The executive order that President Biden signed in Maine Friday encourages companies to manufacture what is invented in the United States. But what does the order actually say and what will it accomplish?

American companies have created and commercialized many of the world’s most important technologies, the administration said, but many of those technologies have ended up being manufactured overseas, even when the research and development behind the inventions was funded with taxpayer dollars and could have been manufactured domestically.

The executive order aims to break that pattern and keep both the innovation and the production in the United States.

“Our world is healthier, smarter, more connected and more sustainable because of federal taxpayers’ investment in discovery and innovation that has supported the commercialization of new products and services,” Biden wrote in the executive order. Moving forward, “when new technologies and products are developed with support from the United States government, they will be manufactured in the United States whenever feasible and consistent with applicable law.”

The executive order would cut red tape and streamline the reporting requirements in the federal research-and-development process, encourage the expansion of domestic production for critical industries and make the domestic manufacturing waiver process clearer, timelier and more consistent. It also boosts incentives to manufacture new inventions in the United States, especially when the inventions are developed using federal funds. 

While it lays out a number of goals, in many cases the language in the executive order lacks concrete directives and leaves room for interpretation.

Agencies are told they “should consider developing a process” to waive the domestic manufacturing requirements. The heads of agencies, along with the administration of the Small Business Administration “are encouraged to advance a coordinated interagency approach.”

There’s also no mention of additional funding to help institute these changes.

The goals laid out in the executive order have the potential to be “extremely effective” in the long run, said Julie Fraser, vice president of research for operations and manufacturing for Tech-Clarity, a Pennsylvania research firm that focuses on, among other things, innovation and manufacturing. 

Streamlining the reporting requirements, is especially crucial, Fraser said. 

ATTEMPT TO TRACK INNOVATIONS

The government has struggled to track the life cycle of technologies after it has invested in their research and development, according to a fact sheet sent by the White House. The executive order will help modernize iEdison, the interagency government reporting system, to help researchers, companies and the public better understand the innovation landscape in the U.S.

The order would help the government keep track of where innovations end up. “The heads of agencies … shall require recipients of Federal R&D funding agreements to track and update the awarding agency on the location in which subject inventions are manufactured,” the executive order states.

It directs agencies to transition reporting requirements to The National Institute of Standards and Technology’s iEdison portal by the end of 2025. This system is already used by many agencies and will centralize reporting for federal funding recipients and their licensees. This also should help reduce the administrative burden on the recipients and provide more consistent commercialization data.

Historically, different departments have used different reporting systems, Fraser said, and trying to navigate all these systems is cumbersome, confusing and expensive. Streamlining this process should encourage more manufacturing businesses to work with the government, she said.

Encouraging businesses to work with the government is important, added Michelle Boucher, vice president of research and engineering practices at Tech-Clarity. Government innovation investments have worked well in other countries and show promise here, she said.

“As a country, we need to innovate to stay competitive, but innovation is risky as not all innovative ideas work out, so there is no guarantee a company will be able to recoup the R&D investment,” Boucher said. “Funding will help (offset) some of the risk. … However, if the production is done overseas, the government misses out on some of its investment because not all the jobs will stay here. This is why it is exciting to see a program like this.”

But it’s not always possible to manufacture in the U.S. Under the Bayh-Dole Act, agencies can waive the requirement that certain products “embodying the subject invention or produced through the use of the subject invention be ‘manufactured substantially in the United States’ if  … ‘reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States’ or ‘under the circumstances domestic manufacture is not commercially feasible.’ ”

Agencies will create a set of waiver questions for use across the government, according to the executive order, as well as how and why the waivers will be used. Manufacturers also will need to detail “the conditions under which the subject invention would be manufactured abroad, including unionization of workplaces, health and safety standards, labor and wage laws, and environmental impacts,”

Increased transparency was a repeated theme throughout the order, which promised “increased visibility to taxpayers on the use of federal R&D funding in support of domestic manufacturing and job creation.”

A CALL TO BE CREATIVE

The executive order also expands an existing domestic manufacturing requirement beyond a small set of corporations with exclusive licenses to use and sell an invention in the U.S. and opens it to others manufacturing “critical and emerging” technologies.

“I like that it’s more blanket across any organization,” Fraser said. “It’s usually a handful of very large corporations that participate.”

Ross Baker, a political science professor at Rutgers University, summed up the order as a “call to people to be creative.” 

“(Biden) said the economic environment is conducive to startups, so start something up,” he said. 

It doesn’t require any bold or unrealistic promises – research, development, innovation and production is not a fast turnaround, so it will take time before it starts producing jobs and before its effectiveness can be gauged, Baker said. 

While the executive order does have some teeth to it, it was also a political move for Biden, who is seeking reelection, said Mark Brewer, professor and interim chair of the department of political science at the University of Maine. 

“Keeping American jobs in America is a winning message for any candidate,” he said. 

Biden has long talked about rebuilding the economy “from the middle out and the bottom up” and this order is another way to emphasize that strategy, Brewer said. 

It’s clearly a useful campaign tactic, he said, “but how effective the policy will be will take three, four or five years to answer.”

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