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The National Institute of Standards
and Technology has asked the National Academy of Public Administration
(NAPA) to conduct an independent study of its Manufacturing
Extension Partnership (MEP) Program. The purpose of the study
is twofold: First, to re-examine the core premise of the program;
and second, to assess the advantages and disadvantages of
alternative business models for providing needed services
and maximizing performance.
Background of the MEP Program
The
Omnibus Trade and Competitiveness Act of 1988 directed NIST
to establish the Manufacturing Technology Centers (MTC) program
with the intention of making advanced technology developed
in NIST labs available to small manufacturers as a way to
improve productivity. Labs were to license the technology
to state-based Centers which would in turn, charge a fee to
the manufacturers. This was envisioned as a way of ultimately
allowing the Centers to become self-sufficient.
Proposals to establish Centers were solicited
from qualified non-profit organizations and were evaluated
based on regional need, technology resources, technology delivery
mechanisms and management and financial plans. Applicants
were required to contribute 50 percent or more of the Center's
proposed capital and maintenance costs for the first three
years and an increasing share up to 80 percent in the sixth
year. Federal funding was to be eliminated ('sunsetted') after
six years.
Early experience with the MTC program
found was that there was a technology gap between the technology
developed in federal labs and the capabilities of many small
manufacturers to utilize it. "(We) learned early on that
these companies were several generations behind in technology."(Kevin
Carr, Director, MEP) In many cases these companies had more
basic needs for management information technology, financial
management systems, and fundamental business processes that
could improve their companies' profitability. As a result,
a significant change in tactics and strategy took place during
the 1990's to reorient the services provided by the Centers
to assist these small companies with their productivity improvement
efforts. A study conducted by the National Research Council
of the National Academy of Sciences in 1993 helped to shape
the perspective of program managers concerning the best way
to implement a national industrial assistance system. It also
detailed the following barriers to performance improvement
that small manufacturers faced:
1. The regulatory environment creates
a disproportionate burden for smaller firms.
2. Smaller manufacturers are often unfamiliar with changing
technology, production techniques, and business management
practices.
3. Smaller manufacturers are generally isolated and have too
few opportunities for interaction with other companies in
similar situations.
4. It is difficult for owners and managers of smaller companies
to find high-quality, unbiased, advice, and assistance.
5. Operating capital and investment funds for modernization
are difficult for small and medium-sized manufacturing firms
to obtain.
Among the most important changes was
the evolution of the basic services offered by the Centers
from technology transfer to consulting services. During the
Clinton administration, the number of Centers grew from seven
in 1992 to 75 (with 400 satellite offices) in 1996. Funding
from the Defense Advanced Research Projects Agency (DARPA)
Technology Reinvestment Project (TRP) provided significant
assistance with this Center expansion effort. Congress also
enacted the Technology Administration Act of 1998, which eliminated
the 'sunset' provision of the initial legislation and allowed
for ongoing federal funding of the Centers. The program name
was changed to the Manufacturing Extension Partnership, and
the funding formula mandated that only 1/3 of funding would
be provided by the MEP program, with 1/3 coming from state
or local sources and 1/3 collected as fees from the small
manufacturers helped by the program.
MEP Today
The MEP program consists of 60 manufacturing
extension centers and 400 satellite locations throughout the
United States and Puerto Rico. Each Center works directly
with local firms to provide expertise and services tailored
to their most critical needs, ranging from process improvements
and employee training to new business practices and the application
of information technology in their companies. Services are
delivered through direct assistance from Center staff, outside
consultants, or a combination of both.
There are over 350,000 small manufacturing
establishments nationwide. The program currently interacts
approximately 21,000 times per year with some 15,000 different
manufacturers; about 6,000 of these interactions are considered
to have provided significant services.
MEP has an operating budget of about
$105.9 million for fiscal year 2003, approximately 10% of
which funds MEP headquarters operations with the remaining
90% used to fund the state Centers. While funding has been
relatively flat since 1999, the Program has demonstrated measurable
improvements in its impact on client competitiveness over
time. At this stage in its evolution, the MEP Program has
requested an objective, independent analysis of 1) the core
premises that underpin the Program's mission; and 2) the viable
business models for delivering needed services and maximizing
performance.
The Study will be conducted in four phases
as described below.
Phase I - Study Plan
Deliverable: Study Plan and Identification
of Team
Completion date: May 5, 2003
Phase II - Mission Analysis
During this phase, NAPA will address the first study objective
identified by NIST.
· Study objective #1: Mission Analysis:
The study will reexamine MEP's core premise- that there are
specific barriers that prevent small firms from obtaining
the technical and business advice that they need to improve
innovation, productivity, and competitiveness.
Deliverable
Written assessment of the barriers; the degree to which they
impede small manufacturers from improving their performance;
and the adequacy of the MEP model to overcome these barriers.
Completion date: July 31, 2003
Phase III - Alternative Business Models
During this phase of the study the team
will address the second NIST objective
· Study Objective # 2: Beginning with the assessments
of the barriers conducted in Phase II, this phase of the study
will identify the viable business models for providing the
needed services. The study will also provide the advantages
and disadvantages of each business model. The objective of
this analysis is not to validate MEP's existing partnership
model, but to thoroughly understand the advantages and disadvantages
of that model relative to viable alternatives.
Deliverable: A draft report outlining the
advantages and disadvantages of alternative business models
for providing the needed advisory services to small manufacturers.
Completion date: December 20, 2003
Phase IV - Stakeholder Review
Deliverable: A final report that has been
vetted through a broad stakeholder review process.
Completion Date: February 20, 2004
For more information, please contact Alison
Brown at (202) 347-3190 or abrown@napawash.org.
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