In the December 5, 2003 Issue:

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FY 2004 Funding Levels Set For Key TBED Programs
Two months into the fiscal year and several federal offices of importance to the state and local tech-based economic development community are finally learning how much money they will have available in fiscal year 2004 — once the consolidated appropriations bill is signed by the President in January.

Economic Development Administration (down $2 million from 2003)

National Institute of Standards and Technology (NIST)

Small Business Administration – SBA is barred from extracting operating funds from the following programs' appropriations:

Technology Administration: $6.411 million (down $2.4 million from FY03)

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House Passes $3.7B Nanotech Bill
Legislation that would authorize $3.7 billion over the next four years for the National Nanotechnology Initiative awaits the President's signature, having cleared Congress before the Thanksgiving Holiday recess. The 21st Century Nanotechnology Research and Development Act (S. 189) was passed by the U.S. House of Representatives on Nov. 20, following passage in the Senate two days earlier.

S. 189 provides for the creation of a National Nanotechnology Coordinating Office, research centers, education and training efforts, and research into the societal and ethical consequences of nanotech. It also supports efforts to spur technology transfer and includes a series of coordination offices, advisory committees and regular program reviews.

The bill's $3.7 billion authorization levels are spread over fiscal years 2005-08 to five federal agencies — the National Science Foundation ($1.73 billion), Department of Energy ($1.46 billion), National Institute of Standards and Technology ($307.2 million), NASA ($153.9 million) and the Environmental Protection Agency ($24.76 million). No appropriations were made in the bill.

The National Science and Technology Council would oversee the program's implementation, including management of the coordinating office and a National Nanotechnology Advisory Panel. Activities planned for the nanotech initiative range from interdisclipinary research grants and centers to education and training programs for researchers. The overarching goal is to develop an understanding of matter that enables control and manipulation at the nanoscale.

The 10-page S. 189 is available at http://thomas.loc.gov/.

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USC Named First Homeland Security Center for Excellence
The University of Southern California (USC) will serve as the first Homeland Security Center of Excellence, the U.S. Department of Homeland Security (DHS) announced last week. DHS anticipates providing USC with $12 million over the course of the next three years for studying risk analysis related to the economic consequences of terrorist threats and events.

The first HS-Center is designed to address both the targets and means of terrorism, with emphasis on protecting critical infrastructure systems such as electrical power, transportation and telecommunications. As part of the agreement, USC will offer its expertise in natural disasters, system safety and nuclear threats. Two centers within USC's School of Engineering, the Integrated Media Systems Center and the Information Sciences Institute, also will contribute research in advanced computer modeling and cybersecurity.

DHS and outside advisors reviewed more than 70 proposals to establish the first HS-Center. Other HS-Centers are planned for research and development areas such as agro-terrorism countermeasures and behavioral research on terrorism. DHS may fund as many as nine more HS-centers during the current fiscal year.

The HS-Centers program, which is operated by the DHS's Science and Technology division, was established for the purpose of creating university-based centers where critical homeland security issues can be addressed. DHS and USC are undergoing grant negotiations to formalize their partnership. More information is available at http://www.dhs.gov/.

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NSF Announces $30M Program in "Cyber Trust"
The risks of identity theft, e-mail viruses, denial-of-service attacks, system glitches and other online hazards can make the average person's reliance on computer systems more of a leap of faith than a bond of trust. To promote research into more dependable, accountable and secure computer and network systems, the National Science Foundation (NSF) has issued a solicitation for the Cyber Trust program, which expects to fund up to $30 million in awards.

The Cyber Trust program will support up to three research center-level efforts as well as single-investigator and team awards, subject to NSF's merit-review process and the availability of funds. NSF expects that Cyber Trust research centers will involve collaborations among academic, industry and other partners.

"Interconnected computer systems are part of the nation's critical infrastructure as well as part of people's homes, cars and offices," said computer security expert Eugene Spafford of Purdue University, who recently joined NSF as a senior advisor. "The goal for Cyber Trust research is to make these systems-and their successors-not only less vulnerable to attacks, but also less likely to corrupt data, expose private information or fail when subjected to unexpected inputs."

The Cyber Trust program is seeking innovative proposals in three broad areas: fundamental research, multidisciplinary research and education and workforce development. Fundamental research is needed to advance the state of the art in knowledge and technology about trustworthy computing. This covers such areas as security and privacy models and metrics, evaluation and certification methods, denial-of-service prevention, long-lived data archiving methods, privacy protection and network and application forensics.

Multidisciplinary research is needed to improve understanding of the social, legal, ethical and economic trade-offs that affect the design and operation of trusted information systems. Finally, the Cyber Trust program encourages proposals that encompass education and workforce development to ensure that those who produce, operate and use trusted systems can put the technological advances into practice.

Deadlines and additional information for proposals are available in the official solicitation, which can be found at: http://www.nsf.gov/pubsys/ods/getpub.cfm?nsf04524.

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Tobacco Settlement Board Commits Up to $20M for Life Sciences in Pa.
Pennsylvania's Tobacco Settlement Investment Board (TSIB) recently approved a commitment of up to $20 million to Birchmere Ventures III LP to invest in life sciences companies based in Pennsylvania. Birchmere Ventures III, a new fund jointly formed by Pittsburgh-based Birchmere Ventures and San Francisco-based Bay City Capital, will raise up to $150 million.

The commitment to Birchmere Ventures/Bay City Capital will leverage the Tobacco Settlement money three-to-one by raising $30 million from other sources to match an initial $10 million made available by the TSIB. The TSIB stipulated that the total $40 million must close by March 31, 2004.

Birchmere Ventures/Bay City Capital must raise an additional $30 million from other sources to leverage the total available $20 million in TSIB funds. The $30 million must be raised one year from the date of the first close. Following the $20 million TSIB contribution, Birchmere Ventures/Bay City Capital would then be expected to invest a minimum of 70 percent of $80 million, or $56 million, in Pennsylvania life sciences companies, raising another $70 million from other sources to reach the total of $150 million.

Birchmere Ventures III is the TSIB’s third and final $20 million venture fund investment. Quaker BioVentures Inc. was the first firm selected by the TSIB to manage $20 million. PA Early Stage Partners later received TSIB approval to invest another $20 million. All three funds will be invested in Pennsylvania-based life sciences companies.

The TSIB has exclusive control and authority to manage, invest and re-invest money in the Pennsylvania tobacco settlement fund. Pennsylvania will receive the $11 billion settlement over the next 25 years from the national tobacco settlement. The Board consists of state elected officials including Gov. Rendell and individuals appointed by the governor, House and Senate.

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CIT Initiative Addresses Capital "GAP" for Early-stage Tech Companies
Virginia's Center for Innovative Technology (CIT) announced on Monday a new investment initiative to help close the capital gap for the state's early-stage technology businesses. CIT, a state-chartered nonprofit corporation, will launch the Growth Acceleration Program (GAP) on Dec. 15, 2003, to address the funding void created by a recent shortfall of angel capital.

CIT's GAP will invest up to $100,000 in early-stage technology companies that successfully complete a seven-step investment process. All GAP investments will take the form of convertible notes with outstanding principal and interest converting to a CIT equity position in the firm at the time of a qualifying financing event. CIT may attach warrants to GAP investments as a function of loan term, interest rate and payment schedule.

Under the program guidelines, any Virginia-based company involved in communications, biotechnology, information technology, nanotechnology, materials or sensors would be eligible for GAP funding. Eligible companies must have a high-potential prospect for commercialization and follow-on funding and be able to match requested funding on a one-to-one basis.

The process of reviewing and evaluating potential GAP investment candidates will be conducted by CIT staff. CIT's Investment Advisory Board will review CIT evaluations and make the final investment decisions.

"A key challenge for entrepreneurs is finding the early-stage funding necessary to convert technologies into business opportunities," said Peter Jobse, CIT president. "CIT's GAP funding will provide critical pre-seed and seed-level capital necessary to move Virginia's most promising technologies from the proof-of-concept stage to the marketplace."

CIT will implement an investment screening process in mid-December, followed by a statewide kickoff in early 2004. More information on CIT's GAP fund is available at: http://www.cit.org/gap-04.asp

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Georgia Launches Aerospace Innovation Center
To expand on the state's Centers of Innovation strategy, Gov. Sonny Perdue announced in November the creation of the Middle Georgia Aerospace Innovation Center (MAIC). The center is comprised of numerous partners, including the Georgia Department of Industry, Trade & Tourism's Office of Science and Technology, the University System of Georgia, private institutions and companies, and the Warner Robins Air Logistics Center (ALC).

Researchers from Georgia Tech, Mercer University and Macon State College will work directly with the ALC and industry partners to develop new technologies to transform lifecycle support for aircraft. All technologies developed in MAIC will be evaluated and potentially implemented by its partner organizations. These technologies eventually will be commercialized and licensed by the state Board of Regents to corporate partners including Boeing and Lockheed-Martin.

As aircraft become more complex and expensive, the challenge of extending their life cycle grows. The combined talents of academic, military and commercial organizations in Middle Georgia will develop solutions for these challenges that will benefit all aircraft, according to Dr. Dan Schrage, professor at the Georgia Tech School of Aerospace Engineering and MAIC executive director.

Georgia's Centers of Innovation strategy was launched earlier this year to help build the state's science and technology infrastructure. The strategy focuses on the development of centers of excellence in aerospace, biosciences, digital media, logistics, medical technology and transaction processing. In August 2003, state leaders announced the first of these centers, the Savannah Maritime Logistics Innovation Center (SMLIC), a partnership between the Georgia Ports Authority and the University System of Georgia. SMLIC is designed to address maritime logistics and security issues.

A benchmark study and needs assessment for the MAIC will be conducted during the next 60 days to define the center's scope of work.

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Clemson Research Campus Will Make S.C. an Automotive Research Hub
With $90 million already secured in state and private support, a 400-acre automotive research campus to be developed by Clemson University promises to make South Carolina a hub of the nation's automotive and motorsports industry.

The Clemson University International Center for Automotive Research will house a new graduate engineering education center, distinctive research and testing facilities, and private industry research and development operations that will help support the region's growing automotive industry cluster. The first non-academic tenant on campus, BMW Manufacturing of South Carolina, plans to occupy an Information Technology Research Center to be built adjacent to Clemson's graduate school. The 84,000-square-foot center will support research focusing on improving automotive software systems and software/hardware compatibility for BMW products.

The $15 million facility will be owned by Clemson and leased by BMW. State funding to build the center is part of the state incentive package offered to BMW last year when the company announced an additional investment of $400 million and creation of 400 new jobs over the next several years. Last year, BMW donated $10 million to Clemson to help endow the graduating engineering center.

IBM also announced its plans to form a long-term partnership with Clemson, starting with a first-year commitment valued at $1.1 million. Officials said the commitment includes $750,000 worth of software and the assignment of an IBM executive at the research campus to support the work of Clemson faculty and students.

Clemson plans to recruit nine faculty and up to 50 graduate students, who are expected to generate at least $5 million a year in research support. The graduate programs will focus on systems integration, addressing a growing challenge in the automotive industry as car components become increasingly computerized and complex.

Public and private support for the Clemson project is as follows:

The automotive research campus consists of 250 acres of Clemson-owned land and an adjacent 150-acre property that will be privately developed. Eventually, the campus is expected to include unique research and testing facilities, such as an automotive electronics systems lab, crash-worthiness lab, fuels lab with an emphasis in hydrogen-based research, and a full-scale wind tunnel.

The 400 acres of property that will situate the campus reside along Interstate 85 in Greenville, S.C., halfway between Charlotte, N.C., and Atlanta, a corridor that is home to two-thirds of the nation's motorsports racing teams. Two hundred automotive-related businesses and 114 automotive industry suppliers also are located in South Carolina.

In addition, just this week, BMW has asked the state to pay to construct and equip a $17 million development and testing center in Greer. The second research facilty will facilitate joint research between BMW and its North American parts suppliers.

More information on related stories about Clemson's automotive research campus is available at:  http://www.clemson.edu/autoresearch

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Success of Federal Labs Depends on Variety of Factors, Study Shows
Federal laboratories' ability to contribute to local economic development efforts may depend most on the quality of technical and business assistance they can offer, suggests a new report issued by the U.S. Department of Commerce's Office of Technology Policy (OTP). The report, Partners on a Mission: Federal Laboratory Practices Contributing to Economic Development, documents nine programs that go beyond immediate laboratory missions to provide communities with greater access to lab technologies and facilities.

The report was developed with information from interviews with labs interested in highlighting their local economic development efforts. The nine cases included in the report were selected as representative of other U.S. laboratories and programs conducting similar activities. Numerous issues affecting the labs' ability to actively support economic development and related activities surfaced among the nine that were visited:

Other key findings also emerged from the report. Entrepreneurial leave programs, for example, are potentially valuable mechanisms for promoting commercial use of laboratory technologies and know-how. Additionally, by sponsoring or participating in entrepreneurial, seed and venture capital, and business networking events, some federal laboratories are contributing valuable technical expertise and credibility to these events.

In the future, federal labs may have difficulty in filling technical and scientific positions, the report cautions. Policymakers are urged to take actions that strengthen the business communities in which the labs are located. Building stronger, higher quality enterprises provides better suppliers for the labs, the report states. Sandia National Laboratory’s Mentor Protégé Program, which encourages small business partnering, is one example of a program that is helping to strengthen its suppliers, benefiting both communities and labs.

Working in more effective and flexible ways with business and industry, the study adds, helps ensure that federal laboratory-inspired technologies and knowledge will be transferred and commercialized. The report concludes that "fostering maturation and commercialization of federal lab technologies through business and technical assistance and entrepreneurial programs adds value to lab technologies, sometimes contributing back to the lab higher quality technologies than the original, and raising the scientific and engineering bar higher for all."

For purposes of the report, economic development practices were viewed broadly; covering a wide range of activities initiated by federal laboratories and intermediary organizations working directly with federal laboratories, and included a variety of activities that actively contributed to local economic growth. While “pure” technology transfer activities such as Cooperative Research and Development Agreements were recognized as directly contributing to economic development, they were not covered in the report since they have been covered in numerous other studies.

Partners on a Mission: Federal Laboratory Practices Contributing to Economic Development is available at http://www.technology.gov/.

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People

Steve Bryant has been named the project director for the Bloomington Life Sciences Partnership in Indiana.

Patrick Rea recently was selected as administrator for the Small Business Administration's six-state region involving Indiana, Illinois, Michigan, Minnesota, Ohio and Wisconsin.

The Idaho Economic Development Association has named Jan Rogers as new president.

The Grand Forks Region Economic Development Corp. has named Klaus Thiessen as its new president.

The Association of American Universities has selected Patrick White as the new director of federal relations.

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