New Law Lets the Feds Sponsor Prize Competitions

The repeal of Don’t Ask Don’t Tell and the ratification of a brand-new START treaty represent milestone achievements for the suddenly prolific lame duck Congress, and the press has covered these developments accordingly. But Congress passed another law amid this flurry of activity—the America COMPETES Act—and although the media didn’t cover this move nearly as vigorously, it is potentially quite significant and praiseworthy in its own right.

America COMPETES authorizes continued growth in the budgets of the Department of Energy’s Office of Science, the laboratories of the National Institute of Standards and Technology, and the National Science Foundation, 3 agencies focused on incubating and generating innovations designed to keep our country at the forefront of an increasingly competitive global economy.

Beyond this, in what many hope will become a bona fide turning point in the effort to leverage American ingenuity and innovation, America COMPETES empowers all federal agencies to sponsor prize competitions to spur innovation, solve particularly vexing problems in their domains, and advance their missions.

Prize competitions are proven to be an effective strategy for energizing our country’s innovators. The private sector and philanthropists use them increasingly. According to a study by McKinsey  in fact, more than 60 prizes valued at $100,000 or more were introduced by such organizations between 2000-2007. Total prize money associated with these competitions approaches $250 million.

Perhaps the best known among these are the competitions sponsored by the X Prize Foundation, a nonprofit organization that works with philanthropists and the private sector to foster innovation by offering cash prizes to those who solve key technological challenges. In September for example, it awarded $10 million to 3 teams who won the Progressive Insurance Automotive X Prize by creating a production-ready car that gets 100 miles per gallon (or an energy equivalent).

The X Prize Foundation has also established cash prizes for groups that achieve specified cost and speed targets in the area of gene sequencing, and to the first private group that lands and operates a rover on the moon.

And as Eric Hintz points out, America COMPETES is not the first example of government-sponsored innovation challenges. Way back in 1714, Hintz writes, British Parliament offered cash prizes to those who could develop a means to calculate longitude at sea. It took a while, but eventually John Harrison won nearly £14,315 for his marine chronometer. And in 1800, the French government created a Food Preservation Prize to help supply food to Napoleon’s army. A decade later, Nicolas Appert won 12,000 francs by developing a vacuum-packing process that is used for canned foods to this very day.

Until now however, the US Federal government had not implemented a prize-oriented open innovation strategy

But, as summarized in a post by Tom Kalil and Robynn Sturm on the Open Government Initiative blog, President Obama set out to change that when he floated the idea as part of a 2009 proposal titled, Strategy for American Innovation. Then, 6 months after a March, 2010 memo from the Office of Management and Budget confirmed the Administration’s commitment to the new approach, the White House and the General Services Administration “launched Challenge.gov, a one-stop shop where entrepreneurs, innovators, and citizen solvers can compete for prestige and prizes by providing novel solutions to tough national problems, large and small.”

In just 3 months since the launch, Challenge.gov helped 27 federal agencies release 57 challenges on topics ranging from childhood obesity and Type 1 Diabetes to advanced vehicle technologies and financing for small businesses.


Frankly, I can’t remember a more creative, dynamic initiative coming out of Washington. Innovation is in this country’s DNA. It has helped make our country great. In today’s increasingly competitive global economy, we need it more than ever. Moreover, prize competitions, whether sponsored by governments or other entities, have been proven to work. They allow sponsors to exponentially increase the number and diversity of people that are focused on the toughest of challenges.

And as Hintz said, the sponsor pays only for positive results.

Nice work, fellas!

Glenn Laffel, MD, PhD, is a successful entrepreneur in health information technology. He blogs over at Pizaazz.

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2 replies »

  1. On paper sounds easy enough although I disagree with the claim it has never been done, what would you classify NEA grants as? More importantly what is being done to prevent this from turning into an NEA liberal slush fund? Funding bad science for political and patronage doesn’t benefit the public.
    You cite several examples of very successful private prizes, why do we need this government program then? I would prefer you keep my taxes low and let me contribute to the prizes I think worthy instead of another corrupt and worthless federal program.