HQ0034259C00F Appendix 1.pdf

2011 U.S. IN TELLECT UA L PROPERT Y

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Executive Office of the President National Science and Technology Council

Advanced Manufacturing National Program Office

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Advanced Manufacturing National Program Office

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About the National Science and Technology Council The National Science and Technology Council (NSTC) is the principal means by which the Executive Branch coordinates science and technology policy across the diverse entities that make up the Federal research and development enterprise. A primary objective of the NSTC is establishing clear national goals for Federal science and technology investments. The NSTC prepares research and development strate-gies that are coordinated across Federal agencies to form investment packages aimed at accomplishing multiple national goals. The work of the NSTC is organized under five committees: Environment, Natural Resources and Sustainability; Homeland and National Security; Science, Technology, Engineering, and Math (STEM) Education; Science; and Technology. Each of these committees oversees subcommittees and working groups focused on different aspects of science and technology. More information is avail-able at http://www.whitehouse.gov/ostp/nstc.

About the Office of Science and Technology Policy The Office of Science and Technology Policy (OSTP) was established by the National Science and Technology Policy, Organization, and Priorities Act of 1976. OSTP's responsibilities include advising the President in policy formulation and budget development on questions in which science and technology are important elements; articulating the President's science and technology policy and programs; and fostering strong partnerships among Federal, state, and local governments, and the scientific communities in industry and academia. The Director of OSTP also serves as Assistant to the President for Science and Technology and manages the NSTC. More information is available at http://www.whitehouse.gov/ostp.

About the Advanced Manufacturing National Program Office Hosted by the Department of Commerce, National Institute of Standards and Technology (NIST), the AMNPO is an interagency team with participation from all Federal agencies involved in U.S. manufactur-ing. Principal participant agencies currently include the Departments of Commerce, Defense, Education, and Energy, the National Aeronautics and Space Administration, and the National Science Foundation.

The AMNPO reports to the Executive Office of the President and operates under the National Science and Technology Council.

As recommended in PCAST’s advanced manufacturing report, the interagency office will enable more effective collaboration in identifying and addressing challenges and opportunities that span technol-ogy areas and cut across agency missions. In addition, the office will link Federal efforts to the growing number of private-sector partnerships between manufacturers, universities, State and local govern-ments, and other organizations.

For more information please contact:

Michael F. Molnar Director-Advanced Manufacturing National Program Office Chief Manufacturing Officer-National Institute of Standards and Technology United States Department of Commerce 100 Bureau Drive, Stop 4700 Gaithersburg, MD 20899 Telephone: 301-975-2830 amnpo@nist.gov www.manufacturing.gov http://www.whitehouse.gov/sites/default/files/microsites/ostp/pcast-advanced-manufacturing-june2011.pdf mailto:amnpo@nist.gov http://www.manufacturing.gov

EXECUTIVE OFFICE OF THE PRESIDENT

NATIONAL SCIENCE AND TECHNOLOGY COUNCIL

WASHINGTON, D.C. 20502

January 10, 2013

Dear Colleague:

For more than a century, U.S. manufacturing has been a cornerstone of American prosperity.

Today, more than ever, it is essential that the Nation continues its leadership in manufacturing—to sustain the foundations of the Nation’s economic prosperity and national security and to meet new challenges in the domains of energy, transportation, health care, and education. That is one reason President Obama has set scientific and technological innovation—and support for the basic research that fuels such innovation—as central priorities of his Administration.

In furtherance of these goals, this report describes the Administration’s proposed National Network for Manufacturing Innovation (NNMI)—an initiative to accelerate U.S. advanced manufacturing by catalyzing the development of new technologies, educational competencies, production processes, and products via shared contributions from the public and private sectors and academia. The NNMI will consist of linked Institutes for Manufacturing Innovation (IMIs), designed to serve as regional hubs of world-leading technologies and services. IMIs will provide shared facilities to local start-ups and small manufacturers to help them scale up new technologies, accelerate technology transfer to the marketplace, and facilitate the adoption of innovative developments across supply chains. And they will act as ‘teaching factories’ to build workforce skills at multiple levels and to strengthen business capabilities in large and small companies.

To validate this concept, and in response to a Federal call for proposals, a public-private consortium launched a pilot IMI on Additive Manufacturing technologies in late 2012. Today that National Additive Manufacturing Innovation Institute is operating with the participation of more than 85 companies, 13 research universities, 9 community colleges, and 18 non-profit and professional associations. This report reflects lessons learned from that pilot institute as well as inputs from regional workshops and a public Request for Information.

The NNMI, which is anticipated to eventually encompass up to 15 IMIs addressing a variety of technical areas critical to U.S. global leadership, directly supports the findings of the President’s Council of Advisors on Science and Technology, which has called for such a network in order to ensure a vibrant and viable American manufacturing sector for decades to come.

I look forward to working with Federal agencies, Congress, and the private and academic sectors to ensure implementation of the NNMI.

Sincerely, John P. Holdren Assistant to the President for Science and Technology Director, Office of Science and Technology Policy i★ ★

National Network for Manufacturing Innovation: A Preliminary Design

Executive Summary

Recognizing that a vibrant advanced manufacturing sector is vital to the American economy and national security, President Obama has proposed a $1 billion investment in a National Network for Manufacturing Innovation program. The NNMI program has the goal of advancing American domestic manufacturing. This program will seek to accomplish this by creating a robust national innovation ecosystem anchored by up to fifteen Institutes for Manufacturing Innovation. The Administration is committed to working with Congress to authorize and fully fund the President’s request for the NNMI program. This report and the proposed program design included herein aims to support Congressional authorization and provide a guide for future program implementation.

The NNMI will fill a gap in the innovation infrastructure, allowing new manufacturing processes and technologies to progress more smoothly from basic research to implementation in manufacturing. The NNMI program has a scale and focus that is unique, and it is built upon concepts of a strong public-private partnership.

Because the challenges associated with manufacturing are multi-faceted, within the NNMI model, each IMI will have its own distinct manufacturing topic or technology focus, determined through a competi-tive proposal and review process managed by the AMNPO partners. This process will identify the highest value cross-cutting manufacturing challenges and opportunities, and proposals will bring together manufacturing stakeholders including government, industry, and academia. Stakeholders will consist of industry, academia (research universities and community colleges), relevant organizations (industry consortia, economic development organizations, labor organizations, national laboratories, etc.), and government bodies at all levels (Federal, State, and local). In their individual focus areas, institutes will act to anchor a region’s innovation infrastructure, and will conduct research and demonstration projects.

The Federal investment in the National Network for Manufacturing Innovation (NNMI) serves to create an effective manufacturing research infrastructure for U.S. industry and academia to solve industry-relevant problems. The NNMI will consist of linked Institutes for Manufacturing Innovation (IMIs) with common goals, but unique concentrations. In an IMI, industry, academia, and government partners leverage existing resources, collaborate, and co-invest to nurture manufacturing innovation and accelerate commercialization.

As sustainable manufacturing innovation hubs, IMIs will create, showcase, and deploy new capabilities, new products, and new processes that can impact commercial production. They will build workforce skills at all levels and enhance manufacturing capabilities in companies large and small. Institutes will draw together the best talents and capabilities from all the partners to build the proving grounds where innovations flourish and to help advance American domestic manufacturing.

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IMIs will offer facilities comprising an “industrial commons” (the R&D, engineering, and manufacturing capabilities needed to turn inventions into competitive, manufacturable commercial products) to accelerate the formation and growth of small- and medium-sized enterprises (SMEs), and will integrate education and workforce training functions into their operations. IMIs will engage with many types of corporations, with particular emphasis on engaging small and medium-sized manufacturing enterprises.

They will provide shared-use facilities with the goal of scaling up laboratory demonstrations and matur-ing technologies for manufacture. American companies and international corporations with significant holdings in the United States are envisioned as participants in these Institutes.

Institutes will be a partnership between government, industry, and academia, supported with cost-share funding from Federal and non-Federal sources. It is expected that institutes will typically receive $70-120 million in total Federal funds, depending upon the magnitude of the opportunity, maturity, and capital intensity of the technology, and scope of the focus area, over a 5-7 year timeframe. When combined with substantial non-Federal co-investment, for example 1:1, it is envisioned the total capitalization of an institute over this period will be $140 to $240 million. At greater ratios of non-Federal co-investment, an institute could achieve its goals with a lower level of Federal funding. Institutes will be expected to be sustainable within seven years of launch through income-generating activities including member fees, intellectual property licenses, contract research, and fee-for-service activities as examples. The proposed design is of a size and scale intended to provide long-term economic impact in the region and nationally.

IMIs are to be led by independent, not-for-profit institutions that strongly leverage industry consortia, regional clusters, and other resources in science, technology, and economic development. Institutes are intended to link and leverage all available resources, including institutions funded through existing Federal programs, so that they have national and global impact.

Institutes will be established through a competitive solicitation and evaluation process managed by the interagency Advanced Manufacturing National Program Office (AMNPO). Current participating agen-cies include the Departments of Commerce (DOC/NIST), Defense (DOD), Education (ED), and Energy (DOE); the National Aeronautics and Space Administration (NASA); and the National Science Foundation (NSF). Competitive solicitations will be sought and proposals will be peer-reviewed. Expected evaluation criteria include Institute focus and its importance for the American economy; the Institute plan to have significant production-scale manufacturing impact in its area of specialization from a research, com-mercialization, and workforce training standpoint; the effectiveness of the governance and management structures; the proposed Institute resources; the level of co-investment; engagement with SMEs and other community stakeholders; and the strength of the plan towards sustainability.

Leadership from the Institutes will formally collaborate through a Network Leadership Council made up of representatives from the Institutes, Federal agencies, and other entities as appropriate. The Leadership Council will oversee efforts to develop consistent and common approaches for matters such as intellectual property, contracts, research and performance metrics, and facilitating the sharing of best practices. Each Institute will also participate in the AMNPO-hosted Manufacturing Portal, a web-based resource to help manufacturers locate relevant research, research partners, and pertinent information within the Network. Each Institute’s research and commercialization outcomes will be available to other IMI’s as appropriate, through technology and knowledge transfer efforts.

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Beginning in April 2012, a broad public engagement strategy by the Advanced Manufacturing National Program Office was used to “crowd source” the NNMI program design initiated by a Federally sponsored Request for Information (RFI) and series of regional workshops. In parallel, a pilot institute on additive manufacturing, the National Additive Manufacturing Innovation Institute (NAMII), was announced in August 2012 to move the IMI concept forward and to refine an architecture supporting the formation of the larger Institutes and Network. The RFI period has ended, and combined with the lessons learned from NAMII and rich discussions from the regional workshops, the proposed design for the NNMI is described in this report.

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Table of Contents Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

1.0 Overview

2.0 The National Network for Manufacturing Innovation Vision

3.0 Characteristics of the Institutes for Manufacturing Innovation

3.1 Overall IMI Focus

3.2 IMI Activities

3.3 IMI Funding, Revenue, and Sustainability

3.4 IMI Partners and Members

3.5 Engagement of IMIs with Small and Medium-sized Enterprises (SMEs)

3.6 IMI Governance

3.7 IMI Selection Process

3.8 Disbursement of Federal Funds

4.0 National Network of Manufacturing Innovation Institutes

4.1 Inter-Institute Collaboration

4.2 Common IMI Policies

4.3 Manufacturing Portal Participation

5.0 Rationale for the Investment

5.1 NNMI in the Context of 21st Century Global Competition

5.2 Overview of Existing Relevant Programs

5.3 Differences between Existing Programs and the NNMI Vision

6.0 National Additive Manufacturing Innovation Institute—the Pilot Institute

7.0 Crowd Sourcing the Design of the NNMI

7.1 NNMI Request for Information

7.2 NNMI Regional Workshops

8.0 References

Appendix A: NNMI Public Workshop and RFI Participants

Appendix B: Glossary of Abbreviations

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Preliminary Design National Network for Manufacturing Innovation

1.0 Overview

Manufacturing plays a critical role in the American economy, underpins U.S. innovation, and is essential to national security. The health and performance of the U.S. manufacturing sector has become a topic of national interest and concern. In 2011, 11 of 19 major U.S. manufacturing industries produced less than they did in 2000 [1]. Over this same decade, more than 65,000 manufacturing establishments—nearly one in six—ceased operation [2], the United States share of global exports of advanced technology products fell from 21 percent to 15 percent [3], and the sector eliminated more than 5 million jobs.

The fundamental contributions of manufacturing to economic prosperity are evident from national and international perspectives. The U.S. manufacturing sector continues to be a mainstay of our economic productivity, generating $1.8 trillion in GDP in 2011 (12.2% of total U.S. GDP). Manufacturing firms lead the nation in exports: The $1.3 trillion of manufactured goods shipped abroad constituted 86% of all U.S. goods exported in 2011. Moreover, manufacturing has a larger multiplier effect than any other major economic activity—$1 spent in manufacturing generates $1.35 in additional economic activity [4].

Manufacturing’s underpinning role also is corroborated in international studies. For example, according to the World Economic Forum, over 70 percent of the income variations of 128 nations are explained by differences in manufacturing product export [5].

U.S. manufacturing has begun to rebound from the recession of 2008 – 2010. The sector has recovered more than 500,000 jobs since January 2010 and the number of job openings for skilled factory work-ers has increased significantly. Still, the sector faces formidable challenges from a growing number of increasingly capable international competitors. Even as foreign nations and companies position themselves for advantage in markets for high-value-added products, the nature of manufacturing itself is undergoing transformative changes. The United States response to these challenges and changes will have significant impact on the Nation’s future prosperity and its ability to meet future challenges in areas as diverse as defense, energy independence, transportation, and public health.

Numerous factors—private and public—shape the competitiveness and innovation performance of U.S.

manufacturing, as documented in a stream of recent reports [6-17]. Common weaknesses identified in many of these studies might be labeled as “missed opportunities” or failures to reap the full economic and commercial value from public investments in research. There are many examples where materials and product technologies were innovated in the United States, but most of the significant commercial market share they enabled was lost to other countries. They include rechargeable lithium-ion batteries, oxide ceramics, semiconductor memory devices, manufacturing equipment such as wafer steppers, flat panel displays, robotics, solar cells, and advanced lighting.

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As summed up by the National Science and Technology Council, “A gap exists between R&D activities and the deployment of technological innovations in domestic production of goods,” contributing signifi-cantly, for example, to the growing trade deficit in high-value-added, advanced technology products [8].

Other nations and their manufacturing industries are investing and mobilizing resources to strengthen their manufacturing performance. Germany, Korea, and Japan each have more R&D-intensive manufac-turing efforts than the United States [7]. These and other nations have established government-industry-academia partnerships to spur industrial innovation [8].

Similar large-scale public-private partnerships in the United States could accelerate the development of innovation infrastructure and strengthen the Nation’s position in the global competition for new products, new markets, and new jobs. Although the United States has many elements of an innovation ecosystem, the assortment of joint centers, incubators, demonstration facilities, economic development partnerships, and other assets with innovation-related objectives tends to be fragmented and does not support an overarching U.S. manufacturing strategy.

Historically and even today, the United States has excelled at basic science and invention. But the com-mercial and economic rewards that can sprout and grow from these important early-stage accomplish-ments are realized in the stages following initial discovery—especially at the points of manufacturing scale-up and commercialization. This is especially true for complex, cost-efficient, high-value-added products that require development and mastery of equally complex manufacturing processes before successful commercialization can be achieved.

To strengthen U.S. innovation and manufacturing capacity and reverse the trend in which more research, production and design facilities, and supporting functions are sited overseas requires a robust innova-tion policy, as outlined in the Administration’s A National Strategic Plan for Advanced Manufacturing [8].

A key component of this innovation policy is the creation of public-private partnerships to accelerate investment in and deployment of advanced manufacturing technologies, which the Steering Committee of the Advanced Manufacturing Partnership, composed of U.S. industry and university leaders, has recommended [7].

President Obama has proposed a $1 billion investment in a National Network for Manufacturing Innovation to advance American domestic manufacturing by addressing this gap [18]. This Federal investment will be managed collectively by several Federal agencies coordinated through the Advanced Manufacturing National Program Office (AMNPO).*

The NNMI program is designed to bring together industry; universities (including community col-leges); and local, State and Federal governments to spur manufacturing innovation and translate it into American jobs. Up to 15 Institutes for Manufacturing Innovation will be formed.

Through long-term partnerships, the Institutes will be able to maintain a sustained focus on manufac-turing technology innovation, workforce development, the transfer of promising new processes and

* AMNPO member agencies include the Department of Commerce and its National Institute of Standards and Technology (NIST), Department of Defense, Department of Education, Department of Energy’s Advanced Manufacturing Office, NASA, and the National Science Foundation. NIST hosts the AMNPO.

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3★ ★ technologies to the manufacturing sector, and the support of small- and medium-sized enterprises and aspiring start-ups for developing advanced manufacturing know-how and capabilities.

A key feature of the network and its individual IMIs is a strong focus on building clusters of advanced manufacturing capabilities that join expertise from industry, academia, and government. The NNMI will leverage existing resources with the aim of capturing the economic value of U.S. research and early-stage innovation. It will close the gap now separating American inventions, research discoveries, and ideas from the development and scale-up of domestic manufacturing capabilities necessary to make—and sell—products based on those U.S. innovations.

Emphasis will be on linking and integrating existing public and private resources into a robust national innovation ecosystem anchored by regional nodes of advanced manufacturing capabilities, where the processes to build next-generation products will be developed, demonstrated, and refined to the point where there is a clearer, lower-risk path to commercial-scale manufacturing. Institutes will facilitate and accelerate the applied and commercial development of basic research results—the outputs of work sup-ported, for example, by the National Science Foundation or the Department of Energy’s Office of Science.

At IMIs, these promising “seeds” of future technologies will undergo further development and refinement into manufacturing-relevant processes and approaches for next-generation, commercially feasible products and applications that are made in the United States. IMIs are furthermore intended to produce benefits across agency boundaries that broadly support the competitiveness of U.S. manufacturers.

A benchmark for the NNMI institutes is the pilot institute on additive manufacturing, the National Additive Manufacturing Innovation Institute (NAMII). Launched in August 2012, NAMII is centered in Youngstown, Ohio. NAMII is composed of a broad coalition of more than 80 companies, nine research universities, six community colleges and 18 not-for-profit institutions. While it differs from the proposed NNMI and its Institutes (a single topic was selected a priori, and funding was based on existing programs from a number of agencies), NAMII demonstrates a number of IMI attributes. Significantly, industry and regional interests acted together to leverage the Federal investment of $30 million with a combined co-investment of $39 million.

The proposed NNMI has been designed using a broad public engagement strategy, and it builds on a review of best practices used to establish the pilot institute. Public engagement was pursued through a series of workshops held nationwide as well as through comments received by the AMNPO’s Request for Information, published on May 4, 2012.

The focus of each Institute will be proposed by the applicants and selected through a competitive application process. As parts of a network, each IMI will: communicate best practices and coordinate efforts with other IMI’s; coordinate approaches on issues such as intellectual property treatment, contract research, and performance metrics; be led by independent, not-for-profit institutions that coordinate industry partners both locally and nationwide, including SMEs; focus upon workforce development with its industry and academic partners at the university and community college levels to impact the engineering and technical workforce; and join in the governance and activities of an NNMI-wide Network Leadership Council. The President’s proposal calls for a one-time $1 billion investment over a 5-7 year period, after which each IMI should be a sustainable center of excellence.

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2.0 The National Network for Manufacturing Innovation Vision

Funded by a proposed one-time, $1 billion investment, the NNMI responds to a crucial competitiveness challenge with a vision of closing the gap between research and development (R&D) activities and the deployment of technological innovations in the domestic production of goods.

The proposal implements recommendations made by the President’s Council of Advisors on Science and Technology (PCAST) and a wide range of other experts and organizations. It recognizes that investing in early stage research isn’t enough to ensure that a new technology progresses smoothly from invention to product development to manufacturing at scale in the United States.

The IMIs will bring together industry, universities and community colleges, Federal agencies, States, and localities to accelerate manufacturing innovation and scale up by investing in industrially-relevant, cross-cutting product and process technologies. These stakeholders will co-invest with the Federal Government in each IMI, forming a strong partnership between industrial and other stakeholders to catalyze a renaissance in advanced manufacturing activity.

IMI activities may include, but are not limited to: applied research and demonstration projects that reduce the cost and risk of commercializing and manufacturing new technologies or that solve generic manufacturing problems; education and training at all levels; development of innovative methodologies and practices for enhancing the capabilities of and integrating supply chains; and engagement with small and medium-sized manufacturing enterprises (SMEs).

The President’s proposed NNMI and the regional collaborations it catalyzes are designed to address barriers to rapid and efficient development and commercialization of new advanced manufacturing-process innovations, thus strengthening existing or building new innovation ecosystems in advanced manufacturing. The network and its individual IMIs will help companies to collaborate and access the capabilities of research universities and other science and technology organizations to support efforts aimed at developing and scaling up manufacturing and assembly processes. At the same time, the IMIs will help to meet the challenge of building at all levels the pool of high-skilled talent that advanced manufacturing innovation and production requires. The number of proposed IMIs, envisioned to be up to 15 institutes, will be scaled in order to provide sufficient resources for achieving regional and national impacts in advanced-manufacturing performance.

The NNMI has two fundamental components: the individual institutes and the coordinating network, as described below.

3.0 Characteristics of the Institutes for Manufacturing Innovation The Federal investment in the National Network for Manufacturing Innovation (NNMI) serves to create an effective manufacturing research infrastructure for U.S. industry and academia to solve industry-relevant problems. The NNMI will consist of linked Institutes for Manufacturing Innovation (IMIs) with common goals, but unique concentrations. In an IMI, industry, academia, and government partners leverage existing resources, collaborate, and co-invest to nurture manufacturing innovation and accel-erate commercialization.

As sustainable manufacturing innovation hubs, IMIs will create, showcase, and deploy new capabilities, new products, and new processes that can impact commercial production. They will build workforce

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5★ ★ skills at all levels and enhance manufacturing capabilities in companies large and small. Institutes will draw together the best talents and capabilities from all the partners to build the proving grounds where innovations flourish and to help advance American domestic manufacturing.

Broad public input was received regarding the desirable characteristics of IMIs and the Network as a whole through the four public “Designing for Impact” workshops held in Troy, New York; Cleveland, Ohio;

Irvine, California; and Boulder, Colorado. In addition, substantial input was received through the RFI responses collected by the AMNPO. Detailed information about the participants in the workshops and respondents to the RFI may be found in Appendix A. In total, comments from nearly 900 stakeholders have contributed to the design of the Institutes and Network. AMNPO has reviewed and distilled all of this input for incorporation into this document.

IMIs will be long-term partnerships between industry and academia (including universities and com-munity colleges) enabled by Federal, State, and local governments. In order to advance American domestic manufacturing, they will have a sustained focus on manufacturing technology innovation with a strong brand identity and reputation. They will identify critical manufacturing processes and technologies with potential transformational impact, and through their member companies, they will have the capacity to translate these technologies into market-relevant private-sector manufacturing production. IMIs will facilitate the formation of effective teams of industrial and academic experts from multiple disciplines to solve difficult problems, from pre-competitive industrially relevant research to proprietary technology development for product manufacturing. Through dual appointment of faculty and students in both research universities and Institutes, they will develop leaders familiar with research applications, new technologies, and production systems. They will engage and assist SMEs in applying and adapting new process technologies by providing technical assistance, highly trained personnel, and access to shared equipment and infrastructure. IMIs will provide education and training opportunities to build and enhance the skills of the manufacturing workforce.

3.1 Overall IMI Focus

The focus of each Institute will be on integrating capabilities through collaborations at facilities designed and equipped to further efforts addressing cross-cutting manufacturing challenges, yielding solutions that have the potential to retain or expand industrial production in the United States.

3.1.1 Defining Focus Areas

Each Institute will have a unique and well-defined focus area, such as a manufacturing process, an enabling technology, manufacturing processes for new advanced materials, or an industry sector (see Section 3.1.2). There was broad consensus among the workshop participants and RFI respondents that the emergent focus areas should be defined by the proposing teams. The proposing teams will be driven by the needs of industry, the opportunities created by new technologies, and the programmatic needs of the AMNPO partners. Many respondents cautioned against the tendency to pre-select trendy topics that don’t serve this essential balance. This concept, strongly supported from public input, is to allow open solicitations with clear selection criteria rather than government-selected topics. Good ideas come from unexpected places. The government view is included as the agencies will make the selections.

The focus area for each Institute will be defined by the proposing team, and the AMNPO partners will evaluate the efficacy of the proposal in meeting a national need as part of an overall portfolio. Proposing

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6★ ★ teams will need to demonstrate that their focus area is appropriate for an Institute, including the poten-tial to deliver regional and national improvements in advanced-manufacturing capabilities, and to meet national needs. IMIs will provide a comprehensive and detailed plan to accomplish institute objectives and impacts. Each Institute should leverage existing regional or national innovation ecosystems or catalyze the formation and sustainability of new innovation clusters. Each Institute will have a specific physical location or locations and a clear lead organization, rather than existing as a “virtual” or distrib-uted organization. At the same time, the Institute will collaborate with organizations in any location that have relevant, complementary expertise. It is expected that Institutes will take advantage of technology clusters, and will draw talent and resources from across the nation and around the world to their site.

3.1.2 Illustrative Focus Areas

For the purpose of illustration only, the following are examples for each of the categories of Institute focus areas:

1. Manufacturing Process: Refining standards, materials, and equipment for additive manufactur-ing to enable low-cost, low-volume production using digital designs that can be transmitted from designers located anywhere. This focus area was selected for the pilot National Additive Manufacturing Innovation Institute, which uses existing resources and authorities. Alternate examples include advanced joining or polymer processing methods.

2. Advanced Materials: Developing lower-cost production methods for lightweight materials, such as low-cost carbon fiber composites, for applications that will improve fuel efficiency, performance, and corrosion resistance of the next generation of automobiles, aircraft, ships, and trains. Alternate examples include novel materials development for improved manufacturability at scale in solar power or next-generation integrated circuits.

3. Enabling Technology: Creating a smart-manufacturing infrastructure and approaches that integrate low-cost sensors into manufacturing processes, enabling operators to make real-time use of “big data” flows from fully instrumented plants in order to improve productivity, optimize supply chains, reduce costs, and reduce energy, water, and materials consumption.

4. Industry Sector: Improving medical device or biomaterials manufacturing processes to enhance safety, quality, and consistency of pharmaceuticals, chemicals, or other products by enabling rapid on-line sensing and analytical capabilities, and creating new tools for bioprocess optimization and control to enable cost-effective production methods. Other examples are development of next-generation automotive or aerospace manufacturing process technologies.

3.2 IMI Activities

According to the National Science Foundation [19], approximately 17.4 percent of total public and private R&D spending in the United States supported basic research, 22.3 percent supported applied research, and 60.3 percent supported development in 2008. Within these categories the Federal Government con-tinues to be the nation’s (and the world’s) largest funder of basic, knowledge-driven R&D. Approximately 21 percent of Federal R&D supports basic research, while 22 percent supports applied research [20]. While U.S. industry accounts for almost two-thirds of all U.S. R&D funding, about 90 percent of the industry investment supports applied research and technology demonstration efforts with low levels of techni-

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7★ ★ cal and commercial risks and short payback periods [7]. The NNMI proposal is aimed at strengthening support for R&D that lies between the ‘discover/invent’ beginnings of innovation and the ‘manufactur-ing innovation/scale up’ stages that precede commercialization. The Institutes, therefore, will focus on Technology Readiness Levels 4-7, defined in Table 1, which include component validation in a relevant environment, system model or prototype demonstration in a relevant environment, system prototype demonstration in an operational environment, and actual system completion and qualification through test and demonstration. The NNMI will launch a government-industry-academia partnership that galvanizes the resources of all stakeholders to achieve the critical mass of efforts needed to effectively address these stages of manufacturing innovation.

IMI activities will include, but are not limited to:

1. Applied research, development, and demonstration projects that reduce the cost and risk of developing and implementing new technologies in advanced manufacturing. An Institute’s research activities will be driven by the need to mature the demonstration of component tech-nologies in a laboratory environment toward the demonstration of a system in a representative production environment.

2. Education and training at all levels. An Institute will assess skills and certifications needed and provide educational opportunities to improve and expand the manufacturing workforce, includ-ing K-12 programs, internship opportunities, skills certification, community college engage-ment, university collaboration, graduate students, post-doctoral students, and retraining to meet the requirements set forth by an Institute’s mission in order to impact both the technical and degreed engineering workforce.

3. Development of innovative methodologies and practices for increasing the capabilities and capacity of supply chain expansion and integration. Deployment of these will be facilitated through the Institute and its strategic partnerships and efforts to impact the larger industrial complex.

4. Engagement with SMEs. Small and medium-sized enterprises are a vital part of the manufac-turing sector; SMEs in highly effective supply chains for technology-intensive manufacturing sectors have the potential to accelerate efforts to enhance U.S. competitiveness in advanced manufacturing overall. These SMEs tend to be early adopters of transformational technology, and they are well-positioned to innovate and produce jobs. This makes their involvement in Institutes essential for maximizing industry and economic impacts. However, SMEs usually invest less in R&D than larger or more established firms. Strategies to encourage the participation of SMEs in Institutes include engaging outreach partners and intermediaries that work closely with SMEs, providing valued information and services tailored to address SME needs, providing a tiered membership fee structure, allowance of all in-kind contributions for new member SMEs, the use of contract-based activities, staged licensing of IP, and similar arrangements.

5. Shared facility infrastructure. Institutes will provide shared facilities to local industry, especially SMEs and startups, with the goal of scaling up laboratory demonstrations and making technolo-gies ready for manufacture. Each IMI will integrate capabilities and facilities required to reduce the cost and risk of commercializing new technologies and to address relevant manufacturing challenges on a production-level scale.

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8★ ★

3.3 IMI Funding, Revenue, and Sustainability

Each Institute should be of sufficient size and scope to have major national and regional economic impacts and to address the multidimensional challenges associated with the Institute’s focus area. The amount of Federal funding should be appropriate to the Institute proposed. Federal funding to launch a typical Institute is expected to range from $70-$120 million over a 5-7 year timeframe. With greater than 1:1 non-Federal co-investment, an institute could achieve its goals with a lower level of Federal funding. In addition, each Institute should build into its operations model the ability to develop and leverage diverse revenue streams throughout its life. Federal funding is expected to be initially larger when an Institute is established and to diminish after the initial 2-3 years so that most of the Institute’s funds are provided by private and other funding sources as time progresses.

Each Institute should have a plan to be self-sustaining, based on diverse funding sources beginning at Institute formation, and be fully independent of NNMI Federal funds 5-7 years after launch. Institutes will have the flexibility to pursue sustainable Institute revenue from a variety of sources including:

member fees, fee-for-service activities, contract research or pre-production scale-up, non-NNMI grants and awards from Federal and other sources, intellectual property royalties, endowments, etc. The Board of Directors for each Institute will develop, within constraints specified by the Institute award, policies and procedures for its operation and for its revenue-generating mechanisms. Institute facilities and work products should be made available on appropriate and reasonable terms to a broad base of industrial

Table 1. Technology Readiness Levels and Manufacturing Readiness Levels, after [21]

TRL 1: Basic principles observed and reported MRL 1: Manufacturing feasibility assessed

TRL 2: Technology concept and/or application formulated MRL 2: Manufacturing concepts defined

TRL 3: Analytical and experimental critical func-tion and/or characteristic proof of concept MRL 3: Manufacturing concepts developed

TRL 4: Component and/or breadboard validation in a laboratory environment MRL 4: Capability to produce the technology in a laboratory environment

TRL 5: Component or breadboard validation in a relevant environment MRL 5: Capability to produce prototype components in a production relevant environment

TRL 6: System/subsystem model or prototype demonstration in a relevant environment MRL 6: Capability to produce prototype system or sub-system in a production relevant environment

TRL 7: System prototype demonstration in an operational environment MRL 7:

Capability to produce systems, subsystems or components in a production relevant environment

TRL 8: Actual system completed and qualified through test and demonstrated MRL 8: Pilot line capability demonstrated; Ready to begin Low Rate Initial Production

TRL 9: Actual system proven through successful mission operations MRL 9: Low rate production demonstrated; Capability in place to begin Full Rate Production

N N

M I T ar ge t

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9★ ★ users. The evolution of Institute facilities and work activities over time should also be informed by a broad base of industrial partners and other stakeholders.

To encourage the transition to sustainability, a portion of the Federal funds used for Institute projects will be awarded competitively among the Institutes. Competitive Project Award decisions will be made in part based on technical quality, but additionally based on prior Institute performance and the strength of industrial participation. This is described further in Section 3.7.

During the period of NNMI Federal funding, each Institute should demonstrate significant co-investment support from non-Federal sources. The non-Federal co-investment must be tangible, meaningful, and in the aggregate, substantial enough to signal strong and committed industry, regional, and local partner-ship. The co-investment requirement is expected to be met with both cash and in-kind contributions.

In-kind and cash contributions may arise from any source, but are only counted as co-investment if they come from non-Federal sources and directly support the function of the Institute. The funds may come from the Institute (for example, using revenue from the licensing of intellectual property); the members of the Institute; State, regional, and local sources (such as economic development agencies); private donations; or other non-Federal sources. The value of in-kind contributions should be determined in accordance with OMB Circular A-110, Subpart C, Section 23.

3.4 IMI Partners and Members

The acceleration of innovation for advanced manufacturing in order to advance American domestic manufacturing requires bridging a number of gaps in the present U.S. innovation system. Each Institute will be based upon concepts of open innovation and partnerships.

Institutes should be led by an independent, U.S. not-for-profit institution with the capacity to lead an industry-wide technology, workforce development, and infrastructure agenda. Although other lead organizations (such as universities) are not prohibited, many workshop participants and RFI respondents expressed concern about the treatment of intellectual property, confidentiality, tax-exempt status, and timely responses if universities were allowed to lead Institutes. Partners in the Institute should include the full range of national, State, and local stakeholders. This includes manufacturing enterprises of all sizes including startups. In addition, a diverse set of institutions of higher education including both research universities and community colleges should be included. Other partners may include research organizations (including Federally Funded Research and Development Centers, subject to statutory or regulatory restrictions); national laboratories or government agencies (subject to funding restrictions);

career and technical institutions; State, regional, and local public and private entities that support indus-trial clusters and associated economic development partnerships; unions; professional and industry associations; other not-for-profit organizations; and the general public. To help ensure a broad impact, Institutes should openly encourage the addition of new partners and participants wherever relevant through well-defined mechanisms.

To effectively leverage existing national capabilities and centers of excellence, Institutes are envisioned to be hubs that link the national and international resources that exist within the area of focus of the Institute. To this end, Institutes should seek to benefit and leverage the various centers and research institutions funded through existing Federal programs, such as the NSF Engineering Research Centers

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10★ ★

(ERC) and Industry/University Cooperative Research Centers (I/UCRC) programs. These programs focus teams of faculty and students on research that provides opportunities to advance technology for their member firms through formalized partnerships with industry. The ERCs have education programs that create pathways to engineering for pre-college students. These programs also support pre-college teachers to learn engineering concepts at the centers and develop course materials to bring engineer-ing to pre-college classrooms.

Participation in an Institute by a non-domestic organization will be allowed only when in the economic interest of the United States. This would be demonstrated by that organization’s investments in the United States in research, development, and manufacturing; significant contributions to employment in the United States; and commitment that any technology arising from or assisted by the Institute be used to promote domestic manufacturing activities. Participation restrictions for non-domestic organizations may exist in some circumstances.

3.5 Engagement of IMIs with Small and Medium-sized Enterprises A major goal of the NNMI is to support the creation, growth, and expansion of domestic SMEs, and to that end, each Institute will demonstrate…