Door Open for For-Profit Firms To Bid on Research

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Sometimes new laws are as noteworthy for what they leave unsaid as for what they say. Washington insiders say that may be the case with the Education Sciences Reform Act of 2002, which sets out to transform research operations at the Department of Education.

Signed by President Bush in November, the measure is best known for abolishing the department's office of educational research and improvement and creating a more streamlined and slightly more independent Institute of Education Sciences to replace it.

Along the way, though, it also quietly dispenses with long- standing language that kept private, for-profit companies from bidding on some federal education research contracts. That means commercial companies are now as eligible as universities, nonprofit research groups, or any other organization with research know-how to bid for a chance to operate one of the department's research centers, regional education laboratories, comprehensive centers, or clearinghouses.

The aim of the change, according to congressional architects of the plan and federal officials, is to improve the quality of federally financed studies in education by stimulating a little more competition. Under the old restrictions, for instance, sometimes only a handful of organizations bid for multimillion-dollar contracts to run federal education research centers.

The changes worry some Education Department watchers, though. They wonder how trustworthy studies born of public-private collaborations will be, and whether the public will still be able to access data from those public-private research ventures if the findings look bad for businesses' bottom lines.

Arnold Fege

"I don't think we want private research interests controlling the public agenda," said Arnold Fege, the director of public engagement and advocacy for the Washington-based Public Education Network and a longtime observer of the federal education research enterprise. "They're interested in profit and I'm interested in quality, and the two aren't necessarily comparable."

Whether for-profit firms will ever operate the department's centers, laboratories, or clearinghouses could hinge on upcoming budget debates. The federal budget that President Bush presented earlier this month proposes eliminating some of those structures altogether, such as the regional laboratories, the comprehensive-assistance centers, and at least one clearinghouse. ("Bush Budget Would Boost Spending on Studies, But Cut Back Outreach," this issue.)

Their continued existence depends in part now on whether the Congress decides to keep them in place.

Role of Private Sector

To some extent, for-profit research organizations, such as the Rockville, Md.-based Westat and Mathematica Policy Research Inc., located in Princeton, N.J., have almost always handled federal education research grants and contracts—partly because they are often better-equipped to handle nationwide data collection.

With Republicans in control of the White House, the House of Representatives, and, as of January, the Senate, the welcome mat for commercial research firms and other educational profitmakers has been expanding departmentwide, according to observers and business groups.

"There's a definite improvement in the department's attitude towards educational-materials publishers," said Maureen DiMarco, a senior vice president for Houghton Mifflin, the Boston-based publishing company. "It's not so much that the door was opened, but that the door wasn't closed anymore."

Allowing commercial firms to run entities such as research centers or laboratories could open yet another dimension for profit-making companies interested in federal education business.

Research centers, for one, have been off limits to any organization other than a university for nearly three decades. Under the new law, however, grants or contracts for operating those centers—at least eight of which are now authorized—can go to any organization "with capacity to conduct scientifically valid research."

The change would be less of a departure for the 10 regional education laboratories that the law reauthorizes. Those entities—which focus on providing technical assistance and applied research for states and school districts in their geographical regions—have been open to both universities and nonprofit organizations for more than a decade.

What's more, in order to have a financial base apart from their federally supported research activities, a few had already begun partnering with commercial providers on their own.

"Our members are anticipating a lot more competition from within and from other players," said Richard Hershman, the vice president for legislative affairs for the National Education Knowledge Industry Association. The members of the Washington-based trade group include the regional labs and research centers as well as some for-profit research organizations.

"I think most folks have been focusing a lot on partnerships," Mr. Hershman said.

Even so, his group was among those to lobby against some of those changes when the bill was making its way through Congress. That's because the research agenda for the labs is set by governing boards made up of educators and policymakers from state and local school systems.

"If on the one hand you're working on a lab contract and advising states what to look for, and on the other hand, you're selling a product," Mr. Hershman said, "that could be a conflict of interest."

Safeguards for Public

Authority to run 20 comprehensive-assistance centers, which dispense advice to educators around the country, could also go to for-profit companies for the first time under the new law. That would be somewhat less of a change, however, since the universities and nonprofit firms that operated the centers in the past were already allowed to recruit profit-making businesses as partners.

The law is fuzzier on the future of the 30-year-old Educational Resources Information Center clearinghouses, or ERIC, which collects, analyzes, and disseminates information on specific issue areas, such as mathematics, and rural education and small schools.The existing clearinghouses will operate until their current contracts end. Beyond that, the Education Department is required to continue collecting studies only on the 16 areas the clearinghouses now track. The new law says nothing about how that effort should be carried out, which observers say could open the way for contracting out such services to for-profit research groups.

Grover J.

For his part, Grover J. "Russ" Whitehurst, the director of the department's research institute, said federal officials would take steps to make sure that all of the contracts and cooperative agreements the institute approves have safeguards to ensure that profit-making incentives don't get in the way of the public interest.

"We can require of a contractor anything we want," he said. "And we will certainly be vigilant to make sure there aren't different rules than those that apply to nonprofit or university centers regarding issues of public availability of data or anything else."

C. Kent McGuire, the assistant secretary for the office of educational research and improvement in President Clinton's administration, noted that applying to run a federal education research lab or center can be expensive.

"If you're going to spend $100,000 to win a center, but you have only a 20 percent shot at winning, given the fact that the incumbents may have a leg up on the competition, is it worth it to get into the competition?" Mr. McGuire said.

Coverage of research is under-written in part by a grant from the Spencer Foundation.

Vol. 22, Issue 23, Pages 24, 27

Published in Print: February 19, 2003, as Door Open for For-Profit Firms To Bid on Research
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