Technology Licensing in Defense Procurement : A Proposal.
Proposal for the incorporation of licensing provisions into government-funded research and development contracts likely to lead to the creation of a body of production technology valuable in follow-on contracts. Two cost-saving benefits of competition through licensing are seen: avoidance of monopoly rent and avoidance of excess costs that result from doing business with an inefficient, though perhaps low-profit, producer. Licensing benefits, attainable without adverse impact on the balance of technological rivalry among defense firms, could bring improved long-run cost efficiency and the creation of technically superior defense products. Increasing competition would also eliminate situations in which production technology remains in the hands of developers. It is suggested that directed licensing using commercial transfer techniques would have several administratively attractive features. In addition, the proposal embodies safeguards to guarantee protection for the developer's technology developed at private expense, and touches on the subject of royalty payments. 12 pp.