In the August 9, 2004 Issue:

Copyright State Science & Technology Institute 2004. Redistribution to all others interested in tech-based economic development is strongly encouraged — please cite the State Science & Technology Institute whenever portions are reproduced or redirected.

Subscription to the SSTI Weekly Digest is free. If you are reading a forwarded copy of this issue and would like to receive your own copy each week directly, please subscribe at http://www.ssti.org/Digest/digform.htm. Requests to unsubscribe also may be completed at http://www.ssti.org/Digest/digform.htm.

MEP Recompetition Scrapped
Citing the input of participants in a series of public hearings among other reasons, U.S. Department of Commerce Under Secretary of Technology Phil Bond announced in a conference call today that a systemwide recompetition for the Manufacturing Extension Partnership (MEP) would not be held “at this time.” Instead, MEP will use a re-application process that will be integrated into the current review process.

The Administration in January issued Manufacturing in America: A Comprehensive Strategy to Address the Challenges to U.S. Manufacturers that called for a "recompetition for all MEP centers, with a focus on effectiveness and cost-efficiency" (see our coverage of the report at http://www.ssti.org/Digest/2004/012304.htm).

At a series of public hearings held during July and August that focused on forming the next generation MEP and the plans for recompetition, opposition to the recompetition was strong. Opponents were particularly critical of holding a recompetition when the amount of funding available is unknown because of Congress’ inaction on the FY05 budget and argued that the process would force MEP centers to take time away from working with manufacturers to prepare applications.

Under Secretary Bond indicated on the call that the Administration had seen the recompetition as a means of reform and that several steps had been taken to meet the goals of the Administration’s manufacturing report. He cited a “thorough review by the National Academy of Public Administration” and new efforts to link MEP to other government programs among other reform steps.

“I want to underscore that, as a partnership program, the Administration values the input of its MEP partners and many thoughtful Members of Congress,” Under Secretary Bond said. He pledged that the Administration “will be working very closely with the states” as it moves forward.

A copy of Under Secretary Bond’s comments can be found at: http://www.technology.gov/speeches/PJB_040809.htm

return to the top of the page

VC Continues Upward Trend in Second Quarter with $5.6B Invested
The steady upward trend in venture capital (VC) investments continued in the second quarter of 2004, with $5.6 billion going to 761 companies, according to the latest PricewaterhouseCoopers/Thomson Venture Economics/National Venture Capital Association MoneyTree™ Survey. The Q2 2004 figure compares to $5 billion invested in the year's first quarter and $5.4 billion in the fourth quarter of 2003..

The Life Sciences sector outpaced other industries for the eighth consecutive quarter, among MoneyTree™ Survey highlights. Investments in the sector totaled $1.41 billion, or 25 percent of all venture capital. Biotechnology and Medical Devices, the sector's two components, accounted for $922.8 million and $485.3 million, respectively. A total of 85 biotech and 70 medical device companies were funded during the quarter.

Software, with 212 companies securing $1.2 billion in Q2 2004, remained the single-largest industry category for the second consecutive quarter. The Telecommunications Industry showed a decline from the prior quarter, with $518 million going to 59 companies.

Detailed information for the second quarter of 2004, as well as some historical data dating back to 1995, is available at www.pwcmoneytree.com. For comparison, 16 statistical tables available for each of the first two quarters of 2004 break down VC data by just about any measure: congressional district, major metropolitan area, state, region, nation of funding source and others. The tables may be more readily accessed by visiting: http://www.ventureeconomics.com/vec/statshome.htm

return to the top of the page

President Signs Defense Bill, Increasing R&D Budget by $4.3B
With the President's signature on the fiscal year 2005 Defense Appropriations Bill last week, the Pentagon received nearly $70 billion for research and development spending, a $4.3 billion increase over that of last year.

Much of the increase is absorbed by congressional earmarks, according to The Chronicle of Higher Education. Spending on basic defense research is up 7.8 percent ($109 million) from the FY 2004 level,  including increases for the Air Force ($31 million), the Army ($27 million), and the Navy ($12 million).

Funding for applied research also is up 12 percent, or $525 million, over the FY 2004 amount. The Army will receive a $118 million increase, the Navy $102 million, and the Air Force $61 million.

The Defense Appropriations Act, as passed by Congress in late July, calls for a total of $416.2 billion in FY 2005 spending, approximately $25 billion over FY 2004 spending. Included in the Act is $25 billion to cover war-related expenses in Iraq and Afghanistan. Despite the increases from the previous year, the budget is still $1.6 billion below the President’s request.

The Department of Defense cannot spend any of it until the second part of the bill, the National Defense Authorization Act for FY 2005, also passes. Officials from both the House and Senate armed services committees have not commented on when that legislation is expected to pass.

The FY 2005 Defense Appropriations Act is available in full from the Congress website at: http://congress.org/congressorg/bill.xc?billnum=H.R.4613&congress=108

return to the top of the page

DOE to Improve S&T Education through STARS Initiative
Capturing students’ interest in science and mathematics during the middle school years is crucial to America’s future workforce and the nation’s security, according to U.S. Secretary of Energy Spencer Abraham.

To help foster the next generation of American scientists and engineers, the Department of Energy (DOE) announced the Scientists Teaching and Reaching Students (STARS) initiative involving both students and teachers in grades K-12. Abraham outlined the STARS initiative, launched by DOE and its national laboratories, earlier this month at the Stanford Linear Accelerator Center in Paolo Alto, Calif.

Citing disappointing results from the 1999 Third International Mathematics and Science Study, which reported that 12th-graders in the U.S. performed among the lowest of 21 nations in math and science, Abraham emphasized the importance of addressing the problem of math and science literacy in the nation. The report indicated that U.S. students in the fourth grade ranked at or near the top in science and math globally; however, by 12th grade they fell behind nearly every industrialized rival.

The STARS initiative will work to fill the deficiency occurring during the middle school years by incorporating several programs intended to pique students’ interest in math and science careers. The initiative consists of seven steps:

These seven actions will lay the groundwork for success on an immediate level, according to Abraham. To ensure long-term success and meet future goals, however, additional steps need to be taken. Abraham announced the creation of a special task force to consider such steps.

The Secretary of Energy Task Advisory Board will solicit input from scientists, mathematicians, education specialists, business leaders, and teachers and report their findings and recommendations to Abraham by the end of the year. According to DOE’s press office, the task force will be chaired by a yet-to-be-named leader in the science, technology and business realm.

Press announcements and other backgrounders concerning the STARS initiative are available through the DOE Office of Science: http://www.er.doe.gov

return to the top of the page

Chinese Government Sets New Guidelines to Grow High-tech Industries
China is focusing on the newest and most promising areas of technology to expand economic growth through the development of high-tech industries, suggests a new report released by the nation's government. The report, 2004 Guidelines for Priority on Key Technology Areas, indicates China will channel investments to 134 key sectors and promote exports, according to an article in The Scientist.

Key areas include biotechnology and new medicines, new materials, information technology, environmental protection, aeronautics, astronautics, and agriculture. The report was created with input from 200 experts in domestic and international high-tech trends, the National Development and Reform Commission (NDRC), and the Ministry of Commerce, the article states.

NDRC reported that high-tech output climbed from $132 billion (US) in 1999 to $326 billion (US) last year, having an annual average growth rate of 25.5 percent. The Scientist states China’s High-tech Research and Development (863) Programme, established in 1986, has enabled some of these key areas to begin approaching international standards. The Programme, similar to the new guidelines, focuses on limiting objectives and instead concentrating on key areas.

China’s Tenth Five-Year Plan (2001-2005), according to the article, included $1.8 billion (US) for the 863 Programme. NDRC has yet to release figures for the new guidelines, however.

The 2004 Guidelines for Priority on Key Technology Areas are available from NDRC’s Chinese-language website at: http://www.ndrc.gov.cn. More information on China’s High-tech Research and Development (863) Programme is available at: http://www.materials.gov.cn/newMaterials/static/e_projects/863_prg/

return to the top of the page

Useful Stats: 2002 State Rankings of Academic R&D Expenditures
Academic research and development expenditures grew 11 percent in fiscal year 2002, according to new data released by the National Science Foundation (NSF). An NSF report, Academic Research and Development Expenditures: Fiscal Year 2002, finds 625 institutions of higher education in the U.S. collectively spent $36.332 billion in FY 2002. The figure for FY 2001 was $32.723 billion.

Federal sources of R&D funds accounted for a significant majority of the growth, climbing to $21.834 billion in FY 2002 ­- 13.8 percent higher than the $19.191 billion reported for the previous year. State and local sources of R&D expenditures at academic institutions went up 8 percent, with a $2.501 billion share of the nation's total. Funding from industry sources, accounting for $2.188 billion, experienced a 2 percent decrease over the previous year.

Institutional funds rose nearly 8.5 percent to $7.109 billion in FY 2002. Other sources such as foundations or individuals provided $2.701 billion in FY 2002, a growth rate of 11.1 percent.

With 72 detailed statistical tables, Academic Research and Development Expenditures presents the findings by source of funds, field and selected subfields of science or engineering, by academic institution, and by geographic distribution. SSTI has prepared a table standardizing academic R&D expenditures on a per capita basis by state.

The SSTI table shows the national average academic R&D expenditures per capita in FY 2002 was $126.17. The figure was $114.69 for FY 2001. The District of Columbia reported the highest academic R&D expenditures per capita for FY 2002 at $442.06. Maryland, Massachusetts, Alaska, New Hampshire, North Dakota, Iowa, New Mexico, Connecticut and Pennsylvania round out the top 10 on a per capita basis.

SSTI's table is available at: http://www.ssti.org/Digest/Tables/080904t.htm

Academic Research and Development Expenditures: Fiscal Year 2002 is available at: http://www.nsf.gov/sbe/srs/nsf04330/htmstart.htm

return to the top of the page

Tech-based ED Roundup

Arkansas Biotech Research Threatened With 20% Cut
In order to meet the higher priority needs of the state, the Arkansas Tobacco Settlement Commission should reduce its medical research funding by 20 percent, according to an independent report from the RAND Corp. Although the report praised the Arkansas Biosciences Institute for its success in attracting nearly $3 for every dollar of tobacco settlement money spent, it recommends that the commission reallocate 20 percent of its funding to programs aimed at reducing obesity, physical inactivity and cancer.

The Arkansas Biosciences Institute currently receives 22.8 percent of the state’s annual share of tobacco-settlement funds or roughly $11 million to $12 million per year, according to an article in the Arkansas Democrat-Gazette. However, the 24 percent of the institute’s share received by Arkansas State University should remain the same, the report states. Commissioner John Ahlen, director of the Arkansas Science and Technology Authority, criticized the report for recommending reduced funding to a successful program, the Democrat-Gazette observes. The Commission will withhold sending their recommendations to the governor until they have further reviewed the report.

Kentucky Targets Ag Biotech, Creates Consortium
To encourage the growth of biotechnology jobs, and attract life sciences companies to the state, Gov. Ernie Fletcher recently announced the creation of the Life Sciences/Biosciences Consortium. During a press conference last month, Gov. Fletcher said that Kentucky is in unique position for moving into advanced agriculture. However, the state must first retool a business recruitment system that was historically geared toward manufacturers, he added. The consortium is comprised of government, industry and education representatives who will work to boost the development of the biotech industry through technology transfer and commercialization.

Massachusetts Creates University Tech Clearinghouse
As part of Gov. Mitt Romney’s $100 million economic stimulus package approved last year, the Massachusetts Technology Transfer Center is being created to focus on using research to spur new jobs. The governor's Science and Technology Initiative measure builds on the success of tech transfer centers and will streamline and accelerate technology transfer between research facilities and industry. According to an article in the Lowell Sun, experts in technology transfer from the University of Massachusetts (UMASS), state business development agencies and the private sector will join in the collaboration. The center will be based at UMASS and have regional offices in the campuses at Lowell, Amherst, Dartmouth, Boston, and Worcester.

New Jersey Ups Stem Cell Research Commitment
Facing increased competition from other states to become leaders in stem cell research, Gov. James McGreevey has agreed to provide an additional $3 million in state funding to the New Jersey Stem Cell Institute atop the initial $6.5 million previously allotted by the state, the Home News Tribune reports. Rutgers and the University of Medicine and Dentistry of New Jersey also have agreed to contribute $1 million each to the institute.

Ohio Workers' Comp to Invest $30.5 Million in VC
The Ohio Bureau of Workers’ Compensation (BWC) will invest $30.5 million in seven venture capital firms, which the state hopes will successfully identify new and existing companies in Ohio that have business plans that closely parallel the Third Frontier Project. According to the Ohio Department of Development, the BWC put out a request for proposals in December seeking venture capitalists to fund Ohio start-up companies that are involved in technology-based industries such as biomedical and fuel cell research. Three of the seven venture capital firms chosen are located in Ohio.

Rhode Island 2005 Budget Mixed For TBED Initiatives
Although the state legislature agreed to support most of Gov. Don Carcieri’s fiscal year 2005 jobs-focused budget requests, the Rhode Island Economic Development Corporation (RIEDC) is disappointed it did not back the entire package, based on an article in The Providence Journal.

Tension between the Gov. Carcieri and the General Assembly stems from the governor's decision to veto the legislature’s last three major bills, although the governor and RIEDC claimed a victory when the legislature agreed to put two major initiatives on November’s ballot. Voters will be asked for approval to borrow $50 million to build a technology research center at the University of Rhode Island and $48 million for infrastructure changes of the Quonset Davisville Port and Commerce Park.

The Assembly also approved $1.5 million to help the state’s institutions of higher education with collaborative biotech and biomedical research projects, despite cutting $1 million for the Samuel Slater Technology Fund, which makes loans and provides grants to start-up technology companies. Also rejected was RIEDC’s request to borrow $25 million to set up a small business loan and investment program.

return to the top of the page

People

Peter Abramo has been named executive director of Cameron University’s Center of Emerging Technologies and Entrepreneurial Studies, effective Aug. 30.

Maryland Gov. Robert Ehrlich has appointed Robert Brennan to succeed Hans Mayer as executive director of the Maryland Economic Development Corporation. Mayer retired after holding the position for 17 years.

James Greenwood will take over as president of the Biotechnology Industry Organization from outgoing president, Carl Feldbaum. Congressman Greenwood has represented the Eighth Congressional District since 1993.

Florence Mendelson has resigned as president and CEO of Pittsburgh-based Innovation Works. She will remain in her position through the end of the year, helping to identify her successor and implement plans for fiscal year 2005.

The Purdue Research Foundation has appointed Robert J. Wichlinski as executive director of the new Purdue Technology Center of Northwest Indiana and Kathy DeGuilio-Fox as the center’s business development manager.

return to the top of the page

State Science & Technology Institute
5015 Pine Creek Drive
Westerville, OH  43081
Phone: (614) 901-1690
Fax: (614) 901-1696

© 2004 State Science and Technology Institute. All rights reserved.