In This Week's Issue
SSTI News and Analysis
COMPETES Act Reauthorized
Earlier this week, President Barack Obama signed the
reauthorization of the COMPETES Act, extending the federal
competitiveness initiative that provides funding for numerous
science, STEM education and commercialization programs. Though the
final bill represents a significantly scaled-back version of the
legislation passed in May by the House, the final version will
allow the programs introduced in the COMPETES Act to continue for
another three years. The reauthorization also includes a new
regional innovation program to award competitive grants for
activities relating to the formation and development of regional
innovation clusters.
The 2007 America Creating Opportunities to Meaningfully Promote
Excellence in Technology, Education and Science (COMPETES) Act
authorized $43 billion in new federal spending over three years to
support research and STEM education. In order to enhance U.S.
scientific competitiveness, the legislation put several federal
research agencies on a path towards doubling their budget
authorizations, including the National Science Foundation (NSF),
the Department of Energy's (DOE) Office of Science, and the
laboratory activities of the National Institute of Standards and
Technology (NIST). The bill put a particularly strong emphasis on
energy research as a key to U.S. competitiveness, creating the DOE
ARPA-E energy innovation program.
Earlier last year, the House passed an $84 billion
reauthorization bill (see the June 9, 2010
issue of the Digest) that would have bolstered the
initiative with strong support for its associated energy programs.
Last month, however, the Senate approved a much less ambitious
bill, pared down to a three-year, $43 billion extension, limiting
funding for ARPA-E and not including investment in
DOE's Energy Innovation Hubs. The final bill
also exorcised any mention of the clean energy innovation
consortium pilot program present in the earlier House bill. The
consortium would have supported public-private clean energy
research partnerships and clusters.
Despite these cuts, many science and TBED organizations
applauded the reauthorization, citing the continuing value of its
funding increases for research. Research
agencies would remain on track to double their budgets under the legislation, although this would occur over ten years, instead of the seven year path undertaken in the original COMPETES bill. ARPA-E would be funded at $300 million a year over the next three years.
The Department of Commerce would house a new Office of Innovation and Entrepreneurship charged with developing policies to accelerate innovation and advance the commercialization of U.S. research and development and coordinating Commerce innovation initiatives. These inivatives would include a new Regional Innovation program that would support regional innovation strategies,
including cluster-based initiatives and science or research parks, a pilot program to promote high-end computing simulation and modeling by small manufacturers and federal loan
guarantees for innovative manufacturing technologies. NIST's Hollings Manufacturing Extension Partnership (MEP) would administer a green manufacturing and construction initiative for high-performance building standards.
The bill also directs the administration to develop a national
competitiveness and innovation strategy,
Actual funding levels for the act's
provisions will depend on the decisions of appropriators over the
next few months. The current continuing resolution extends the
deadline for appropriations through March 4.
Read the text of the legislation at: http://thomas.loc.gov/cgi-bin/bdquery/z?d111:H.R.5116:.
The Information Technology and Innovation Foundation provides
additional details on the new aspects of COMPETES at: http://www.itif.org/publications/itif-statement-congressional-passage-america-competes-act.
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Virginia Gov Proposes $25M Research and Technology Fund, $50M
Boost for Higher Ed
A $25 million fund providing grants for tech commercialization,
matching funds for research, and funding to attract
"star" researchers to
Virginia's universities is a key component of
Gov. Bob McDonnell's $54 million Opportunity at
Work agenda presented to lawmakers as part of his amendments to the
2010-12 budget. The governor's budget also
includes $5 million for a refundable R&D tax credit and an
extra $50 million for higher education directed toward increasing
college access and economic development opportunities.
The $25 million Virginia Research and Technology Innovation Fund
would be governed by a board of technology industry experts,
legislators and administration representatives with funding
directed toward targeted sectors including information technology,
biotechnology, life sciences, alternative energy, advanced
electronics, polymers, composites and aerospace propulsion. Grants
or loans would be distributed among three funds:
- Commercialization Fund — providing grants to
grow new small and existing businesses to accelerate entrance of
new products and services to the market;
- Research and Matching Fund — providing
matching funds to incentivize collaboration between institutions of
higher education and companies engaged in research in high-growth,
emerging industries; and,
- Eminent Scholars Fund — providing funding
for brining the best and brightest researchers, scholars, and
professors in key technologies to Virginia universities.
Other components of the agenda include $5 million for a
refundable R&D tax credit for startups and early stage firms in
targeted industries; $5 million for the Virginia Small Business
Financing Authority to provide access to capital for small
businesses; and, $3 million to support noncredit courses in the
Virginia Community College System used to strengthen workforce
development efforts.
The governor also proposed reforming incentive programs for
certain energy generation businesses by rolling current programs
into a new Clean Energy Manufacturing Incentive Grant program,
which would focus existing resources to nuclear, wind, solar, and
biomass alternative energy projects.
Gov. McDonnell also is calling for a $50 million investment in
higher education to increase college access and capitalize on
economic development opportunities. Proposals are geared toward the
governor's goal of awarding 100,000 more degrees
over the next 15 years. The plan includes a $30 million increase
for student enrollment, graduation and retention rates and degrees
in STEM disciplines, $13 million toward making college more
affordable, $3 million to expand cost effective online course
offerings, and $1 million to enhance the use of technology in the
classroom. Institutions of higher education should identify
significant savings to help leverage the $50 million, Gov.
McDonnell said in his budget speech.
Although the state's revised revenue forecast
for the next two years includes an additional $283 million, the
governor is calling for $191 million in cuts to reform and
restructure state funding to focus on job creation. Within the
Office of Commerce and Trade, the Virginia Economic Development
Partnership would receive an additional $763,549 in FY12. This
includes $400,000 to improve economic development efforts through
regional collaboration and $379,095 to restore operating funds for
the Virginia Commercial Space Flight Authority. The proposed budget
reduces funding by $600,000 for the Virginia Biotechnology Wet
Laboratory Program in FY12, which was seeded with $3 million over
the biennium.
Gov. McDonnell's proposed changes to the
2010-12 budget are available at:
http://dpb.virginia.gov/budget/buddoc11/pdf/budgetdocument2011.pdf.
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Tech Talkin' Govs: Part I
The 11th Annual Tech Talkin' Govs series highlights new
and expanded TBED proposals from governors' State of the State,
Budget and Inaugural Addresses across the nation. The first edition
includes excerpts from speeches delivered in the following
states:
New York
Gov. Andrew Cuomo, State
of the State Address, Jan. 5, 2011
"We must change the way we engage in economic
development planning and execution. Those working at the local
level know their area economies best and we will empower them
through the creation of regional economic development councils that
can coordinate and integrate state agency responses with local
government and business activities to create jobs.
"These will not be advisory councils but
instead planning and implementation councils that are empowered to
allocate resources. ...
" ... While New
York's universities rank second nationally in
total research spending, they still lag behind other
states' universities in finding ways to
commercialize New York research. One of the most important tasks of
the regional economic development councils will be to assist those
institutions in transforming their research into meaningful
economic activity.
"The initiatives the regional economic
development councils undertake have to produce measurable results.
Competition will drive how scarce economic development resources
are committed. The regional economic development councils will use
performance standards to determine how funds are distributed within
their regions. At the same time, I will propose a fund where the
regional economic development councils compete for $200 million of
existing money to develop the best jobs development plan.
"This past year, New York allowed the
state's Empire Zone tax credit program to expire
and replaced it with a new, more targeted initiative called the
Excelsior tax credit program. ... I will propose
making several changes to strengthen the program.
"First, the Excelsior program offers a tax
credit of $2,500-$5,000 per job for five years. My reform will give
qualifying businesses a tax credit equal to 100 percent of the
income tax receipts the state will collect from the
companies' new employees for a period of ten
years. ... Excelsior now promises new R&D tax credits, but
makes them unavailable if the company is taking advantage of other
New York State R&D tax credit programs. This limitation will be
eliminated and allow companies to expand their R&D tax credits.
...
"... I will introduce a permanent Power for
Jobs program, which ensures predictability and stability of supply
with long-term contracts and incorporates efficiency incentives to
reward such improvements. This will provide a valuable tool to help
keep manufacturers in New York State, thereby growing the job
base."
North Dakota
Gov. Jack Dalrymple,
State of the State Address, Jan. 4, 2011
"In addition to approaching job creation
through five targeted industries, we will now take a holistic
approach, using five specific strategies that create jobs across
all industries and sectors. ...
" ... The second strategy is
investment in research and development, in both the private sector
and the university system. ... That is why we have
proposed a new model for public-private partnership called the
Research Center of Excellence.
"Our third strategy is to foster a culture of
entrepreneurship where all of our four-year universities operate
business incubators that support startup enterprises of all kinds.
... This concept will be enhanced in the new
Entrepreneurship Center of Excellence. ...
" ...The fourth strategy is to
build, educate, and retain our workforce. ... This
approach can be formalized into the new Workforce Center of
Excellence. ...
" ...We must begin a new
approach to funding higher education where we ask the board of
higher education to develop a funding methodology that is based on
the outcomes that education leaders and citizens would like to see
from their college campuses. ...
" ... Energy is such a large
part of our economic future that we have recommended a new Energy
Division in the Department of Commerce to support all energy
development, not just individual projects."
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Funding for Economic Clusters Among Utah
Governor's Proposals
Building on the state's seven economic
clusters identified to grow the economy through targeted
investments in emerging industries, Gov. Gary Herbert is asking
lawmakers to provide $500,000 in FY12 to plan and identify for
additional projects. The Utah Cluster Acceleration Partnership
(UCAP) is a collaboration of leaders from industry, state
government, higher education, and workforce charged with developing
strategies to develop industry-driven education and training
services, leverage resources from higher education to accelerate
industry clusters, and identify best practices.
So far, three partnerships are underway in the areas of
aerospace and defense, energy, and digital media. Additional
UCAP's may be established in the areas of health
care, life sciences and advanced manufacturing. The governor
recommends one-time funding of $500,000 for
"development of new technologies within
Utah's economic clusters" from the
Education Fund within the higher education operating budget.
The state-funded initiative to grow Utah's
knowledge-based economy, USTAR, would receive $25.7 million in
FY12. USTAR's authorized spending for FY11 is
$35.4 million, which included a portion of federal stimulus funds
dedicated to the initiative in 2009 (see the March 25,
2009 issue of the Digest).
The 2012 budget proposed by Gov. Herbert projects revenue growth
of 5 percent and totals $4.9 billion in general fund and education
fund spending, a slight increase over FY11 authorized spending of
$4.8 billion. The budget recommendation book is available at:
http://governor.utah.gov./budget/Budget/Agency%20Recommendations/FY2012/FY2012_RecBk.pdf.
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Venture-Backed Exits Rebound in 2010
After two years of stagnancy, venture-backed company exits
improved dramatically in 2010, according to the National Venture
Capital Association (NVCA). The increase was driven by a
record-breaking market for acquisitions and the best quarter for
initial public offerings (IPOs) in ten years. NVCA attributes the
uptick in IPOs to a surge in Chinese venture-backed companies going
public on U.S. exchanges. A recent NVCA/Dow Jones VentureSource
survey finds that most venture capitalists (VCs) and venture-backed
CEOs expect exits to continue their upward swing and that
venture investments will grow in the coming year.
Last year, there were 72 venture-backed IPOs valued at $7.02
billion, 32 of which went public during the fourth quarter. Only 12
venture-backed companies went public in 2009, and only six did so in
2008. While 2010 was on track to surpass the previous
year's numbers in the third quarter, an influx
of 17 China-based companies spurred the fourth quarter market to
the highest number of venture-backed IPOs since the fourth quarter
of 2000. The substantial jump in IPOs put the U.S. on track to
return to its pre-crisis levels (86 venture-backed companies valued
at $10.33 billion went public in 2007), if U.S. firms can
approximate the pace of Chinese public offerings.
The upswing in mergers and acquisitions (M&As) last year was
even more remarkable, as the market reached an all-time high for
M&A activity. After a disastrous 2009, 420 venture-backed
M&A were reported last year, the highest number since records
began in 1984. The growth was led by the information technology
sector with 72 deals with a disclosed value of $2.8 billion.
Read the NVCA report:
http://www.nvca.org/index.php?option=com_docman&task=doc_download&gid=683&Itemid=93.
NVCA and Dow Jones VentureSource's annual
survey of venture capitalists and venture-backed CEOs find more
encouraging news for the venture capital market. VCs have regained
some of the confidence missing over the past two years, with 51
percent predicting an increase in venture investment in 2011.
Twenty-four percent predict that investment levels will fall and
24 percent predict it to stay the same. The highest levels
of investment are expected in information technology, particularly
the Consumer Internet and Digital Media, Cloud Computing, and
Mobile/Telecom sectors. Two-thirds of VCs expect more IPOs next
year, and 81 percent expect more M&As.
Venture-backed CEOs were just as optimistic, with 82 percent
planning to increase their company's headcount
next year. Sixty-four percent of CEOs and sixty-three percent of
VCs expect the overall U.S. economy to improve.
Read the NVCA survey:
http://www.nvca.org/index.php?option=com_docman&task=doc_download&gid=682.
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Jobs Tax Credit Generates $72 Million Fund for CT
Firms
Connecticut has certified its first fund manager under the
state's revised Insurance Reinvestment Tax
Credit program, which has now expanded beyond its focus on
insurance-related companies to support early stage and high-tech
firms. Advantage Capital Partners has raised $72 million to invest
under the revamped program. Fund managers may invest in any
Connecticut-based business. One quarter of the investments must
support green technology firms, and three percent must go toward
pre-seed stage projects. Read Governor Joni
Rell's press release ...
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TBED Books
"Software" of Innovation Is
Crucial for Maintaining the U.S. Competitive Advantage Over Asia, Says Author
In "Advantage: How American Innovation can
Overcome the Asian Challenge," Adam Segal contends the
U.S. will continue to maintain a comparative advantage in
innovation over Asia due to the
"software" of innovation. The
"software" of innovation revolves
around the political social and institutional factors that move
ideas from the lab to the market place.
America's cultural values of individualism,
social mobility, entrepreneurship, limited barriers to market
access and low risk-aversion provide it a significant advantage
over our Asian competitors. It is necessary to leverage and
continue to cultivate the U.S.
"software" of innovation
because Asia's science and technology sectors
(S&T), specifically China and India, are rapidly catching up to
and should overtake the U.S. in several areas including the number
of Ph.D.s awarded, investments in product innovation, number of
patents obtained and facilities — Segal terms
these quantifiable factors as the
"hardware" of innovation. Segal, a
senior fellow at the Council on Foreign Relations, argues that this
decline in the U.S. domination of the
"hardware" of innovation is not a
negative, but as a long-term positive for national prosperity.
In the early chapters, Segal performs a detailed comparative
analysis of Asia's S&T sectors. Even though
these countries differ greatly in political, social and economic
institutions — the Asian Tigers (i.e., Hong
Kong, Singapore, South Korea and Taiwan), China and India all have
committed to making two drastic changes in their S&T sectors.
First, they intend a switch from "made
in" countries to "innovated
in" countries. Segal contends Asia is no
longer content being just the producers of goods, but they also
want to be hot spots of innovation. Second, Segal contends Asian
countries traditionally have focused on "process
innovations" — incremental changes
to foreign products for the domestic/regional market. However, they
are turning towards "product
innovation" — the creation of a new
to market technology.
To achieve these transformations, the
countries have sunk extensive resources into developing a talented
S&T workforce, creating world-class facilities and increasing
attention from Foreign Direct Investment (FDI). Due to the size of
these investments, rapid population growth and central government
interventions (e.g., investments, sector targeting) these countries
(specifically China and India) will replace the U.S. as the world
leader in the "hardware" of
innovation. According to Segal, they will surpass the U.S. because
the U.S. lacks the population growth and financial resources to
compete long term with these countries in
"hardware innovation."
In the later chapters, Segal argues that this inability to
compete with hardware innovation is not necessarily a negative, but
actually a positive that could fuel long-term, sustained U.S.
economic growth. He contends the U.S. cannot maintain a
"zero sum" strategy of innovation
focusing only on increasing domestic innovation. The U.S. must
develop a strategy that increases global innovation and builds
relationships with our most feared Asian competitors. These
mutually beneficial relationships will spur long-term prosperity if
the U.S. focuses its strategy on three areas: regional innovation
ecosystems, immigration reform and international collaboration.
Globalization requires local specialized clusters that take
advantage of a region's comparative advantage
according to Segal. He acknowledges the importance of federal
government and multinational corporations in driving large-scale
innovation projects (e.g., green energy), but highlights the
importance of regional innovation ecosystem in spurring innovation
and cultivating sustained growth. Regions cannot simply rely on
major corporations to fuel the local economy due to globalization.
Instead, these regional networks would create new niche industries
that address both domestic and global S&T needs.
Segal proposes
that the federal government focus on developing collaborations
between these regional networks and international
"hot spots" (i.e., international
industry clusters) that are based on technology transfers,
talent migration and large-scale research projects. This would lead
to increased FDI into the U.S. and create relationships between
U.S. small business and foreign markets. He also points towards
immigration reform that would allow the U.S. to maintain its
ability to attract and retain world-class talent that has increasingly
returned to Asia due to new opportunities. The streamlining of
immigration for individuals in the S&T sectors would provide
America the talented need to develop these networks.
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TBED People and Job Opportunities
TBED People
SSTI Board member Phillip Singerman has been named as the Associate Director for Innovation and Industry Services for the National Institute of Standards and Technology. He will assume this position on January 31.
Alabama Gov.-elect Robert Bentley named former house
speaker Seth Hammett as the director of the Alabama Development Office.
Colorado Gov. Bill Ritter announced he will become
director of the Center for the New Energy Economy at
Colorado State University effective Feb. 1.
Michigan Gov. Rick
Snyder named Michael Finney, current
president and CEO of Ann Arbor SPARK, as the new Michigan Economic Development
Corp. director, replacing Greg Main. Ann Arbor SPARK announced the
appointment of Skip Simms as interim president and CEO.
New Mexico Gov.-elect Susana Martinez named businessman
Jon Barela as the new secretary for the Department of Economic
Development.
Pennsylvania Gov.-elect Tom Corbett named Alan Walker
as secretary of the Department of
Community and Economic Development. Walker, who is the
president and CEO of Bradford Energy Company, also currently serves
as a member and is past chair of the board of directors of both the
Pennsylvania Chamber of Business and Industry and the Pennsylvania
Coal Association.
South Carolina Gov.-elect Nikki Haley named Bobby
Hitt, a BMW executive, to lead the state Commerce Department.
South Dakota Gov.-elect Dennis Daugaard named Pat
Costello to be commissioner of the Governor's
Office of Economic Development. Costello is a certified public
accountant and previously served on the Sioux Falls City
Council from 2006-2010.
West Virginia Acting Gov. Earl Ray Tomblin named Keith
Burdette as secretary of the Department of
Commerce, succeeding Kelley Goes who will become state
director for former Gov. and current U.S. Sen. Joe Manchin.
Burdette was a Senate president and former legislative liaison
under former Gov. Bob Wise.
Wisconsin Gov.-elect Scott Walker named former Green Bay
Mayor and business leader Paul Jadin as Commerce secretary. Jadin is
the president and CEO of the Green Bay Area Chamber of
Commerce.
Automation Alley
has promoted Charles DeVries to senior director, business
development.
i2E Inc. has named Wayne
Embree as vice president of entrepreneur services.
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Staff Picks
State of the Recovery: State by State
The majority
staff of the Joint Economic Committee have released an interesting
report with a state-by-state analysis of the state of the recovery.
They contend that while the Great Recession was deeper in its job
losses, the job recovery is outpacing the last two recoveries. Read
the full report
here or The Hill's
reporting on the study.
George Will: Rev the Scientific Engine
While
we've grown accustomed to Thomas Friedman
arguing for investments in research, George Will joins the fold
with a recent column. He argues for Congressional conservatives to
defend "research spending that sustains
collaboration among complex institutions...
Read more ...
Interview with OSTP Director John Holdren
For insights into the Obama Administration's
views on science, this
article from Science magazine provides information
straight from the Office of Science and Technology Policy director,
John Holdren.
Up to $74M Available for Fuel Cell R&D
The U.S.
Department of Energy announced it is accepting applications for a
total of up to $74 million to support the R&D of clean,
reliable fuel cells for stationary and transportation
applications.
Read more ...
CQ: House Appropriations Committee to Upend Funding
Process
Rather than being giving spending allocations, House Appropriation
subcommittee chairs will be given "reverse
302(b)s" — informal targets for cuts
in spending appropriated for fiscal 2011 that the new House GOP
majority will try to cut in a rescission bill.
Read more ...
Profile of Chair of House's Higher Ed
Subcommittee
The Chronicle of Higher Education has a profile of Rep.
Virginia Foxx (R-NC), the new chair of the
House's higher education subcommittee. The
Chronicle reports that she questions the
Administration's goal of five million more
community college graduates by 2020.
Read more ...
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