In the March 21, 2005 Issue:

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Congressional Actions Challenge Economic Development Revamp
The fate of the Advanced Technology Program and the Administration's entire reorganization of federal economic development efforts also took hits, as parts of a series of Congressional votes on the budget. However, these votes are only the first step in a along budget process.

Senate Saves CDBG with Coleman Amendment
Last Thursday, 42 Democratic Senators joined one Independent and 23 Republicans in passing a Republican measure that blocks the key element of the White House plan to consolidate most economic development programs within the Department of Commerce's Economic Development Administration (EDA).

The amendment to the budget authorization bill sponsored by Senator Norm Coleman (R-MN) prevented the transfer of the Community Development Block Grant Program (CDBG) from the Department of Housing and Urban Development (HUD) to the Commerce Department and fully funds CBDG at fiscal year 2005 funding authorization levels. The House Budget Authorization also kept CDBG within HUD.

While the Administration's FY 2006 budget request proposed consolidating or eliminating at least 28 programs totaling more than $6.7 billion in FY 2005 (see table from Feb. 14 Digest), transferring CDBG to EDA was seen by many analysts as critical for the Administration to proceed with creation of its $3.7 billion "Strengthen America's Communities" fund within EDA. Without the more than $4 billion of CDBG appropriations, the proposed EDA fund would require an injection of new funds, an unlikely prospect with the size of the federal deficit.

House Hearing on EDA Highlights Challenges to Change
The Senate vote on the Coleman Amendment saving CDBG took place at the same time the House Committee on Transportation and Infrastructure held a hearing on the Administration's proposed changes to the Economic Development Administration (EDA) structure. Besides the lack of funds, Strengthening America's Communities is running into other hurdles as well, it seems, with its proposed elimination of EDA's existing grant programs, funded at $253 million in fiscal year 2005.

Congress reauthorized EDA less than six months ago, leaving some of the Administration's Republican allies in the House questioning the magnitude and sweeping nature of the proposed changes.

"For this new program to succeed, it is going to have to be built on the basis of a successful model," said U.S. Rep. Bill Shuster (R-PA), chairman of the Subcommittee. Shuster recommended that EDA act as that model, as it has demonstrated success in the past and received a "moderately effective" ranking from the Office of Management and Budget (OMB).

The Administration's initiative would consolidate 18 programs within multiple agencies into one new grant program to be administered by the Department of Commerce (DOC). The Strengthening America's Communities Grant Program would allocate resources to state and local governments to invest in distressed communities and regions, while the Economic Development Challenge Fund, a bonus grant program, would provide grants to low-income communities facing economic challenges that have already taken steps to improve current conditions. The 18 programs slated for consolidation received approximately $5 billion in FY 2005, but the Administration has proposed cutting this to $3.71 billion for FY 2006, the first year of the program, according to the Committee on Transportation and Infrastructure.

Assistant Secretary of Commerce for Economic Development David Sampson, testifying in support of the initiative, said the programs needed to be merged because there is a high degree of duplication and overlap in addition to weak accountability measures. These 18 programs cannot demonstrate after 30 or 40 years that they have made a meaningful contribution to economic development goals, Sampson said.

Tensions arose during the hearing when Subcommittee Ranking Member Eleanor Holmes Norton (D-DC) accused Secretary Sampson of changing his mind from what he said six months ago during testimony for reauthorization of EDA. According to Norton, when Sampson previously testified to the subcommittee, he was supportive of the programs' performance and made no mention of weak accountability measures. In response, Sampson said he was focused purely on EDA's reauthorization at the time and not the 18 programs they were discussing now. He referred to the assessment of these programs as an OMB initiative that was outside of his portfolio.

According to Norton, $18 billion would be lost in private investment under this consolidation. Sampson responded by stating that, in leveraging the experience of DOC and their history of working with these funds, private investment would grow, producing greater results for most impoverished communities.

Four other witnesses representing local governments and economic development programs testified during the hearing on the benefits of the programs slated for consolidation. They expressed concern that these benefits would be lost under the new initiative, leading to increased distress on their communities.

More information, including audio of the hearing, is available at: http://www.house.gov/transportation/pbed/

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ATP Strikes Out in House, Gets On Base with Senate
With Opening Day less than two weeks away, a baseball analogy is only fitting to suggest NIST's Advanced Technology Program (ATP) is in for a long season. Since 1990, ATP has provided early-stage funding for 768 projects to accelerate the development of innovative technologies that promise significant commercial payoffs and widespread benefits. While the program is still engaged with its portfolio of two-year awards from 2004, Congress did not appropriate any funding for a 2005 solicitation cycle for new projects. The Administration's fiscal year 2006 budget request recommended terminating the program altogether.

Last week began with the news that a key House Science subcommittee excluded the program in its approved version of H.R. 250, a NIST authorization bill entitled "the Manufacturing Technology Competitiveness Act of 2005."  The National Journal's Tech Daily reported March 15 that the bill will be considered by the full House Science Committee next month.

Meanwhile, on Thursday, the full Senate passed an amendment to the Senate's version of the budget authorization bill on a 53-46 vote "expressing the sense of the Senate urging the Senate Committee on Appropriations to make efforts to fund the Advanced Technology Program, which supports industry-led research and development of cutting-edge technologies with broad commercial potential and societal benefits." Senate Amendment 238 to S. Concurrent Resolution 18 was introduced by Senator Carl Levin (D-MI) and co-sponsored by senators Jeff Bingaman (D-NM), Mike DeWine (R-OH), John Kerry (D-MA), Leiberman (D-CT) and Debbie Stabenow (D-MI).

The fate of H.R. 250 remains to be seen, as a similar measure passed the full House last year but did not survive the Senate. More critical, perhaps, is what weight the Levin Amendment to the Budget Resolution will carry through the budget process as significant differences in the House and Senate versions of the FY06 budget authorization levels remain to be reconciled.

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Massachusetts Launches Tech Commercialization Awards
Sometimes a little money is all that may be required to discover that an innovation in the lab is worth millions in the marketplace. At least that's the goal of a small grant program launched this afternoon by the Massachusetts Technology Transfer Center (MTTC). The MTTC Tech Commercialization Awards will provide $5,000 mini-grants for technology assessments and investigations by academic and industrial researchers within the Commonwealth.

All researchers and technology licensing offices at Massachusetts research institutions are eligible for the awards, which strive to enable researchers to move technology closer to commercial markets. Five awards of up to $5,000 each will be granted to determine the potential commercial application of innovative technology, including identifying target markets and business development contacts. An additional five grants of up to $25,000 will be made for technology development projects, including prototype building, proof-of-concept demonstrations and project development.

Created in 2004 and housed in the Commercial Ventures and Intellectual Property Office at the University of Massachusetts Office of the President, MTTC works with more than 30 technology licensing offices at universities and nonprofit research organizations across the state. The awards launch is the first in a series of MTTC activities intended to spark new businesses and strengthen the technology lead of existing companies in the Commonwealth by bringing together researchers, company executives and financiers.

MTTC received $2.4 million as seed funding from the state as part of the 2003 Massachusetts Economic Stimulus Bill (see Jan. 30, 2004 Digest).

More information is available at: http://www.mattcenter.org/

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Wisconsin University System Joins Consortium to Compete for Defense R&D Funds
As trends in federal funding priorities shift from domestic R&D to defense-related R&D, universities are scrambling to get their piece of the pie. The president's fiscal year 2006 budget request for the Department of Homeland Security (DHS) includes increased funding of 6.6 percent over the fiscal year 2005 appropriation (see the Feb. 14 issue of the Digest). In comparison, increased funding requested for research-related activities within the National Science Foundation and the National Institutes of Health are not proposed even to keep pace with inflation.

Maneuvering around a decades-old policy banning classified and sensitive military projects, the University of Wisconsin (UW) System, The Medical College of Wisconsin, UW-Madison, UW-Milwaukee, and the Marshfield Clinic announced earlier this month the formation of the Wisconsin Security Research Consortium. The independent nonprofit entity will allow the institutions to bid for funding available for military and high-security projects from federal agencies such as DHS.

An article in the Milwaukee Journal Sentinel points out that UW has a policy against bidding for federal military and high-security projects that dates back to the 1970s following the bombing of a Army Research Center by student protestors. However, to get around the policy, grants would be channeled through the consortium, which will remain formally independent from the campus.

The Wisconsin Technology Council (WTC), a private nonprofit group created by the legislature to act as a science and technology advisor to lawmakers, would serve as the administrative headquarters for the consortium, according to the Associated Press. The goal is to facilitate matches between the federal government and research resources in Wisconsin, especially in classified and sensitive areas that may require off-campus work, said WTC president Tom Still.

The consortium initially plans to catalog all the research strengths of its members, according to the Medical College. It is currently soliciting federal funding for the project.

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North Carolina Unveils Plans for Defense Related Business Incubator
The rapid increase in federal spending for defense and homeland security has led a number of states to establish initiatives targeting potential economic development from these activities. North Carolina becomes the latest of those states, with its proposed Defense Technology Innovation Center.

The North Carolina Technology Association (NCTA), in collaboration with MCNC, has presented a formal plan to develop the incubator/accelerator in Cumberland County. The plan aims to convert North Carolina's technology and R&D assets into products and companies, emphasizing the state's military presence to enhance economic development in the region, said NCTA.

Planning for the incubator began in 2004 when the idea was validated by the General Assembly during its legislative session. The plan centers on a business incubation model and is designed to bridge the military and business communities, providing business start-up services and flexible facilities to accelerate the formation of growth of early-stage technology ventures. Start-up costs would be approximately $5 million over three years.

The nonprofit NCTA serves as the primary voice of the North Carolina's information technologies industry. More information is available at http://www.nceita.org/index.asp.

MCNC, developed by the state government, is a nonprofit organization designed to drive innovation and create jobs through tech-based economic development. More information is available at: http://www.mcnc.org/

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Broadband 'Master Plan' Unveiled for Rural New Hampshire
Broadband access is considered by most to be a key ingredient for encouraging innovation and building a local tech-based economy. Access for many rural areas, however, remains geographically or financially out of reach. Earlier this month, the New Hampshire Rural Development Council (NHRDC) unveiled a plan to change that for the businesses, government and individuals in the northern portion of the Granite State.

Produced by a group of more than 20 regional economic and community development practitioners, the Technology and Telecommunications Master Plan serves as a broad framework that is expected to provide direction to the region. The document is not intended as an implementation plan, but a tool to provide guidance as funding opportunities and projects become available, according to NHRDC.

The plan is divided into two sections, with part one discussing goals and objectives. Part two serves as a technology primer, detailing infrastructure, access, governance, policy and legal issues. General recommendations include:

Other plans to implement broadband throughout the rural Northeast are underway as businesses and government agencies have realized a need for affordable broadband in order to be economically competitive. According to an Associated Press article, an $8.7 million fiber-optic network is being developed across six rural counties in Vermont, while officials in Maine are working to establish an economic development commission to include all three states and New York.

Northern New Hampshire, comprised of Coos County and the upper half of Carroll and Grafton Counties, has a combined population of 163,191. Small businesses make up about 80 percent of the region, compared to 64 percent statewide. The New Hampshire Telecommunications Master Plan is available at: http://www.northernnhtechnology.org

We're number... five?
The state-by-state, region-by-region approach to ensuring more tech-related businesses and researchers have broadband access comes at a cost, however. The U.S. is falling behind its global competitors in terms of information and communications technology (ICT) readiness, according to the fourth annual Global Information Technology Report, released earlier this month by the World Economic Forum. Singapore ranks as the top economy in exploiting global ICT, while the U.S. dropped to fifth. America's precipitous fall comes after holding first place in the assessment for each of the previous three years.

The report uses the Networked Readiness Index to measure the environment, readiness and usage of ICT across 104 economies worldwide. In explaining the slip in rankings by the U.S., the Forum notes that the drop is due less to actual erosion in performance by the U.S. but rather more to continuing improvements by its competitors.

Australia takes on issue nationally
Australia's Communications Minister Helen Coonan announced last month the federal government's plan to spend more than $300 million to deploy high-speed Internet throughout the country.

"This funding is to encourage the effective delivery of important government services while creating new market opportunities and building the Australian economy," Minister Coonan said. The federal government's plan will work cooperatively with the states, which are developing their own action plans under the national framework.

Funding for programs to support rural broadband deployment in the U.S., on the other hand, could see cuts in excess of 30 percent based on the Administration's FY 2006 budget request (see the USDA discussion in the Feb. 14 issue of the Digest).

For more information on Australia's Broadband Strategy, please visit: http://www.dcita.gov.au/ie/publications/2004/march/australian_national_broadband_strategy

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Useful Stats
2002 Federal S&E Obligations with Universities by State
The National Science Foundation has released its report on Federal Science and Engineering (S&E) Support to Universities, Colleges and Nonprofit Institutions for Fiscal Year 2002, revealing the government distributed nearly $24.4 billion to the nation's research institutions during the year. The figure is 8.5 percent higher higher than the FY 2001 total of $22.5 billion.

Federal S&E obligations include six categories of spending: research and development; R&D plant; facilities for instruction in S&E; fellowships, traineeships and training grants; general support for S&E; and, other S&E activities. The distribution of spending for each category varies greatly by state.

Among the statistics included in the new NSF report are tables presenting the geographic distribution of funds by institution, state, activity and agency. More information is available at: http://www.nsf.gov/statistics/nsf05309/htmstart.htm

SSTI has prepared a table presenting total federal S&E obligations by state for the five-year period between 1998 and 2002. During that time, federal S&E obligations rose by 51.58 percent (in real dollars). While all states experienced an increase during the five years, federal S&E obligations in some states barely kept pace with inflation. NSF EPSCoR states captured nine of the top ten rankings for percent change in obligations over the five years.

SSTI's table is available at: http://www.ssti.org/Digest/Tables/032105t.htm

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