Finally, this office did not have in place an adequate system for tracking and verifying these costs and charges, and an audit was not performed.

Within 60 days after this part of the appraisal was written, this issue became moot. In January 1991, the Livermore contract was modified to make technology transfer a part of the Laboratory's mission. This change implemented the National Competitiveness Technology Transfer Act of 1989, and resulted in eliminating the reimbursement requirement in connection with charges for Laboratory preparation of patent applications on inventions owned by the university under ground rules set by the Technology Transfer Act and its implementing contract clauses. These charges are now considered allowable, rather than unallowable.

Moreover, the SAN Field Office has now advised the contractor of the method set forth in the Headquarters patent instruction to determine the appropriateness of charges for patent work in connection with university-owned patents arising out of the contract and requested a response from the contractor as to whether the cost elements currently used by the contractor comply with the instruction.

Mr. WOLPE. I have here an article in the May 16th, 1991 issue of "Washington Technology" that discusses a new technology that can take the capabilities of a super-computer and reduce it to the size of a deck of playing cards. It is called the nCHIP. I don't want to get into the details or merits of the technology. I understand that Chairman Dingell will be doing that with his own subcommittee. In fact, he has been playing the lead role in his concern as relates to technology transfer.

[The article follows:]

continued from page 1

In the spotlight was then-asso-
ciate director Carl Haussmann,
who with several other Liver-
more scientists, including the
technology's inventor Dave
Tuckerman, had been pushing
for commercialization-which
would directly benefit a compa-
ny Congressional documents say
is now operating as nChip and
'was originally incorporated by
Haussmann, Tuckerman and a
third Livermore scientist to fur-
ther develop and market the
technology.

In the face of Congressional
and DOE investigations, Liver-
more staunchly defended Hauss-
mann a living legend in Liver-
more folklore, where he played
an instrumental role in develop-
ing the lab's laser program. And
the DOE field office in San Fran-
cisco, which oversees neighbor-
ing Livermore, initially support-
ed the proposed transfer of the
technology based on the infor-
mation presented by Livermore
officials.

WASHINGTON TECHNOLOGY 17

Rep. John Dingell, D-Mich.

Mr. WOLPE. I just want to discuss the process behind the technology transfer. I understand that before the Department of Energy can waive its rights to a technology so that the University can license it, the University must demonstrate to the Department of Energy that the licensee has no conflict of interest and that all potential licensees have had a fair opportunity to acquire the technology. Is that correct?

Ms. BRECHBILL. That's not how I understand the procedure to work. With respect to title to patents under the contract provisions that were in effect from 1987 until a couple of months ago, there were identified technologies that the University had an automatic right to elect to take title to under the contract. In a certain group, primarily the weapons area technologies, they had to come in and request a waiver from the Department in order to get title.

Önce there was an election that took place, there were requirements with respect to division of the royalties between the Department of Energy and the University of California, but there was none with respect to outside parties.

Mr. WOLPE. I am talking about the ones where the Department of Energy does have the authority to waive or not.

Ms. BRECHBILL. That's in the weapons area.

Mr. WOLPE. That's right.

Now with the nCHIP, the information provided by the University that you used to make your original decision to waive the rights of the Government was incomplete; was it not?

Mr. PEARMAN. I believe it was incomplete, yes.

Mr. WOLPE. In fact, after the decision to release had been made, official notification of the University of California was held up because Congressman Dingell raised questions about whether the appropriate conflict of interest checks had been made; is that correct? Mr. PEARMAN. That's correct.

Mr. WOLPE. To your credit, I understand that you tried in fact to hold up the official notification of the waiver when you realized you had incomplete information?

Mr. PEARMAN. Yes, we did. It was not clear, but we certainly had questions.

Mr. WOLPE. But somehow, the notification letter was inadvertently released to the University of California; is that correct? Mr. PEARMAN. That's correct.

Mr. WOLPE. What did you do about that at that point? Mr. PEARMAN. We attempted to reverse that decision, if you will. There continued to be questions as to whether all the requirements were met and things were done properly and, as a final result, we felt that it was appropriate to look into it further, so we advised the IG.

Mr. WOLPE. Before advising the IG, you attempted to get the University of California to return the letter that had gone out by error; is that correct?

Mr. PEARMAN. Essentially, to reverse the decision, yes.
Mr. WOLPE. And how did the University respond?

Mr. PEARMAN. Essentially, there was the decision to continue. Mr. WOLPE. I ask unanimous consent to enter into the record a letter dated July 28, 1989 from the leader of Livermore's Technology Transfer Program to you, Mr. Pearman.