Since its creation in 2007, the Energy Department's advanced research projects agency-energy has funded energy technology research and development that by and large would not have been funded by the private sector and is not duplicated elsewhere within DOE, finds the Government Accountability Office. However, ARPA-E could improve its project-selection process, according to prepared testimony (.pdf) from the Government Accountability Office.

The testimony was part of a Jan. 24 hearing of the House Science, Space and Technology subcommittee on investigations and oversight.

The agency is required to select projects that industry "by itself is not likely to undertake because of technical and financial uncertainty," note report authors. But ARPA-E needs to require more information on private-sector funding as part of its selection process, said GAO.

"ARPA-E officials said that they have considered but have not used venture capital data to identify applicants with prior private investors. Examining such data allowed us to quickly cross-check applicants' prior private funding," notes the testimony.

Eighteen of the 121 ARPA-E award winners examined in the audit had received prior private venture capital. GAO concluded that most VCs refused to fund ARPA-E sponsored research and development because:

• They don't want to fund projects that rely on unproven technological concepts;
• they questioned the timeliness of investment returns; and
• they were more interested in investing in companies--particularly software-with higher potential profit margins and less costly product development.

The 18 fund recipients told GAO that the ARPA-E investment allowed them to "pursue the development of energy technologies with greater scientific or technical uncertainty" than private funding provided. Two of the projects received private funding for work very similar to their ARPA-E project proposals and 4 secured funding from a government or non-profit entity for similar work.

GAO recommended ARPA-E provide more guidance for applicants on disclosing private funding, require applicants to provide documentation on why projects were not privately funded and use a VC database to check applicant information.

A Jan. 24 statement (.pdf) from Rep. Paul Broun (R-Ga.) cast doubt on GAO's finding. Broun said the subcommittee staff identified 23 companies that received private sector funding prior to their ARPA-E award--the GAO report cited only 18.

The subcommittee also combed GAO work papers and other publicly-available information to find "numerous instances of overlap and duplication between ARPA-E and both public and private sector funding," wrote Broun.

Twelve of the 18 companies GAO identified as having received private sector funding before ARPA-E award "planned to use ARPA-E funding to either advance or accelerate prior funded work," wrote Broun.

For more:
- download GAO-12-407T (.pdf)
- download Broun's statement (.pdf)

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