Government Stories 2009-2010

Stories that earlier appeared in Nelson's News
Note: Carl Nelson Consulting, Inc is not an investment adviser and may hold a financial interest or client relationship in companies discussed.

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Thirty Massachusetts life sciences companies have been awarded a total of $23.9 million in tax incentives by the state in an effort to spur job creation. The awards range from as much as $5.85 million to as little as $55,000.  The companies receiving the awards have committed to creating nearly 1,000 new jobs in the Commonwealth over the coming year.  ...  Last year, the program's first, the state awarded $24.5 million to 26 companies that pledged to create 800 jobs in the state. As of June 30th, those companies had created around 400 jobs, according to the state's Life Sciences Center.   [DC Dennison, Boston Globe, Dec 22]   That's $24000 per job created IFF the recipients create the 1000 jobs.  Last year's cost per actual job was about $70000.  What do you think should be the state's limit on amount spent per job created?  Or is it all sound-bite politics anyway and that real economics don't matter? And if so, how many federal programs do the same thing, only bigger?  SBIR firms taking the money are:  BIND Biosciences, Cytonome, Merrimack Pharmaceuticals, Organogenesis, Vertex Pharmaceuticals.

Connecticut officials said that legislation passed in May has now spurred $72 million in venture dollars that will be invested in at least 25 small businesses in the state. [James Connolly,  Mass High Tech, Dec 30, 10]

Good Ol' Texas Politics.  Gov. Rick Perry on Thursday announced a $4.5 million investment of taxpayer dollars in a friend's company more than two months after the award became a campaign issue.  Perry acknowledged the investment in Convergen LifeSciences (Austin, TX; no SBIR) a company that is led by David Nance, an Austin entrepreneur . Nance has donated money to Perry's campaigns, and the governor has appointed him to state advisory boards.  The grant is the second-largest awarded to an individual company from the Texas Emerging Technology Fund, managed by the governor's office. [Laylan Copelin, Austin American Statesman, Dec 30, 10]

Facing a $24 billion budget shortfall, the [Texas] Legislature is expected to debate whether to continue economic incentives, such as the technology fund, and whether [Gov]Perry should continue to manage hundreds of millions of dollars in incentives. Critics have accused Perry of using the incentives to reward friends and donors.  The Emerging Technology Fund has allocated more than $188.5 million to 128 early-stage companies and almost $170 million to match grants or boost research at Texas universities. [Laylan Copelin, Austin American Statesman, Dec 30, 10]  Seen any reports on the ROI from the fund  aftewr the handouts made good political moments.

The Democrats promised to find nearly $110 billion in waste to fund their pledges. Next year's budget identifies only $3.6 billion in such cuts, bringing total cuts over two years to $12 billion, or less than 1% of annual spending. [Wall Street Journal, Dec 28]  No, this is news from Japan that talk about cutting waste is a lot easier than actually doing it.

Not in this Congress. The House punted SBIR re-authorization into the next Congress although the Senate passed another of its versions that the House SB Chair doesn't like.  SBIR Insider Rick Shindell reports likely activity by the White House especially about the science community's fear of getting hit for the proposed greedy increase from 2.5% to 3.5%.  The whole deal sounds like the old adage: if a policy isn't working, try more of it. We shall see how the Tea Party deficit hawks like this subsidy program.

Voters are cynical about all of them and want every program cut except the ones they benefit from. [ David Brooks, NYT, Dec 17]

The lame-duck Congress ended by punting this fiscal year's federal budget downfield to March 4 for the new Congress to settle. In the interim, generally, the departments will spend at the same rate as last year. But that could affect what the agencies do with their SBIR since they would hate to put one more penny into it than mandated.  And with the partisan feud over spending threatening to become an all-out impasse when the Republican majority takes control of the House in January, such temporary spending measures, and the crunch they cause, may continue indefinitely. [David Herzenhorn, New York Times, Dec 21]  Stand by for steady political blather about spending cuts until the public realizes how many things they won't be getting any more.

NO new SBIR law. Yesterday's posting of a new law was correct only in that HR2965 was passed. But not the real SBIR bill, only a carrier for an unrelated matter. Regrets. 

The US House of Representatives voted overwhelmingly yesterday to establish a new Rapid Innovation Program within the Defense Department.  The mission of the program will be “to accelerate the fielding of technologies developed pursuant to Phase II Small Business Innovation Research Program projects, technologies developed by the defense laboratories, and other innovative technologies (including dual use technologies).” The measure now goes to the Senate which is expected to approve it in the next few days.  Alchemist blog, Dec 18] No structure or money yet, and the Tea Party deficit hawks could make funding tough.

A $2 million [New York] state-sponsored pilot [Upstate Regional Seed Fund] was approved Thursday by the Empire State Development Corp. to provide investments in high-technology startup and emerging companies.  ....  created by Linden Oaks-based Excell Partners Inc., which will invest the grant funds. Excell Partners, a non-profit formed in 2005 through an agreement with the University of Rochester Medical Center, has invested $2.4 million in 21 new companies since its inception.  [Thomas Adams, Rochester Business Journal, Dec 15]

Want a touch of chaos?  a Constitutional amendment that would allow a vote of the states to overturn any act of Congress. After half the states' representatives enact a law, two-thirds of the states could band together to repeal it. And the effect on investment from never knowing where any law stands?  Ah well, it's conservative action time again to overturn the Constitution whenever they don't get their way on policy. The good news is that they haven't succeeded yet with any of their radical schemes, just attracted campaign contributions.

our country's leadership has taken the easy route and has demonstrated still further that there will be no meaningful movement on our burgeoning deficit. The bond vigilantes smell blood, recognize this inertia and are demanding a price to be paid in much higher interest rates. [Doug Kass,, Dec 15]

New SBIR Law.  The Senate passed HR2965, the House's version of SBIR Reauthorization, which makes it the new SBIR law.  Total SBIR money rises as do award "limits" for both phases; prohibits an agency from issuing an SBIR or STTR award if the award size exceeds established guidelines by more than 50%; Requires federal agencies to conduct solicitations of Phase II SBIR and STTR proposals without any invitation, pre-screening, pre-selection, or down-selection process between the first and second phases;  lets NIH use 18% of its money in VC funded companies, and 8% for other agencies; Makes permanent DOD's Commercialization Pilot Program ; Requires DOD to set a goal of increasing the number of Phase II contracts that lead to technology transition into DOD programs of record or fielded systems; Authorizes the head of each federal agency other than DOD to set aside up to 10% of SBIR and STTR funds for further technology development, testing, and evaluation of SBIR and STTR Phase II technologies.; directs agencies to self-evaluate their SBIR programs and the GAO to evaluate as well.

[Tea Party success will be] a damper on hopes that the next Congress will deliver on a long-promised expansion of federal spending on research and education outlined in a 2005 National Academies' report that has been embraced by both parties.  Innovation? The only reference to "innovation" comes as part of a passage in the Pledge on how "excessive federal regulation … hampers innovation and postpones investment in the economy." In other words, get the government off our backs so that the private sector can do its thing. [Science, Nov 26]  Get ready to duck the axe.

More Minneapolis Snow Job.  A group of science and technology boosters plans to ask state lawmakers for $10 million next year to fund start-ups and increase entrepreneurship in Minnesota, according to a draft of its recommendations.  The Minnesota Science and Technology Authority formed earlier this year and will make recommendations to the legislature next month on ways to improve the state's climate for science and technology. The group's formation comes at a time when state officials are concerned about early-stage funding for start-ups and support for innovation. ... would include $1.25 million for the authority's operations, $2 million in a Technology Commercialization Fund, $2 million for an Advanced Entrepreneur Program, $4 million to support [SBIR] grants and $750,000 for an internship program.  [Wendy Lee, Minneapolis Star Tribune, Dec 15]  Hope springs eternal for government intervention in a re-write of Minnesota Project Innovation that was canned some years ago? What are these states using as a metric for the return from such intervention, since they regularly start, stop, and re-invent the same thing?   But the political benefits are too much to resist for the announcement of doing something that sounds hopeful, and a ribbon-cutting photo-op.

AAAS will sign on to an amicus brief for a case scheduled to be heard by the U.S. Supreme Court next year.  The case, Stanford v. Roche, appeals a ruling by a court of appeals that casts doubt on the rights of universities and the federal government alike to inventions arising from hundreds of billions of dollars in federal funding. The decision would allow rights in federally funded patents to be disposed of through private contracts between researchers and third parties (for example, companies), rather than according to the Bayh-Dole Act, which establishes a presumption that ownership is allocated to the university or other nonprofit institution hosting the research.  AAAS joins almost two dozen universities, higher education associations, and the U.S. Department of Justice in opposing the appeals court ruling. [AAAS, Dec 8] The old principle that whoever pays for the work owns the right to patent is under attack. One practical problem is that some universities don't see much value in hurrying to patent because they are not (yet) profit-driven creatures. And if the universities lose the fight, why would not SBIR companies lose the same way to individual employees doing federally funded R&D?  

Sound bite management is back.  In an online video employing contemporary technology to follow in the footsteps of the late Senator William Proxmire's (D-WI) famous  "golden fleece" awards, Rep. Adrian Smith (R-NE) has launched a "You Cut Citizen Review" asking viewers "to identify wasteful spending that should be cut and begin to hold agencies accountable for how they are spending your money."  Rep. Smith's first target is the National Science Foundation, and he provides a helpful link to NSF's award search page and suggests keywords such as "culture," "media," "games," and "stimulus" that viewers might use to identify and report "wasteful" grants.  An article in USA Today compares Smith's exercise with past congressional attempts to ridicule NSF grants on the basis of incomplete information. [AAAS, Dec 8]  Looking always for programs with weak political sponsors regardless of the merit of the program.

Obama chose Forsyth Tech to unveil a theme aides say he will emphasize in 2011: The United States must take steps to regain its economic edge in the world market.  Even in difficult budget times, Obama said, the country needs to invest in education and innovation.  [Rob Christensen, Raleigh News & Observer, Dec 7] Great warm fuzzy political speech stuff, but the devil is in the details.  In a deficit and program cutting era, just what is he proposing for government action? Dribbling more opportunity away in federal agency self-serving in SBIR? A renewed NIST handout program that the free-market Republicans hate?

Freezing and delaying  The lame duck Congress says it will freeze most budgets and roll everything FY11 into another catch-all. For SBIR "winners" that could mean funding delay since the departments put SBIR way down on the priority list and convert any funding uncertainty into an SBIR hold action. And when the new Congress convenes, expect war on feel-good Democratic programs.

When politics comes first.  In 1892 William Jennings Bryan, later the Democratic presidential candidate, declared: “The people of Nebraska are for free silver and I am for free silver. I will look up the arguments later.” [The Economist, Nov 27]

[Simpson-Bowles] was a formula for changing government without a philosophy of government. For years, it was assumed that a rapidly growing economy could pay for added programs. The result was the careless use of government for almost anything that made a good slogan or could support a lobby. The underlying economic assumptions were overly optimistic. ... If we keep the expedient morality of perpetual programs - so that nothing fundamental can ever be abandoned - then Europe's social unrest could be a prelude to our own   [Robert Samuelson, WashPo, Dec 6]  Can you think of any programs with optimistic ideals and little to show as an economic return?

the chairs of the National Commission on Fiscal Responsibility and Reform has released a draft list of proposals to reduce the federal deficit. The proposals include drastic cuts to the federal government's economic development agencies, including the elimination of the Economic Development Administration (EDA) and the Hollings Manufacturing Extension Program (MEP), as well as the merging of the Department of Commerce and the Small Business Administration (SBA). The commission also has proposed funding cuts for research into fossil fuels, defense and private sector space flight. [SSTI, Nov 19] Stand by for weeping and gnashing as sacred cows are offered up and declined. Remember that every program has stout defenders.

DoD lacks complete data on the number of technologies commercialized and therefore cannot determine the return on its space-related SBIR investment, finds a report by the GAO. To meet space-related technology needs, DoD invested $5 billion, or approximately 11 percent of its total SBIR budget, on space-related Phase I and Phase II contracts over fiscal years 2005-09. However, the GAO report finds that DoD does not have a complete picture of contract awards and does not know how effectively it is commercializing SBIR technologies. Specifically, DoD is lacking complete data on Phase III and is inconsistent in recording and defining commercialization. Further, the report finds DoD does not require the services and components to track and report the data. The report offers three short- and long-term recommendations to overcome the challenges, including collecting data on all SBIR technologies that transition into DoD acquisitions or commercial-sector products or services. Read the report ... [SSTI, Nov 17] Even though everybody involved has excuses, the real problem is Congress which never told the Executive Branch that it really cared about SBIR beyond getting the specified money to the small businesses. As a result, DOD and the others have no incentive to spend money and people fostering commercialization. collecting data, and measuring performance.  So it's not quite fair to send the auditors to discover the obvious and then carp about deficiencies. Anyway, as DOD gets squeezed in the deficit battle (if Congress can ever get beyond talk about deficit), SBIR follow-on and dual-use will sink to even lower priority.

"Despite the clear limitations of existing federal innovation programs, they remain important to our national economic competitiveness," according to a new report from the Center for American Progress. In Silos of Small Beer, authors Maryann Feldman and Lauren Lanahan examine the efficacy of federal innovation programs on the regional economic development of the eastern Midwest region that includes Pittsburgh, Cleveland, Akron , and Youngstown. The authors found "an ecosystem of innovation entrepreneurship that is emerging and vibrant, but also fragile, requiring the sustained efforts of local, state and federal agencies." However, a problematic relationship exists between high-performing, local innovation programs and federal programs because of programmatic limits (e.g., mission, funding, capabilities) and the "siloed" nature of these programs. [SSTI, Nov 17]

Grab a government lifeline.  Given the difficulty of starting a company from scratch, and how economic activity is generated today, you can start to see why, if you were a rational market actor, you would be trying to get a piece of the government action. [Morris Panner, WaPo, Nov 17]

The [Deficit] Commission's suggested discretionary cuts include a number of R&D-related programs; for example, reducing the Department of Defense's Research, Development, Test & Evaluation (RDT&E) program budget by 10 percent ($7 billion in FY 2015), canceling the Hollings Manufacturing Extension Partnership, cutting fossil fuel research, eliminating private sector funding for spaceflight, [AAAS Policy Alert, Nov 17] Alerts and alarms going off all over Washington as Tea Party idealists prod for less government.  Financial reality still has not yet struck, just the pigs targeted to be pork chops.

The program New Mexico started to reclaim its "job growth engine" has $400 million, about $250 million of which is allocated to venture capital funds, said [Brian Birk of Sun Mountain Capital], whose firm manages that and several other state programs.  "We've attracted about $1.7 billion of other peoples' money to the state and created over 4,000 jobs that have an average salary of $77,000," Birk said.  [Kathleen Gallagher, Milwaukee Journal Sentinel, Nov 11]  Beware politicians claims of jobs created; ask how many such jobs last more than five years.

Cut?  What? If these [Republicans] were all put into a room on penalty of death to come up with how much they could cut, they couldn't come up with $50 billion, when the problem is $1.3 trillion. [David Stockman, Oct 31]...  If Republicans were really serious about cutting spending, they had a golden opportunity after 2002, when they controlled all the levers of government in Washington. The result was the most reckless expansion of government spending and debt in two generations.  [Fareed Zakaria, , Time, Nov 4]  Soon, abstract deficit cutting must become serious bleeding looking for a scapegoat.

CT Gov.-elect Dan Malloy (D) developed a roadmap focused on innovation and entrepreneurship. He would develop a fund using close to a billion dollars in unused research & development tax credits to leverage new research and advanced manufacturing space, and encourage the participation of state and municipal pension funds to augment the initial investment.  [SSTI, Nov 3] In the interstate competition for high-tech industry, how many understand how profitable technology gets started and nurtured.  Any politician running for office claims to know and have the answer. 

FL Gov.-elect Rick Scott (R), a health care executive and Navy veteran, proposed a seven-step economic plan that he says would create jobs and allow Florida to become a job creation model for the nation. In seven years, the 7-7-7 economic plan aims to create 700,000 jobs and generate $74 billion in state GDP, $41 billion in higher personal incomes, and $1 billion in total state revenues as a direct result of increased economic growth. [SSTI, Nov 3] Keeping Florida green with wishful thinking. 

IA  New-old governor Branstad aimed at eliminating what he refers to as excessive government interference in new job creation by requiring a small business jobs impact statement for any new administrative rule in Iowa. Branstad also would sunset all regulations affecting job creation and retention and replace the state's current economic development agency with a public-private partnership tasked with promoting and marketing the state to attract new investments and jobs. [SSTI, Nov 3]  Anybody expecting rule of law in Iowa should consider that Iowa voters removed three judges by affirmation vote failure for ruling for same sex marriage.  Said one of the candidates, It's we the people, not we the courts. 

Meanwhile, all over the country, the Tea Party wants government to get out of such business altogether. They think they are going to re-write the Constitution and 200 years of development of government. Just by snapping their fingers and shouting platitudes. [SSTI, Nov 4]

Federal financing of science research, which has risen quickly since the Obama administration came to power, could fall back to pre-Obama levels if the incoming Republican leadership in the House of Representatives follows through on its list of campaign promises. ....  research and development at nonmilitary agencies — including those that sponsor science and health research — would fall 12.3 percent  [Kenneth Chang, New York Times, Nov 3]

Massachusetts got its share of the handouts as biomedical firms landed 546 federal grants and tax credits, totaling $126 million, as part of a "therapeutic discovery" program created as part of the omnibus health care reform package. [Boston Globe, Nov 3] More pork as a legislative lubricant.

North Carolina's portion of the Affordable Care Act grants, about $36million, will be divided among more than 150 companies. [Raleigh News & Observer, Nov 3]

The University of Texas will be opening a research laboratory to entrepreneurs to develop life sciences technologies and evaluate the potential to turn them into products. ... Biotech entrepreneurs, including those from outside the university, will be able to reserve space in the wet lab to work on their projects. The entrepreneurs will retain all rights to their intellectual property. [Austin American Statesman, Oct 29]

What are prospects for government spending on useful R&D?  Republicans want to cut spending drastically (on politically weak programs) and they hate market assistance programs (except for large corporations who can afford lobbying with money). Which means that programs like TIP and SBIR enter another danger zone. 

Rick Shindell SBIR Insider says SBIR 2.0 is an initiative by the SBA and the federal agency SBIR program managers to modernize and streamline the SBIR program.  You can (and should) read the entire description of the program as listed on the SBA's web site at In his newsletter, Shindell ID's one of the dilemmas with SBIR: there are lots of SBIR companies in Texas as a comment on how the House member from Texas would view SBIR.  Just what does he mean by an SBIR company ?  One reason that SBIR has little return to show is that so much of the money and attention go to companies that live on SBIR or merely use it as a revenue filler by doing federal R&D of no particular future.  The SBIR community with political voice is not companies who have never heard of SBIR and want a chance to use it for economic innovation; the community is merely companies who know how to capture its money without regard to any larger national goals.

wiredmikey writes "Launched by the CIA in 1999, In-Q-Tel's mission is to identify and partner with companies developing cutting-edge technologies that serve the national security interests of the United States. In-Q-Tel has invested an undisclosed sum in Silver Tail Systems, an emerging online fraud prevention and analytics company, an investment they say enables them to offer powerful technology companies in the U.S. intelligence Community and further protect the Nation's assets."  [, Oct 27]

China said on Thursday that it will not use rare earths as a diplomatic "bargaining tool", in response to challenges against its management of the vital metals. It also said measures to restrict the exploitation, production and export of rare earths are in line with World Trade Organization (WTO) rules. [Wang Xing, China Daily, Oct 29]

even though he has more faith in government than most Americans, he will relentlessly oppose programs when the evidence shows they don’t work. [David Brooks, New York Times, Oct 29]  If Obama is indeed data-driven, what would be his attitude toward SBIR?  Has it succeeded, and if so, on what criteria? Does GAO count with its "result not demonstrated" finding?

TR: If energy research is underfunded by $11 billion, what is a better approach to funding new energy technologies? Bill Gates: It's not a problem that lends itself to a Manhattan Project-type approach. It has to be low cost and usable in different circumstances. You can't just get a bunch of smart people together and know which path they should go off and pursue. Actually, it's amazing that that worked for the Manhattan Project. [Technology Review, S/O10]

Last week Albert Teich, director of AAAS's Science and Policy Programs, joined three other witnesses in testifying before the House Subcommittee on Research and Science Education on NSF's Science of Science and Innovation Policy, noting that the impact of S&T Policy has proved to be "just as unpredictable as basic research in physics, chemistry, or life sciences."  Written testimony and an archived copy of the webcast can be found on the Committee's web site.   [AAAS, Sep 29]

Hearing the hoofbeats.  The American public, already skeptical of free trade, is becoming increasingly hostile to it. The ire has clouded prospects for approval of pending free-trade pacts, and prompted concern among U.S. businesses reliant on the rest of the world for growth.  [Sara Murray and Douglas Belkin, Wall Street Journal, Oct 4]  The short sighted attitude of the SBIR world is contributing its negligence to the competition for world economic influence.  The agencies want to do only stuff for their immediate benefit and the beneficiary companies don't want any economic criteria to ruin their picnics on  the decks of the Titanic. So, they resort to protectionism as if the world competitors would sit for it.

Can't afford prudence any more. The State of Wisconsin Investment Board is considering putting more money from the big state pension fund into top-performing venture capital funds on the coasts and, as part of that move, trying to steer money toward investment opportunities in the upper Midwest.  [Kathleen Gallagher, Milwaukee Journal Sentinel, Sep 28]

The small-business bill signed into law by President Barack Obama Monday eliminates capital-gains tax for investors who put money into qualifying startups. The change will likely benefit angel investors, high net-worth individuals who back technology startups, but it’s unclear whether the tax break will actually spur more individuals to put money into more companies.  [Mass High Tech, Sep 28] No matter, any bill that connects small business with tax cut is a political winner. No one will check results later with any view to program evaluation.

Buying jobs.  Wausaukee Composites  (Cuba City, WI; no SBIR) will get $1.5 million in state assistance for creating 200 jobs ... to help Wausaukee build and equip an addition to its manufacturing plant that makes wind-turbine components ...  The company is a subsidiary of Sintex Industries, headquartered in India.    [Rick Barrett, Milwaukee Journal Sentinel, Sep 22]  Globalization and state assistance to private companies.

Clusters in vogueThe Wisconsin Entrepreneurs' Network, which provides resources and expertise to entrepreneurs, plans to partner with the Defense Alliance of Minnesota, a group that concentrates on developing defense technologies. The partnership is part of a Small Business Administration loan that will result in creation of an Advanced Defense Technologies cluster.  [Don Walker, Milwaukee Journal Sentinel, Sep 24]

The University of Wisconsin-Milwaukee's plan to develop a science campus and a tech-oriented business park in Wauwatosa has won approval for up to $12 million in city financing. ...  Innovation Park will generate property tax revenue for the city once the debt is paid off, while also creating jobs, McBride said.  [Tom Daykin, Milwaukee Journal Sentinel, Sep 22]  Hope in debt springs eternal as several cities around the country wallow in insolvency from great schemes gone sour.  What happens to these schemes if the federal government retrenches on spending as a groundswell rises against government?  

Evaluation of Handout Programs.  the Maine Technology Asset Fund (MTAF) is a competitive award program, funded by Maine state bond proceeds, that builds capacity and infrastructure to support R&D projects leading to significant economic benefits across the state. The MTAF program has completed two successful rounds of competition and executed contracts for $46 million to 25 projects, leveraging $69 million in matching private investment and federal and philanthropic grants. The program will award another $7 million in October 2010. [SSTI, Sep 22] The state borrowed $50M to fund a variety of entities and its biannual report details how much it gave out and how many employees the firms have and how much they paid in taxes. But nowhere does it calculate a Return on Investment for the taxpayers who supplied the money to repay the debt.  And nowhere does it show a control group of similar firms who got no handout. The problem with all these handout programs, SBIR included, is a lack of capital investment standards for the taxpayers' dollars. But since the beneficiaries like the money and the politicians can be seen doing something for small business technology, all is well at least politically and the charade will continue. 

N.C. State University has its own stimulus plan for the lackluster state economy: a new initiative to double the number of private companies it spins off every year, and to boost by 50 percent annually the amount of grants and contracts its faculty and staff win to fund research.  NCSU will open an "innovation hub," where companies can come to gain access to expertise and technology that university researchers are developing, and where faculty and staff can get support to market their technologies or create new companies based on their work  ...  planned to create a $2.5 million fund for grants to university researchers to use after they have made discoveries with practical applications. These grants would help to pay for things such as prototypes and market research to bridge the gap between lab and marketplace.  [Jay Price, Raleigh News & Observer, Sep 18]  There's a place for SBIR to look for opportunities to fund companies and technologies with a future.  But the federal agencies have no incentive to actively seek investment opportunities; they are organized to receive proposals over the transom and to throw back yes-or-no answers from committees.

SBIR Insider notes  the Senate and House Armed Services Committees will consider if they should just take the DoD SBIR program into their own hands and bypass these clowns in the House small biz committee. 

even if the $100 billion plan [research tax credit for businesses] is approved, it won't begin to address the fundamental question of how to turn that research and new technology into U.S. jobs and renewed prosperity. ...  said Robert Atkinson, president of the Information Technology and Innovation Foundation, a nonpartisan think tank. "We're pretty much the only country with the illusion that we're not in competition with the rest of the world."   [Don Lee, LA Times, Sep 13] A neutral observer [no one connected to the US innovation or political system] should conclude that USG programs for "competitiveness" or "technology" or "commercialization" are merely political creatures, not effective economic strategies.  "Let's spend $100B on tax relief for companies" is followed shortly by "re-elect me."  In the minor leagues of such political schemes is SBIR which hands most of its money to mediocre companies doing government R&D.

More DFAR pages.  [DOD] announced more than 20 changes in purchasing procedures intended to rein in the ballooning cost of weapons systems and make military ships and planes more affordable.  ... will give preferential treatment to suppliers with good cost-control records and will require more competitive bidding for service contracts [Christopher Drew, New York Times, Sep 15]

The government may resume funding of embryonic stem cell research for now an appeals court said, but the short-term approval may be of little help to research scientists caught in a legal battle that has just begun. [AP, Sep 9]  The appeals court only said that it wasn't as certain of the eventual outcome as the trial judge.

Leaders available.  Tightened spending at the Pentagon is unsettling the defense industry, with Lockheed Martin announcing Wednesday that one-quarter of its executives had applied for buyouts as the company cut costs. ...  Boeing  would cut the number of executives in its military aircraft business by 10 percent ... Northrop Grumman recently announced plans to close troubled shipyards    [New York Times, Sep9]

Handout programs always sound better than they produceThe Texas Enterprise Fund, which backs major economic development projects in the state, has fallen short of the job creation targets claimed for it, according to a report released Wednesday by watchdog group Texans for Public Justice  [Austin American Statesman, Sep 9]  Public fund handouts, including SBIR, are just acts of faith with no intention of honest accountability. The only thing SBIR can count for sure is the amount of money handed out.

SBIR saved for next Congress.  Fred Patterson (SBIR Coach) reports that Congress has decided to punt the SBIR re-authorization past the election to the next Congress which convenes in Jan 2011. If the party control changes in either house, expect no quick action as the Republicans grope for the handles with which invent a governing plan other than the being against everything  for the past four years. Remember that if it doesn't look like anarchy, then it's not democracy.

The Kauffman Foundation, which studies entrepreneurship, argues that the productivity of federal funding for R&D, in terms of patents and licences, has been falling for some years. Funding is spread too thinly. It would yield better results if concentrated on centres of excellence, but fashionable chatter about the “knowledge economy” stirs every congressional backwoodsman to stick his fingers into the university pie. [The Economist, Sep 2]  As long as every state has two senators, we will have fair-sharing for the flyover states. National competitions like SBIR (in principle anyway) don't have much appeal in Nebraska.

Expedited Transition of Propulsion Modeling & Simulation Capability  $1.2M  Phase 2 STTR A multivariate interface/data structure for insensitive munitions (IM) applications, technology and hazards/effects analysis can facilitate transition of propulsion modeling and simulation (M&S) capability. Expected benefits are reduced testing and overall acquisition cost and increased safety margins. etc, etc.  A million plus is tons of money for computer modeling that will make the government smarter.  It's a sign that MDA has more SBIR money than it ever wanted (which is none), that it has an immediate need for its urgent programs, and that it has no desire to use it for growth in US innovation.  Computer modelers are everywhere in America and need no government handouts to spur innovation in a low capital barrier to entry industry.  And anyone wanting a piece of the MDA SBIR pie must find ways to appeal to immediate application of its tech to MDA development/procurement.  Unfortunately, the outsiders have almost no way of penetrating the public information screen to find out what those perceived needs are. Advantage to companies already in the know.

Good news and bad.  As the world's economies rebound, governments are investing heavily in innovation and research infrastructure. Australia and Ireland, for example, will fund significant investment in national innovation strategies. Australia will commit $1.1 billion to develop national clusters in targeted sectors, and Ireland will attempt to become the "innovation hub" of Europe.  [SSTI, Aug 26]  If government is doing it. we have less to fear from foreign innovation.

NIH announced Tuesday that it has suspended funding new human embryonic stem cell research and that all federally funded experiments already underway will be cut off when they come up for renewal if a new court order is not overturned. [Washington Post, Aug 25]

A U.S. judge blocked the federal government from funding research involving human embryonic stem cells, a surprise blow to one of the most promising yet controversial areas of current scientific research.  .... said it violated a law first passed in 1996 prohibiting federal money for research in which an embryo is destroyed.   [Wall Street Journal, Aug 24]  Stand by for science v. religion battles between those who want to understand life and those who already know unknowable answers. Economically, it gives the social conservatives a chance to divert attention from basic economic policy questions for which they have no good answers.  Note that the ruling applies only to federal funding which is running about $100M a year. The California group spends $250 million annually on stem-cell research, with some 30%-40% of the money directed to embryonic stem-cell research. "California may be the only safe haven now, at least temporarily, for human stem cell research," said Dr. Snyder.

Obama administration officials are considering overhauling 26 troubled federal technology projects valued at as much as $30 billion as part of a broader effort by White House budget officials to cut spending.  Projects on the list are either over budget, haven't worked as expected or both, say Office of Management and Budget officials. ... The U.S. government spends about $80 billion annually on technology systems.     [Amy Schatz, Wall Street Journal, Aug 23]  But the prez can't forget that there are 535 competing technology experts in Washington. The same 535 that act as Secretaries of State and Defense.

Iran said it has built an armed aerial drone. The announcement came a day after a ceremony to roll out Iran's first nuclear power plant, as Tehran continued to defy international pressure over its military ambitions. Western analysts brushed off the drone news as saber rattling. ... The weapon's effectiveness is in question amid doubts Iran could guide such a drone over long distances.  [Wall Street Journal, Aug 20] For diplomatic purposes it doesn't have to actually work; it just needs to sound like it might work.

Pawns.  Obama is urging Republican Congressional leaders to stop blocking a bill aimed at helping small businesses hire more people. [AP, Aug 219] Meanwhile, the Republicans blame the Dems for hurting small biz with the death tax.  Unfortunately, both sides treat small biz as a symbolic pawn in their great chess game for power while small biz lobbies to extract the maximum  handouts.

Fair and balanced.  News Corp., owner of the Fox network, Fox News and newspapers including the New York Post and The Wall Street Journal, gave $1 million in late June to the Republican Governors Association, making it one of the largest corporate donors to the GOP group this election season. ... News Corp. spokesman Jack Horner said the contribution was intended to promote the company's core beliefs  [Wall Street Journal, Aug 18]  We should remember that most newspapers were invented as political organs, and that claims like "fair and balanced" are mere puffery. A Pentagon official said he is withholding a contract from Lockheed Martin over concerns about problems with a missile interceptor [Terminal High Altitude Area Defense, or THAAD] that is a centerpiece of the Obama administration's missile-defense strategy.  [Wall Street Journal, Aug 18] Not just the Obama administration; anti-missile defense is a long standing program going back to the 1950s and supported by every President since missiles were invented.

"As Americans, we're all going to have to cut back and take less," said Lois Profitt, a 58-year-old small-business owner and political independent from Chesterfield, Va. ... "It's a brutal predicament for politicians because the rhetoric of deficit cutting is enormously popular, but the details are incredibly unpopular," said Matt Bennett, a vice president at the Democratic group Third Way, which has polled extensively on the issue.  [Jonathan Weisman, Wall Street Journal, Aug 17] Meanwhile, elsewhere in Virginia - what's ours is ours, what's yours is negotiable - as Democrats and Republicans oppose closing a military command and cutting civilian contracts around the Washington Beltway. [Washington Post, Aug 17]

The Greenwoods (SBIR consultants) warn that was a noble experiment to standardize the grant proposal submission process. It is complicated, it is cumbersome, and despite several years of revisions and massaging, it continues to have odd and unexpected idiosyncrasies and peculiarities that few normal people understand.

Home cooking breaks deal.  Great public fanfare on preliminary agreement with China last fall to build the world's largest solar-power plant in the Mongolian desert.  But now,  Chinese competitors in the solar business have complained openly about the U.S. company, First Solar, getting such a lucrative contract. A planned June 1 date to break ground has been missed. Government officials from the Chinese region of Inner Mongolia, where the plant would be built, say they plan to open the project to competitive bidding. [Keith Richburg, Washington Post, Aug 13, 10]

Need, want, deserve a government subsidy?  In the rich world the record shows, again and again, that industrial policy doesn’t work. ... Governments rarely evaluate the costs and benefits properly. ....  Not all such money is wasted, of course. The internet and the microwave oven came out of government-led research  .... Few quarrel with the need for governments to help business with straightforward “horizontal” measures, such as research and development or fostering high-tech skills. But there is no accepted framework for “vertical” policy, favouring specific sectors and companies. But, never mind efficiency, the public funds have an odd habit of flowing towards politically connected projects.  [because] None of this excites politicians as much as donning hard hats and handing out cash in front of the cameras.  [The Economist, Aug 7] 

Economic-stimulus funds for scientific research are becoming a political target for Republican skeptics who say they have identified some grants as evidence of wasteful spending. ... [Two prominent Senators] have criticized a range of stimulus spending as failing to address what they say is the immediate priority of creating jobs in the U.S. [Louise Radnofsky, Wall Street Journal, Aug 12]  "Waste, fraud, and abuse" is any spending that benefits someone else.

Companies seeking grants from Texas's Emerging Technology Fund can begin applying Oct. 5.  Twenty-six Austin-area companies have received a total of $41 million. [Austin American Statesman, Aug 11]  We're still waiting to hear an auditable economic gain beyond the companies getting the money and the politicians approving the "investment".  Just like SBIR.

Stimulus of war.  Steady paychecks and a growing flow of Pentagon dollars pushed average pay in North Carolina's two largest military communities [Fayetteville and Jacksonville] beyond bigger metro areas like Charlotte and Raleigh. .... Federal figures showed seven of the country's top 10 metro areas for greatest growth in personal incomes were powered by military paychecks.   [Raleigh News & Observer, Aug 11]

A white paper from the Wisconsin Technology Council (WTC) lays out a plan to increase access to capital for Wisconsin entrepreneurs, create new workforce development strategies, improve the state's infrastructure and business climate, and implement technology development and transfer strategies. Another report calls for greater coordination and streamlining of Wisconsin's existing programs through the creation of two new entities with a statewide reach. Both papers include extensive recommendations for the state's efforts to make capital available to startup businesses.  [SSTI, Aug 5]  Hand out spending and call it capital, and re-organize.  Two years later, change everything again. If the elements for private capital investment aren't present, the state government will wind up with just a budget hole.

Twenty-six members, spanning university presidents, investors, serial entrepreneurs, and nonprofit leaders, were appointed to the National Advisory Council on Innovation and Entrepreneurship announced yesterday by Commerce Secretary. The group will support President Obama's innovation strategy by helping develop policies that foster entrepreneurship and identifying new ways to take ideas from the lab to the marketplace to drive economic growth and create jobs. ... Read the press announcement  [SSTI Weekly Digest,  Jul 14]  Maybe this group will say that direct government funding of companies doesn't have much track record to recommend it beyond scratching a political itch to be seen doing something.

Meanwhile, A new state agency to promote innovation and job creation in New Jersey was established by Gov. Chris Christie earlier this year. Envisioned as a hub for all economic development activity, the New Jersey Partnership for Action consists of three interconnected organizations to promote the state's incentives and resources, develop pro-growth policies, and assist businesses in navigating government programs [SSTI Weekly Digest,  Jul 14]  Let's guess that the latest Republican poster boy will find that cutting business taxes is the best growth remedy.

The U.S. Justice Department has issued a press release announcing that former University of Wisconsin geneticist Elizabeth B. Goodwin has pled guilty in federal court to fraudulently submitting a grant progress report containing falsified data that misrepresented the progress of genetic research at the lab she directed. She will be sentenced in September and faces a maximum penalty of one year in prison and a $100,000 fine. [AAAS Policy Alert. Jul 14]

More fantasy.  The DOE announced $188 million to small businesses in 34 states to develop technologies with a strong potential for commercialization and job creation.  More fantasy that government funded tech work will lead to job creation.  The winners list is riddled with the usual suspects that have been living on SBIR for at least two decades, and economic return won't come from SBIR just because the awarding agency says it will.  For political purposes, the federal agencies claim doing good work on commercialization and spinoff without much in the way of economically intelligent analysis. Show us some hard evidence, like third party co-investment or a great economic track record from those winners with previous SBIR experience. Otherwise, it's just DOE satisfying its own objectives for knowledge.  

Massachusetts highest court has upheld a tax break for a Bedford start-up in a long-running dispute whose outcome could help reduce costs for companies seeking to design and launch new products in Massachusetts.The Supreme Judicial Court found that the state’s Department of Revenue wrongfully denied Onex Communications Corp. a manufacturing tax break for materials it purchased for its first product, a kind of super chip used to transmit large amounts of data. The state had argued that Onex had not yet finished making any of its chips and therefore did not qualify as a manufacturer under an 80-year-old law that grants tax exemptions to encourage those companies to expand here.  [Casey Ross, Boston Globe, Jul 31]

On the basis of the belief that better education in Soviet Russia contributed to Sputnik, federal money poured into the American higher education system, making it a key component in the battles of the cold war. These policies the creation of new government agencies, further increases in state-sponsored R&D, and expansion and restructuring of higher education—had enormous influence on America's political, social, and cultural trajectory during the cold war.  [Asif Siddiqi, Toward a Global History of Space Exploration, Technology and Culture, Apr 10]  Now that the programs and agencies have beneficiaries and administrators, they are seen as a sine qua non for tech progress.

[OMB] released their annual joint memo to agency heads last week titled "Science and Technology Priorities for the FY 2012 Budget."  The memo reiterates the President's long-term goal for investment in R&D to reach 3% of GDP, and encourages agencies to pursue transformational and multidisciplinary approaches aligned with six "challenges and areas to be strengthened." [AAAS, Jul 29]  More money for pet projects; more fantasy revenue to pay for it.

Pamper the little darlings. both sides are noisily clamoring to prove their support for a critical constituency: America's small-business owners....  "Helping small businesses, cutting taxes, making credit available. This is as American as apple pie," Obama said. "Small businesses are the backbone of our economy. They are central to our identity as a nation. They are going to lead this recovery."  Republicans are blocking action on the bill in the Senate ...   "They've hit small business with a sledgehammer and now they're going to go around and say they're picking up some of the pieces," said Sen. Judd Gregg (R-N.H.), dismissing the small-business initiative before the Senate as "tinkering at the edges."   [Lori Montgomery and Michael Shear, Washington Post, Jul 29]  The winning formula is clear: clear the deficit but don't raise anyone's taxes nor cut anyone's handouts. Until the voters grow up to real math, there's no reason to expect the politicians to act like adults.

SBIR Insider Rick Shindell  implores small businesses to call their local, regional or state office [of members of Congress] to invite them to visit your business.  Let them know how important the SBIR program is to you, your business, and potential new jobs.  Programs such as SBIR that help keep or add employment for good wage paying jobs, are usually popular with the politicos.  But the only companies who would have a direct interest in SBIR are the SBIR junkies who lives on the program.  Many of the worthwhile beneficiaries haven't been born yet and the new innovations worth funding haven't yet been invented.  The political arguments being offered are the standard stuff of vested interests keeping government money flowing to present beneficiaries. 

the Obama administration has championed giving loans and awards to innovative companies through programs such as the Department of Energy's ARPA-E. But it is not a simple journey from funding these programs to actually creating jobs.

Government to compete with industry.  A government program focusing on rare diseases has launched five pilot projects that are taking the NIH in a new direction: developing drugs.  The NIH Therapeutics for Rare and Neglected Diseases (TRND) program was established last year with $24 million of funding. ...will work together with scientists, advocates and others to do the required research and testing on drugs before a compound can be tried in humans in a clinical trial. Promising new drugs discovered through basic research often flounder during this stage. [AD Marcus, Wall Street Journal, Jul 24]

NIH has contracted with Foresight Science and Technology to perform Technology Niche Analyses (TNAT) for 100 NIH SBIR Phase I awardees funded in fiscal years 2010 and 2011. For each eligible SBIR Phase I project, the TNAT will assess potential uses of the technology and then provide a report that addresses the end-user needs, current and emerging competing technologies, the market dynamics, and the technology's competitive advantage. For a full description of the program, check  (  [SBIR alerting service, Jul 16]  Oh great, the government will hire a consulting firm to tell SBIR awardees how good their their technology will be in market competition. Why didn't the government think to ask the companies that before giving them the money?   Actually, NIH does ask them such questions but mostly ignores the answers. Which must somehow be OK because NIH awardees are producing a lot of real commercialization.

DOE said that $30 million will be made available to qualified small businesses to support the commercialization of promising new technologies [for]  projects that include developed technologies with a strong potential for commercialization and impact on U.S. manufacturing and job creation.  ... up to $3 million over 3 years to research, develop and deploy new technologies. apply by Aug 4 [SBIR alerting service, Jul 16] apply by Aug 4.  Oh sure, first they give SBIR to the companies that serve DOE needs and then they pretend that more money will create commercialization.  Why cannot they start by giving the SBIR money to great ideas and market-driven companies, instead of  making lemonade from the best mediocre lemons?  Because feeding DOE programs comes first and the SBIR law gives them unilateral authority to fund anything at any small company they please. DOE won't worry about the problem because Congress doesn't care enough to hold them accountable for SBIR results.

What's more popular than corn? after receiving subsidies for 30 years... The once-popular ethanol industry is scrambling to hold onto billions of dollars in government subsidies, fighting an increasing public skepticism of the corn-based fuel and wariness from lawmakers who may divert the money to other priorities. [Martha Lalonick, AP, Jul 16]  Moonshine!

I can't tell you how hard it has been for the Senate staffers to construct a compromise that they feel retains the integrity of the program, and gives some additional access to the powerful VC and BIO community.  Without some sort of compromise there will be no reauthorization in this congress.  Rick Shindell, SBIR Insider, Jul 15]  Stay tuned for the resolution of how much VC is just right for SBIR.

Cool pork for Wisconsin.    Astronautics Corp. of America (Milwaukee, WI; no SBIR) will work to develop a next-generation air-conditioning system using magnetic refrigeration technology, under a $2.9 million energy research grant funded through the federal stimulus package. ... now moving into a civilian application for the technology ... Astronautics has been conducting research into magnetic refrigeration technology for U.S. Navy ships for years, with the aid of federal funding. U.S. Rep. Tammy Baldwin (D-Wis.) has supported $7.5 million in funding in recent years, said Bill Murat, Baldwin's chief of staff. Another $4 million earmark remains pending. [Thomas Content, Milwaukee Journal Sentinel, Jul 13, 10]

Is SBIR popular?  Did you ever notice that when government programs are labeled “popular,” it is always by their beneficiaries, e.g. "for the second time in two years, the state universities are weighing whether to limit or even get rid of the popular AIMS scholarship, which waives tuition and fees for thousands of college students."   Since most similar government programs consist of giving people something of value for free or at least for a below-market price, aren’t they always going to be popular with their recipients?  ... The only meaningful definition of “popular” vis a vis a public program should be “popular with those who fund it.”  [Warren Meyer,, Jul 12]

We’ve been mired in debates over macroeconomic models recently. But maybe the real issue is how we are going to light a fire under the country’s loners, its contrarians and its narrow, ambitious outsiders.  [David Brooks, New York Times, Jul 13] If the big mission agencies keep shuffling SBIR money to safe performers, the disruptive innovation of the outsiders will continue to depend solely on the private sector.  Which is fine by the agencies since they never wanted or believed in SBIR from the beginning.

a Sustainable Defense Task Force of defense analysts that has recommended $1 trillion in spending cuts over the next decade. ... stopped production of the ultra-expensive F-22 fighter jet, cut back on some missile-defense programs he thought unrealistic, and killed an Army combat vehicle considered out of sync with today's counter-insurgency warfare. The reaction in Congress: revolt.    [Gerald Seib, Wall Street Journal, Jul 9]  Basic criterion: a good defense program is one that puts money in my district.

Opponents say Congress, which is deeply divided on the issue, should have responsibility for regulating greenhouse gases. [Science, Jun 18] Congress has enough knowledge for politics and law, but detailed science? Those "opponents" don't want government to regulate anything, except  abortion and unions.

NSF released the beta version of a new, a website designed to provide information by state, congressional district, and science field on research sponsored by NSF and certain other federal agencies.  ... to promote transparency and highlight outcomes and impacts of agency-funded grants.  Currently, NASA, the Army Research Office, and the National Institute for Food and Agriculture are also providing selected services on the website. [AAAS, Jun 30]

The Obama administration has forced [Emcore, based in New Mexico makes components for fibre optics and solar panels] to abandon a planned joint venture with China’s Tangshan Caofeidian Investment Corporation because it believes the tie-up would threaten national security.  ... the second time in less than a year that the administration has sought to block a transaction involving a Chinese company because of security concerns.  [Stephanie Kirchgaessner, Financial Times, Jun 29, 10]  If China can't use American money to buy American assets, why should they take it or keep it? Are we still the big dog that makes the rules?

Hope and money aren't enough. Mr Kissinger added that fighting the Taliban until it was reduced to impotence “would take more time than the American political system would permit”.   [Daniel Dombey, Financial Times, Jun 29, 10] Congress always wants something by the next election cycle and lectures the generals on strategy.

Policy and job turmoil.  Workers at Bastion Technologies (no SBIR) and elsewhere are caught in a growing conflict between Congress, which has banned NASA from canceling any part of Constellation, and agency leaders who have directed program managers to scale back their work while preserving the parts that would fit into the new space policy proposed by President Obama. [Kenneth Chang, New York Times, Jun 26]  The usual Congressional response: cut the deficit somewhere else. NASA SBIR junkies could feel the pinch also. Somewhere, somehow, lots of folks have to lose jobs if the deficit finance is to be fixed without raising revenue (not on our watch, say the Republicans).

Patenting still foggy.  The Supreme Court on Monday loosened the limits on the kinds of inventions that are eligible for patent protection in a case that was closely watched for its impacts on innovation ... rejected a lower court's reasoning that only inventions involving machinery or physical "transformations" are eligible for patents. ...  Although the court was unanimous in rejecting the claims of the inventors in the [business finance method] case, the justices differed over why, issuing three separate opinions that sparred over what types of inventions should be eligible for patent protection. [Pete Whoriskey, Washington Post, Jun 29]

Breast-beating time again.  Pentagon officials said Monday that they plan to try to cut as much as $100 billion over the next five years out of the billions of dollars spent annually in buying weapons systems and other services from outside contractors. [Dana Hedgpeth, Washington Post, Jun 29]  As the Pentagon staffers regularly write to themselves, "in these times if limited resources," .... Look for more fantasies about "cost saving" as members of Congress protect their local industries.

Dems at commercialization, again. DOUGLAS P. HART, a [MIT] professor of mechanical engineering who sold his last start-up for a tidy $95 million, is already on to his next big thing. On Tuesday, he expects to lock up $1.5 million in funding for his new start-up, Lantos Technologies. ... developed a 3-D scanner that it hopes will streamline the current generation of earphones and hearing aids by precisely fitting them to the dimensions of the ear canal, right up to the eardrum....  able to bring his hearing aid concept closer to reality with $50,000 in backing last year from the Deshpande Center for Technological Innovation, an M.I.T. entity originally funded by two private investors, Jaishree Deshpande and her husband, Gururaj. ...  A proposal from the Obama administration would experiment with all of this by allocating $12 million among several institutions next year in what proponents hope will be a continuing effort to support and study proof-of-concept centers. If successful, supporters say, universities could spread the model faster. But the idea represents a shift in thinking about the federal government’s role in stewarding the more than $50 billion it gives to university researchers annually. Until now, that money has been for the discovery, not commercialization, of scientific breakthroughs.    [Bob Tedeschi, New York Times, Jun 27, 10]  Can the federal government do commercialization decently?  Probably not!  Where is any evidence that it ever succeeded with its host of programs? After nearly three decades of SBIR, for example, where's the economic evidence of success? Government understands science and technology, but not business, and has no incentive for agencies to succeed at business. The political cycle also works against any long-term plan as whenever the Republicans own the White House, the commercialization programs get canned. Then when the Democrats regain and re-start them, the cycle repeats. Despite the theory that SBIR was intended to supplement private R&D, the DOE beneficiaries don't want to contribute anything to post-SBIR development.  In a White Paper on Phase III, the SBTC writers want DOE to waive normal cost-share rules for contracting with mainline DOE funds. Apparently the SECEnergy has the authority to waive the cost-share and the governing statue exempts SBIR anyway.  The two paragraphs on the subject don't delve into whether the  department's insistence on cost-share has actually prevented any contract, whether the Secretary has issued any detailed guidance, and whether such insistence made good sense in light of SBIR being only a supplement.  Ah well, DOE asked a lobbyist for a solution and get the natural answer - send us more money. One solution for DOE is to choose a better class of company for its SBIR awards. If it wants post-SBIR success, pick companies most likely to be pointed in that direction. Look beyond the criteria of "scientific and technical merit" and realize that there is a wide choice among companies with about the same technical merit. 

Russia's [President] Dmitry Medevedev visits Silicon Valley for the first time, eager to reinvent his country's outmoded, oil-dependent economy - and lure talent and money from the high-tech capital..... knows he needs to attract some of the best minds and investors in the United States. [Nataliya Vasliyeva, AP, Jun 23] Why would smart people and capital go where there is no rule of law and no protection for private property?

what is the best way for governments to boost innovation? Sensibly if predictably, the OECD urges investment in education, research and “knowledge-supporting infrastructure” (such as broadband internet networks and smart electricity grids). Skimping on this while money is tight, says the agency, will cause growth to suffer in the long term. ... If governments want to see a blossoming of clean technology, therefore, they should use taxes to put a price on environmental externalities (such as carbon) rather than coddle pet technologies[The Economist, May 29]

What Good Did It Do? NIH, in cooperation with other federal agencies, launched an initiative to monitor the impact of federal science investments in universities, called “Science and Technology for America’s Reinvestment: Measuring the Effect of Research on Innovation, Competitiveness and Science,’’ or STAR METRICS. One key effort will be to count the number of people whose salaries are paid by federal grants — a seemingly simple task that is currently impossible because of the way grant data are collected, said Julia I. Lane, program officer with the National Science Foundation’s Science of Science and Innovation Policy program.  “We basically don’t have any way of knowing who is touched by science funding,’’ Lane said.  [Karen Weintraub, Boston Globe, Jun 21] What a convenient story for SBIR advocates: if NIH can't quantify program benefits, how could a program as diverse as SBIR? Just keep sending money as having faith.

Political Economy.  Russia’s wheat farmers are undercutting America’s, increasing Russia’s global market share from 0.5% in 2000 to 14% today, while the share of US farmers fell from 26% to 19%. Senators from farm states are beginning to demand help for their constituents — subsidies, or bilateral trade deals with wheat-importing countries. [Irwin Stelzer, The Sunday Times, Jun 20]  Never mind deficits when the farmers want subsidies. Or when small business wants an advantage.

The speech — ending with the words “Let us therefore brace ourselves to our duties, and so bear ourselves that if the British empire and its Commonwealth last for a thousand years, men will still say, ‘This was their finest hour’ ” — has resonated ever since. ...  Seventy years ago, on June 18, 1940  [John Burns, New York Times, Jun 18]

The Portland Development Commission has chosen five prominent business leaders to help launch a seed fund for regional startups, aiming to boost to the city's entrepreneurial class. [Mike Rogoway, The Oregonian, Jun 4, 10]

On writing grant applications, Mandala Biosciences’ (San Diego, CA; $800K SBIR) Larocca adds, “My advice is to be passionate. You have to be able to write your grant in a way to make it sound exciting.”  [Bruce Bigelow,, Jun 8]

it takes two politicians to change a light bulb (one to change it, another to change it back again) [Eamonn Butler, Adam Smith Institute]

pour large sums of money at the problem. The United States is badly lagging in basic research on new forms of energy, deepening the nation’s dependence on dirty fuels and crippling its international competitiveness, a diverse group of business executives [American Energy Innovation Council]  warn in a study to be released Thursday. The group, which includes Bill Gates, the co-founder of Microsoft; Jeffrey R. Immelt, chief executive of General Electric; and John Doerr, a top venture capitalist, urges the government to more than triple spending on energy research and development, to $16 billion a year. And it recommends creation of a national energy board to guide investment decisions toward radical advances in energy technology.  [John Broder, New York Times, Jun 10]

The Patent Office said yesterday that it has signed a two-year deal with Google to provide bulk downloads of patent and copyright data to the public. Google will provide the service at no charge to the government or to users of the data. [Hiawatha Bray, Boston Globe, Jun 2]

Enlisting support from industry, policymakers and academics, Gov. Deval Patrick unveiled an initiative to help the state's manufacturers evolve with changing technology, adopt new innovations, and grow their operations through a new multi-tiered loan program. The Advanced Manufacturing Initiative is a public-private collaboration designed to maximize job creation within the manufacturing sector, which added more than 19,000 jobs last month, according to the governor's office. A new loan program from MassDevelopment will offer up to $50,000 for planning loans and up to $500,000 for growth initiative loans to reduce interest rates on real estate and equipment lending to manufacturers allowing companies to pursue expansion opportunities   [SSTI, May 26]

The Obama Administration has released guidance on a new tax credit for medical research conducted by small biotech businesses.  Claims for the credit could total $1 billion. Eligible companies must apply by July 21. [AAAS, May 26]

A paper by MIT physicist Ted Postol and Cornell physicist George Lewis published in Arms Control Today analyzed the reliability of the interception capability of the Pentagon's SM-3 antimissile and found that the success rate of the program was 10-20 percent, far lower than previous government reports.  The Pentagon criticized the analysis as "flawed" and "inaccurate".  [AAAS, May 26]

The United States wastes at least $6.4 billion each year in "forgone innovation" - legitimate technologies that cannot get licensed and start-ups that cannot get funding - because of backlogs and dysfunction at the U.S. Patent and Trademark Office, the agency that's supposed to protect and encourage innovation in America. [John Schmid, Milwaukee Journal Sentinel, May 22]

Every society develops a layer of complexity to deal with a new problem but eventually the solutions beget more problems in non-linear ways we cannot foresee because we have such a poor understanding of the dynamics of the system into which we deploy them. The persistent short-term thinking of governments and the public mean we will lurch from crisis to crisis. It is precisely because our solutions beget more problems that we are forced to innovate. The fact that we can develop solutions to problems we create through our previous solutions only tells us we are not especially good at creating sustainable solutions. [commenter super_critical, The Economist, May 15]

U.S. trustbusters have set their sights on Silicon Valley, with a growing number of investigations targeting possible anticompetitive behavior by technology companies. Now they are having to deal with potential witnesses using blogs to blurt out details of inquiries. [Wall Street Journal, May 21]

Small life-sciences companies in the U.S. will soon get details, expected to emerge in the next few days, of a federal program that will give a $1 billion boost to the industry. ....  The funds will come in the form of tax credits, or as a grant for the many unprofitable companies, covering 50% of project-development costs in 2009 and 2010 for companies with fewer than 250 workers [Thomas Gryta, Wall Street Journal, May 21]

New seeds near Ground Zero.  the Varick Street incubator, run by the Polytechnic Institute of New York University with help from the New York City Economic Development Corp., is one of five that the city has founded with hopes of nurturing a robust start-up culture. ... "there are no garages in New York…you start out of your living rooms or bedrooms," Mr. Mody said.  [Joseph de Avila, Wall Street Journal, May 20]

Planning to plan.   Minnesota Science and Technology Authority was established to develop and implement a comprehensive strategy for growing the state's economy through investments in science, technology and innovation.  [SSTI, May 19]

Prescribing for Others.  Taking matters into his own hands. Mike Pence, the House GOP conference chairman, is on the forefront of the deficit-reduction campaign—for the European Union. He is drafting legislation that would require the Treasury to vote against any IMF assistance to euro-zone nations until every member of the broader European Union has brought its debt-to-gross-domestic-product ratio below 60%. [Wall Street Journal, May 14]  How about getting his constituents to belly-up to deficit reduction at home?

Potentially opening the way to greater freedom in stem cell research, the U.S. patent office has reversed a key decision that enabled a Wisconsin research foundation to maintain patents on all embryonic stem cells used for research within the United States. ... But the Wisconsin Alumni Research Foundation said it would challenge the ruling   [Dean Calbreath, San Diego Union Tribune, May 4]

Dilemma. Illinois lawmakers were in disarray Thursday as they groped for stopgap measures to address a $13 billion deficit equaling nearly half of the state's general-fund revenue. The state faces one of the nation's worst budget crises. … little appetite for drastic spending cuts. An income-tax increase is going nowhere … And California officials said this week that April personal income tax-collections lagged projections by 30%  [Amy Merrick, Wall Street Journal, May 7] Prime candidates for drastic cuts are programs with long term (if any) payoff and few active political defenders. The good news at the federal level is that politicians can pass out money to small business without making any voters mad since SBIR taxes only federal agency programs.

voters approved a four-year, $700 million bond to extend funding for the Ohio Third Frontier initiative through 2016. Established in 2002, the initiative offers programs for emerging and established high-tech companies, including grants for pre-seed funding, research initiatives, product development and commercialization. [SSTI, May 5]

The Massachusetts Life Sciences Center, the quasi-public agency that seeks to promote the life sciences industry in the Bay State, said that is now accepting applications for the 2010 Life Sciences Tax Incentive Program. [Boston Globe, May 4, 10]

Montgomery County [MD (DC burbs)] Council's unanimous approval of a plan to spur creation of a $10 billion, 17.5 million-square-foot center for bioscience research. ....  The county is home to almost 300 biotech companies and institutions [including NIH], ... " in a highly competitive industry. We had to do something to really up the ante," [said one council member]  [Washington Post, May 5] And where will $10B come from in America's richest county?

the Office of Science and Technology Policy (OSTP) and the Office of Management and Budget (OMB) issued a memorandum on standardized Research Performance Progress Reports for federal grantees, to be universally applied across federal agencies so that "researchers spend less time managing paperwork and forms" and more time on research.  Details of the new standards are posted on the NSF web site, and federal agencies have nine months to post implementation plans.  [AAAS, Apr 28]

To remain the world’s pre-eminent nation, the U.S. is going to have to develop energy sources that are plentiful, clean and don’t enrich the worst people on earth. That means in the short term, the U.S. has to unleash the tens of billions of dollars of potential energy investments now being pent up by uncertainty and regulatory hurdles. To make a difference in the long term, the U.S. is going to have to invest more and differently in energy research and development. ... It’s clearly going to take legislative action to catalyze private investment and to increase federal research to where it should be — about $25 billion a year, according to Mark Muro of the Brookings Institution. It’s going to take some equivalent of the Pacific Railroad Acts to kick this into gear.  [David Brooks, New York Times, Apr 30]

Visible cost, invisible benefits. Issue 1, a ballot proposal, would allow Ohio to issue $700m of bonds to finance research and development, the so-called “Third Frontier” programme. ... Voters, however, have reason to be wary of spending and empty promises. It is unclear that they will support a vision that is, for most, still hazy. ... The programme spends nearly $58,000 for each new directly created job, though the state points out that increased tax revenue outweighs these costs. A bigger challenge, however, is that few Ohioans feel that Third Frontier has affected them. [The Economist, Apr 29]  What if SBIR were put to a direct public vote?  Even Congress doesn't want to vote on it. Two decades of federal agencies serving themselves and of beneficiaries suppressing economic evaluations have guaranteed the invisibility of results other than temporary jobs. And even those jobs were taken from other citizens.

Don't cut us. The federal government wants to save taxpayers billions of dollars by reducing spending on crop insurance [below last year's $3.8B] after years of big profits [26% last year] by insurers , Oh no, say the beneficiary farmers and insurers. And even if insurance is reduced, vice president of government relations for the National Farmers Union, said any savings should be put back into other risk management tools for farmers [Steve Karnowski, AP, Apr 28] Another group with a fair share attitude that keeps government spending rolling.  Meanwhile, Bernanke said the USG. needs a quick plan to cut the deficit. The aggies response: cut deficits but not farmers.  SBIR has a similar response:  More is better!

The Web site, which serves as a virtual front door for thousands of citizens accessing government services, is undergoing a comprehensive redesign to encourage more public interaction. ... already installed new search tools that are 10 times as fast as the old ones and that suggest popular phrases as users type in keywords ...  considering adding mobile applications to its site    [Washington Post, Apr 28]

The biggest threat to Democracy comes from the People when they start believing they can demand more and more public services from government while simultaneously demanding ever decreasing taxes. The end result is debt slavery. [commenter, The Times, Apr 28]

The Senate passed a bill to extend SBIR until July 31, says SBIR Insider Rick Shindell


The CIA announced a five-year strategic plan that would invest heavily in new technologies to combat nontraditional threats such as cyber attacks from overseas and gain better intelligence on rogue states. ...   Officials said the agency would boost the technology budget by tens of millions of dollars. [Siobhan Gorman, Wall Street Journal, Apr 27] No, CIA has no SBIR, but it does have a VC - In-Q-Tel.

The giant federal deficit and debt—the subjects everybody loves to talk about but nobody likes to do anything about ... Don't expect much to actually happen this year, an election year in which political leaders will grow increasingly allergic to making hard decisions. ...  Most political will in Washington is devoted right now to prevailing in this fall's midterm election, Looking for the culprit? Try the mirror.  Nearly everybody in America expects more from government than taxpayers will pay for.  [Gerald Seib, Wall Street Journal, Apr 27] And if you think more SBIR is a great idea, look in the mirror again.

Washington's habit of spending today the money it hopes to collect tomorrow is getting worse and worse ... The short term looks awful, and the long term looks hideous. Under any likely scenario, the federal debt will continue to balloon in the years to come. ....  Whether on taxes, entitlements, military retooling, financial reform, energy policy or climate change, Washington is mired in a political enmity that makes tough decisions nearly impossible.  [Joel Achenbach, Washington Post, Apr 25]  The SBIR advocates have an answer - more for us!

Subsidy. Massachusetts is giving A123 Systems a $5 million forgivable loan in return for creating 250 jobs and expanding operations for making large batteries that connect to the electricity grid.  [Boston Globe, Apr 22, 10]  Companies with jobs exploit inter-state competition to pull in government subsidies.

Free Access means fewer archival journals. Committees in both the House and Senate are reviewing the Federal Research Public Access Act (H.R. 5037 and S. 1373). The bill would require agencies with research budgets of $100 million or more to provide online access to research manuscripts stemming from federal funding within six months of publication in a peer-reviewed journal. The bill gives individual agencies flexibility in choosing the location of the digital repository for this content, as long as the repositories meet conditions for interoperability and public accessibility and have provisions for long-term archiving. [AAAS, Apr 21]

Spend Today, Pay Tomorrow. America’s fiscal picture is even worse than it looks. The non-partisan Congressional Budget Office just projected that over 10 years, cumulative deficits will reach $9,700bn and federal debt 90 per cent of gross domestic product – nearly equal to Italy’s. Global capital markets are unlikely to accept that credit erosion. If they revolt, as in 1979, ugly changes in fiscal and monetary policy will be imposed on Washington.  [Roger Altman, Financial Times, Apr 19]  Meanwhile of course, beneficiaries of government handouts scream for more. Are there any adults out there?

NIST-TIP (the re-named ATP program that the free-market Republicans hated) is seeking proposals for high-risk, high-reward research projects  $25 million in first-year projects in "Manufacturing and Biomanufacturing: Materials Advances and Critical Processes." or

As the dust settles on healthcare reform, Stewart Lyman helped show readers one of the overlooked elements of the new law that will provide a windfall of tax benefits for biotech companies.  [Luke Timmerman, Seattle Times, Apr 15, 10]

Tax Before Profit.   BioBehavioral Diagnostics (no SBIR) raised millions of dollars in venture capital and invested heavily in its technology to get its medical device to market. Now, with revenues just beginning to roll in, the six-year-old start-up faces another hurdle as it reaches for success: a new federal tax that will take a cut of every sale it makes. ...  developed a system that tests for attention deficit and hyperactivity disorder, is an example of why Massachusetts business and political leaders worry about the medical device tax, recently enacted as part of federal health care reform. The 2.3 percent excise tax, which takes effect in 2013 to help finance the expansion of coverage, will be levied on sales, not profits, [Boston Globe, Apr 14, 10]

Once a Program, Hard to Change. experts say U.S. manned space travel will likely be grounded for years longer than previously expected.  The [NASA] Florida summit comes amid an escalating battle between the White House and Congress over the fastest and least expensive way to revitalize the space program. Mr. Obama has been pushing ambitious plans for start-up companies to ferry astronauts into space on private rockets. Congress, meanwhile, is bent on defending NASA's traditional rocket and spacecraft programs, which the Obama administration wants to kill.   Meanwhile,  China's manned space program aims to leapfrog the U.S. by deploying advanced spacecraft and in-orbit refueling systems as early as 2016, when American astronauts still may be relying on rides on Russian spaceships. [Andy Pasztor, Wall Street Journal, Apr 15] The reality is that a lot of things have to be cut, because the public won't tolerate big tax increases. Look for much pontificating. 

Jobs Today or Pensions Tomorrow?  Maine is diverting money from its pensions funds to speculate in creating jobs today. a new Innovation Finance Program that allows the Maine Public Employees Retirement System to invest its pension funds into venture capital funds, in an effort to boost venture activity and spur innovative startup growth in the state. [Mass High Tech, Apr 14]  Whatever happened to fiduciary responsibility wherein the pension fund has only one mission - providing secure funds for tomorrow's pensions?  Venture activity is interesting and sometimes rewarding, but risky beyond a standard of prudence for public pension funds. And sub-optimizing by directing the venture funds to Maine startup enterprises adds even more risk. The future pensioners should object to such political shenanigans that pretend to create local jobs.

Betting on Government as Commercial Customer. Both Boeing and Lockheed were stung during the last burst of optimism for the commercial space business about a decade ago. They invested several billion dollars — Lockheed to develop its Atlas V, Boeing for the Delta IV — in the hopes that the huge market for commercial satellites would supplement their traditional business of launching American military spy satellites. The market did not materialize, and what business there was went to European and Russian rockets that were cheaper. With the United Launch Alliance, Boeing and Lockheed Martin share costs and profits equally. The joint venture now operates in the black, but the companies did not recoup their original investments, and much of the infrastructure they built remains underused.  [Kenneth Chang, New York Times, Apr 12] Government is about to lose its cachet as a honey pot as the deficit hawks gain traction.

Russia’s rich scientific traditions and poor record of converting ideas into marketable products are both undisputed, cited as causes for the Soviet collapse and crippling dependence on mining and petroleum. Not surprisingly, then, its leaders look longingly at Silicon Valley. ...  [a new town is intended to incubate scientific ideas using generous tax holidays and government grants until the start-ups can become profitable companies. ... an effort to blend the Soviet tradition of forming scientific towns with Western models of encouraging technology ventures around universities. Skeptics see a deeper strain of Russian tradition: trying to catch up with the West by wielding the power of the state. ...  conceived by the Commission on Modernization, deep within the Kremlin bureaucracy ...   still a thriving tradition of government crackdowns on private business with capricious enforcement of the tax laws [Andrew Kramer, New York Times, Apr 9] Government going to create innovation? Look at the economic record of SBIR for expectations as government serves itself.

$150K and 1000K. The SBA announced new "limits" for SBIR awards. SBIR winners cheered, as should the agencies. SBIR wannabes can't tell whether it matters or not. The practical effect is that the agencies will continue to do whatever they please because no loser can make a certain case of damage and SBA has no teeth.

Small Business in R&D. NSF released an InfoBrief last week highlighting indicators of U.S. R&D performance by the size of the performing company. From 2003 to 2007, small businesses (less than 500 employees) increased their share of U.S. industrial R&D investment from 17.9 to 18.7%. Over the same period, they increased their investment in R&D from 3.1% of sales revenues to 8.6%, while medium-to-large companies saw their percentage of R&D investment decrease from 3.6 to 3.4%.  [AAAS, Mar 24]

Since the federal agencies want to spend their SBIR money on life style companies that make the government smarter, let's hear Tim Kane suggest, We've long advocated here at the Kauffman Foundation for something like a Startup Visa, a program that would grant citizenship to migrants who want to (and are able to) create new firms and jobs in America (but be sure to read this counterpoint).  [ blog, Mar 23]

Tim Kaine also says, conventional wisdom assumes a linear link between more R&D spending and more innovation. What about entrepreneurs?  Most startups I know don't have an R&D budget -- the whole company is a tech gamble!  How can government officials measure that?  They can't.  [ blog, Feb 25]

The Administration wants your opinion.   is interested in working with all stakeholders (including universities, companies, Federal research labs, entrepreneurs, investors, and non-profits) to identify ways in which we can increase the economic impact of Federal investment in university R&D and the innovations being fostered in Federal and private proof of concept centers (POCCs).  ...  This RFI is designed to collect input from the public on ideas for promoting the commercialization of Federally funded research  ...  should be sent to with the subject line ‘‘RFI Questions.’’ Deadline. Apr 26. [ ]  Be sure to tell them they should push more money your way and cut your taxes. Otherwise they won't think you're serious about capitalism. The serious R&D people could also say that if SBIR cannot prove that it does a better job of economically useful innovation than the rest of the agency budget, that the money should go back into the general agency R&D pool. Prove, not just blather platitudes.

Enduring Myths.  Elect me for tax cuts and job growth!  [The candidate] called for incentives to bring American jobs back from overseas. That includes creating what she called “jobs for Americans zones” where business in targeted geographic areas would receive a 10-year “tax holiday” for facilities brought back from abroad and a five-year one for startups and expansions.  also proposed lowering the tax rates for businesses that reinvest overseas profits in creating jobs and purchasing equipment in the United States. [John Marelius, San Diego Union Tribune, Apr 1] If all that worked and didn't involve blatant protectionism, they would have been done long ago. Of course, Republicans genetically see tax cuts as the universal solution to any public dilemma. And every party is for job growth, good job growth with great pay and benefits.  But the world is too competitive to allow infinite good American jobs at America's standard of living. To get good jobs we have to raise productivity (which reduces total jobs) and out-innovate the foreign competition. Unfortunately, passing out government money for pretend innovation of no economic portent simply raises the national debt for no gain. Come on voters, give us politicians based in reality and admit that we have to pay for the free lunch of the last three decades.

A Funding Proposition for SBIR.  It’s hard to imagine a more naked example of rent-seeking than this one.  A group representing Arizona hospitals is pursuing a ballot initiative that would tax the state’s high-income earners to help pay the health-care tab for the state’s neediest kids and adults. The Arizona Hospital and Healthcare Association expects to file paperwork for the initiative later this week, aiming for a place on the November ballot. It asks voters to raise the state income-tax rate 1 percentage point on income exceeding $150,000 per individual and $300,000 per couple. The association estimates the initiative would raise more than $140 million each year to pay for health insurance for low-income children and adults, graduate-school medical education and reimbursement to hospitals that care for the poor. In other words, the government will take the money and hand it over to hospitals to do the things they are already doing.  [Warren Meyer,, Mar 30] Oh wait!  That's how SBIR is already funded:  rich agencies get taxed to spend money on a political class to do what the agency would do anyway.

If there has been a theme to the Obama administration’s disparate domestic policies, it has been to invest more in public goods. The administration has increased spending on schools, highways and scientific research and tried to play a more active role in energy policy and health care. “They’re all a necessary part of the network of what makes market economies work,” Timothy F. Geithner, the Treasury secretary, told me recently, “and we have not been good enough about doing them in recent years.”  [David Leonhardt, New York Times, Mar 28]  Music to the ears of beneficiaries of public handouts.

Maybe Innovation, Maybe Here.  The new $232.3 million N.C. Innovation Fund plans to take a multipronged approach to investing in businesses with a North Carolina connection. ...  Although the fund's primary focus is making money for the pension fund, it also aspires to support economic development in the state. [David Ranii, Raleigh News & Observer, Mar 24]  What'll it be? Home cooking or fiduciary responsibility to the pension fund?  Haven't we learned enough about the meager ROI from government investment in innovation?  When politics "invests", it's mostly for votes. Any politician been caught investing his own money in the schemes after proper laundering?

Collection Outruns Analysis.  flow not only exceeds capabilities to interpret and exploit the data, the GAO told lawmakers, but probably soon will exceed the bandwidth available to carry it to ground stations. Service peculiar collection jealously guarded, shortage of language capability on the ground and in the US, Army won't share until 2014, Marines don't even have a sharing date.  [Walter Pincus, Washington Post, Mar 23] Technology advancing faster than human system can absorb. 

‘How big of a bong is he smoking?’  Seeks $5 Billion (With a “B”) from Feds to Support VCs ... “Tom’s approach [is] to have the federal government fund VCs,” Roth wrote in an e-mail in response to my query. “I proposed that the private sector fund early stage (pre VC) and that the federal government would match at the same terms and conditions as the private sector.” [Bruce Bigelow, San Diego Union Tribune, Mar 22] Isn't a fair-share for VCs as compelling as a fair-share for SBIR companies whom VCs wouldn't touch? If economic gain from innovation is the objective, why not help the most likely to get there? Not to worry; no VC worth the money wants to tangle with government as a partner.

Where's the Innovation? From the empty BioValley site in Malaysia to the many [SBIR]grants won by DC-area firms that produce few real innovations, the pattern is depressingly familiar. ...  The big winner of the Department of Energy's battery funding orgy, A123 Systems, spent about a million dollars on Washington representatives from 2007 through early 2009. ... The only sure way to prevent political and other pressures from distorting public efforts to boost innovation is to look carefully at which firms private investors think are viable. By focusing on supporting firms that have raised matching funds, public officials can boost innovative entrepreneurs far more successfully.   [Josh Lerner, MIT Tech Review, Mar/Apr 10] Josh has been watching SBIR from its beginnings, first at GAO, then at Harvard's School of Government, and now as professor of investment banking at HBS. In the same issue, James Surowiecki of the New Yorker reviews Lerner's latest book Boulevard of Broken Dreams: When Public Efforts to Boost Entrepreneurship and Venture Capital Have Failed - and What to Do About It .  Perhaps Nydia Velazquez's staff has been reading Lerner seriously and sees no compelling reason to repeat the last two decades of SBIR. Perhaps also the SBIR advocates could come up with a new story that promises some decent ROI for the public dollars being poured into life-style companies beyond job for the boys.

Here We Go Again. Meg Whitman will "root out fraud" and "cut wasteful spending." Carly Fiorina wants to eliminate "the billions of dollars of waste and bloat that sits in our federal budget." Ho-hum. Is it campaign time again? ...  One fact Whitman doesn't mention is that California's government workforce is already among America's leanest -- the ratio of state employees to population is the third lowest in the country, according to 2008 figures from the U.S. Census.   [Michael Hiltzik, LA Times, Mar 21] Does it work? It's a way to claim government efficiency without making anyone mad. Does it ever happen? Only to programs with politically weak advocates. But there are few such programs after decades of accretion of government benefits for "all shall have prizes." Just count all the SBIR defenders, for example, and listen to their passionate speech with claims as vague as cutting waste, fraud, and abuse.

Defensive Maneuvers.  Shifts in Chinese policy are making it harder for foreign companies to succeed and suggest Beijing is reassessing the liberalization it made when it joined the World Trade Organization in 2001.  [Andrew Browne and Jason Dean, Wall Street Journal, Mar 17]  Meanwhile, Do Like We Do.  A bipartisan group of senators on Tuesday introduced legislation aimed at forcing the Obama administration to take action against China over its currency policy, reflecting growing anger on Capitol Hill over the issue.  [Corey Boles and Shayndi Raice, Wall Street Journal, Mar 17]  The Chinese view is that we dug ourselves into a hole and we want them to do likewise. And since isolation is better politics than cooperation and responsibility, our politicians haste to make speech. All the while, our angry Tea Party citizens want us to do extreme austerity which would raise the value of the dollar and make our trade balance even worse. Be careful what you wish for.

But giving up earmarking would not be "in the best interests of the Congress or the American people," [the Senator]added, because some earmarks had produced outstanding results."  [RJ Smith. Washington Post. Mar 15]  Sound familiar and hollow?  It's the same argument being made for SBIR. If your child spent 10% of allowance on books and 90% on candy, should you increase the allowance to get more books?

House Democratic leaders banned budget earmarks to private industry, ending a practice that has steered billions of dollars in no-bid contracts to companies and set off corruption scandals. [New York Times, Mar 11]  Senate not so enthusiastic.

End of an Era.   This year, for the first time since the 1980s, when Congress last overhauled Social Security, the retirement program is projected to pay out more in benefits than it collects in taxes — nearly $29 billion more. [Stephen Olmacher, AP, Mar 14]  Now Congress has to find more revenue than it appropriates rather than less as it invades the trust fund of nothing but IOUs.

President Barack Obama laid out plans Thursday to help U.S. businesses double their export sales and add what he said would be 2 million more jobs at home during the next 5 years. [Stephen Thomma, McClatchey Newspapers, Mar 12]  Domestic politics. Every elected national leader wants to increase exports in what classic mercantilism treats as a zero-sum game.  Since America's main competitive industrial asset is technology innovation, and our leaders won't tolerate lowering wages, net exports aren't going to grow unless American continually hones that edge. In that spirit, among baser political motives, SBIR was supposed to be a small engine. But after two decades plus, there's little evidence that it is coming close to even a net gain over doing nothing about steering federal R&D toward economic goals. No matter, the mini-battle over SBIR is purely political now.

Corporate Welfare?   SBIR Insider Rick Shindell reports in high dudgeon that House SB Committee Velazquez said, Without the participation of venture-backed companies, the SBIR program has become little more than corporate welfare for marginal companies who are unable to secure external market-based funding.  Shindell counters that, This statement is not only an outrage, but is untrue and ignorant!  Velazquez is debasing thousands of small businesses and SBIR projects that have provided significant results, more often than not resulting in innovations exceeding that of any other sector including large business and academia.  SBIR success is universally acclaimed by numerous sources, including extensive studies by the U.S. General Accounting Office (GAO) and the National Research Council of the National Academy of Sciences, not to mention many other countries that are now emulating the program.  The bad news for SBIR advocates is apparent agreement among the Committee with the chair's opinion.  Says Shindell, There were no objections nor amendments so the document was approved/passed by unanimous consent with only a few committee members present.  While only Velazquez knows what's really motivating her, taking on the myth that small business is America's economic savior is pretty brave stuff.  Perhaps the SBIR advocates can reflect that their two decades of opposition to economic evaluation of SBIR has finally come to haunt them. Stay tuned for developments.

Fund Us, or Else.  Britain will suffer decades of economic decline if the next government cuts science spending to help to contain the £178 billion national debt, an influential panel of researchers, business leaders and former ministers warns today.  [Mark Henderson and Suzy Jagger, The Times, Mar 9] The same argument made by every beneficiary in S&T. How's a Congress to decide how much for whom is enough for a reasonable return?  Who's going to argue against science since no one has a vested interest in less funding?

Senators Kerry and Lugar introduced a bill (S. 3029) that would provide a new type of visa to allow foreign entrepreneurs to enter the U.S. The proposed EB-6 visa would allow foreigners to enter the U.S. for two years if they can secure at least $250,000 from U.S. investors in support of a start-up venture. This proposal builds upon the EB-5 visa program, which allows foreigners to enter the U.S. if they invest at least $1 million of their own money in a new venture which creates at least ten jobs. [AAAS, Mar 5]

Science Wins One. A prominent [religious] conservative lost his seat on the [Texas] state education board, a shift that weakens the board's powerful social conservative bloc. ... to challenger Thomas Ratliff, viewed as a moderate, on the board that shapes what millions of students read in textbooks. [Wall Street Journal, Mar 4]

But Religion Soldiers On. South Dakota Legislature Considering Resolution on "Balanced" Teaching of Climate Change.By an 18-17 vote, the South Dakota State Senate passed a concurrent resolution on the teaching of climate change in public schools, urging that the subject be taught in a "balanced and objective manner" and stating that the debate on global climate change is "subject to varying scientific interpretations." The Senate amended an earlier resolution (HCR 1009) that passed the state's House of Representatives 36-30, which had included a recommendation to include in classroom instruction discussion of "a variety of climatological, meteorological, astrological, thermological, cosmological, and ecological dynamics that can effect [sic] world weather phenomena and that the significance and interrelativity of these factors is largely speculative." The bill now returns to the House.  [AAAS, Mar 5]  "Balanced" apparently includes superstition, holy scripture, faith, and astrology.

Need Government Support? Viktor Petrik shows off what he describes as his discoveries: a cell that generates electricity when you breathe on it. A new way to produce silicon for computer chips from fertilizer waste. A filter that cleans the toxins—and the color—from red wine. "This is real, serious science here," he says ...  He has won some high-level support. United Russia, the ruling party, regularly gives him prominent roles in events on innovation, while officials including Boris Gryzlov, the speaker of Russia's parliament and No. 2 in the party, have publicly endorsed his products ...  Mr. Petrik's detractors say he's the latest in a long history of false experts who owe their success to their ability to fool people in power. Says Petrik critic Rostislav Polishchuk, a member of the pseudoscience commission: "Russia is especially vulnerable to this."   [Gregory White, Wall Street Journal, Mar 5, 10] Give cold-fusion another whirl and invoke your US Representative.

Political Help Claimed.  NeuroDx Development (Bensalem, PA; no previous SBIR) received a $143,000 SBIR to continue its development of improved diagnostic tests for children and adults with brain injuries and diseases. ...  “This grant supports the vital research that NeuroDx is conducting to help those suffering from this brain condition, as well as supporting employment in this cutting-edge field,” said U.S. Rep. Patrick Murphy, D-Bucks, who helped the company secure the funding.  [Philadelphia Business Journal, Mar 1, 10] 

calls for the Small Business Administration to help business owners find willing lenders and, as a last resort, issue the loan directly. While this provision passed a House vote in October, the direct-lending provision has an uncertain future as it awaits consideration from the Senate. ...  The president, in his response, said that the SBA "does not have the infrastructure to go all across the country in every region and process loans." He added that creating a direct-lending system would make a "massive bureaucracy." .... If businesses are being told 'no' because they are not creditworthy and lenders won't make the loan with a 90% SBA guarantee, why should the taxpayers do it with a 100% guarantee?" says Jonathan Swain, an SBA representative  [Emily Maltby, Wall Street Journal, Mar 4]

Medicare vs Moonshots.  NASA chief Charles Bolden has asked senior managers to draw up an alternate plan for the space agency after members of Congress indicated they wanted to reject a White House proposal to hire private companies to ferry U.S. astronauts into orbit and beyond.  In an internal memo viewed by The Wall Street Journal, Mr. Bolden ordered officials to map out "what a potential compromise might look like" to satisfy critics on Capitol Hill. By calling for an alternative plan, Mr. Bolden threatened to undercut White House efforts to get its proposed NASA budget through Congress. [Andy Pasztor, Wall Street Journal, Mar 4]

Florida's efforts to boost its biotechnology sector may not be paying off as quickly as originally hoped. ... $449 million invested through the Innovation Incentive Program has yet to result in industry growth in counties where the program's grantees have their facilities. ... suggests that the state's lack of early-stage capital for biotech startups may be contributing to the sluggish pace of development. [SSTI, Feb 24]  Government "investment" always sounds good, until ROI time comes. In R&D particularly, the sci-techs have more interest in good science than in economics and profit.

SBIR Insider Rick Shindell fulminates on the House's old-trick blatant attempt to get all its pet SBIR ideas into law by default as a rider on the "must pass" jobs bill. Says Rick: virtually unlimited majority ownership and control of small businesses by VC syndicates; no limitations on the overall percentage of award dollars made to these larger entities; elimination of mandatory phase I (allows direct to phase II); allowing and encouraging "Jumbo Awards",  award amounts with no ceilings, only loose guidelines not requiring justification (makes possible $10B, $20B or more awards,); allowing earmarking of SBIR award dollars; only 2 year reauthorization (contributes to continued destabilization of the SBIR program but acts as a fund raising mechanism for incumbent house members, bipartisan at that); no allowance to raise the SBIR allocation (Senate raises from 2.5% to 3.5% over 10 years).  There are many additional issues beyond the scope of this article. For those who believe SBIR is the greatest advance since sliced bread, Rick goes on the repeat the usual arguments for SBIR.

NIH is proposing to expand its definition of human embryonic stem cells, enabling the university researchers it finances to work with cells derived from a very early human egg. The proposal will benefit several academic researchers and a company, Advanced Cell Technology (Santa Monica, CA and Worcester, MA; $500K SBIR) , that has filed a request with the FDA to test a treatment for macular degeneration, an eye disease. If approved, it would be among the first clinical tests of embryonic stem cells, which were first discovered in 1998. [New York Times, Feb 20, 10]

Last month the Department of Defense (DOD) asked SBTC to come up with a list of possible improvements to make the DOD's SBIR program more efficient. The parameters for SBTC's recommendations were that the improvements had to be non-legislative and could be quickly implemented. To address this issue, SBTC formed a committee of about 16 small businesses that have had experience working with the DOD SBIR program. After coming up with a number of good ideas, the committee whittled the recommendations down to five main topics. 1)     The Office of the Secretary of Defense (OSD) and the Director of Defense Research and Engineering (DDR&E) should direct DOD to prioritize the use of SBIR technology in acquisition programs.  2)     Simplify and streamline the SBIR contracting process. 3)     Provide incentives and rewards to government organizations and prime contractors for successful transitioning and commercialization of SBIR technology.  4)     Educate DOD contracting, management, and technical personnel. 5)     Increase SBIR allocation in the DOD from 2.5 percent to 5 percent, and implement scheduled 1 percent increase in SBIR transitioning funding immediately, rather than over 10 years.  [SBIR Alerting Service, Feb 19]   In other words: lobbyists say give our clients more money (from somebody else's wallet), and pay more attention to their whining. I suppose that's responsive to DOD's request if they adopt a twisted idea of efficiency, which should mean more output per unit of input. If they really wanted efficiency (instead of just more money) they would recommend picking companies and ideas with a future. None of those recommendations would make any efficiency from a rocket plume model project, and passing out money faster to the wrong places won't help efficiency. How about starting with: 1) give some experienced VCs and financially successful SBIR business execs a voice in selections and project structures; 2) toss out every year the bottom some percent of companies with no financial success after an SBIR technical success; 3) give a specified portion of the money to managers who will go for, and be willing to measured and rewarded by, economic success from tech success for a military objective; 4) institute some kind of structure that forces every successive SBIR for a company's technology to meet a steeply progressive requirement for third-party co-investment. Anyway, if DOD were serious about efficiency, it wouldn't be asking such question of lobbyists.   

Since Marc Stanley is retiring, ... NIST is seeking qualified applicants for the director of the Technology Innovation Program (TIP). ... to support, promote, and accelerate innovation in the United States through high-risk, high-reward research in areas of critical national need  [SSTI, Feb 16] Applicant needs steady nerves to withstand Republican free-market drumbeat.

Replenishing the Innovation Incentive Fund and investing in space industry, public research, and green energy technologies are among Gov. Charlie Crist's FY11 budget recommendations to grow the state's innovation economy and establish Florida as a pre-eminent global hub. ...   includes $100 million for the Innovation Incentive Fund, which was established in 2006 to attract R&D companies and create high-wage jobs  ... The fund was depleted in 2008 [SSTI, Feb 16]

When in doubt, re-organize. The Oklahoma Center for the Advancement of Science and Technology (OCAST) is among a list of 16 state agencies slated for consolidation in Gov. Brad Henry's budget proposal, which he says will result in cost savings of $5.3 million. Under the proposal, OCAST would be moved to the Department of Commerce, along with Aeronautics, Indian Affairs and the Oklahoma Space Industry Development Authority. Funding for OCAST would be reduced by 3 percent  [SSTI, Feb 16]

Let's Have an Industrial Policy?  The U.S. is down to four world leading industries: entertainment, out of Los Angeles (heavily indebted to Democrats); information technology, out of the Bay Area (likewise); energy, out of Houston (heavily indebted to Republicans); and financial services, out of New York (indebted to both parties). That's it, folks. We're otherwise second- or third-rung suppliers across the range of manufactured products—except for biotech, a small industry—and we can still (mostly) feed ourselves. ... We've never systematically used government incentives to help U.S. industry compete across the board. It's time we did, like everyone else[John Hofmeister (formerly of big oil), Wall Street Journal, Feb 8] SBIR advocates would be for it, even though they cannot prove economic success after nearly three decades of handout. The industrial policy advocates similarly cannot prove that their ideas work better in a competitive world than free markets. Like most advocates, they believe in sub-optimizing and pretend that it's global optimizing.

even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car. [Special Inspector General for the Troubled Asset Relief Program (SIGTARP), Jan 30] And the Republican ardor for free markets and anti-Democratic brakes will probably block any effective USG regulation to control the car. Why should the world richest nation not have the best Congress money can buy?   Since TARP was of course a bonanza for fraudsters as government passed out money as fast as it could without the usual procurement type safeguards that fill the volumes of the Federal Acquisition Regulations, the TRAP IG has 77 ongoing criminal and civil investigations. To see all SIGTARP actions

A Confidence Game.  "Everyone is depending on sovereign and fiscal authorities to keep the music going," he says. However, because the huge government deficits eventually act to slow economic growth, "people know that eventually the music is going to stop playing." The key unknown is at what point bond markets force governments to cut back on the stimulus. The answer, Mr. Brynjolfsson says, "is purely a function of confidence."  [Tom Lauricella, Wall Street Journal, Feb 8]

The Russian finance minister on Wednesday floated a new approach to catching up with the West in technology ... The government will order ministries and state companies to use more of their procurement budgets to buy products that qualify as “innovative” and that are made in Russia. [New York Times, Feb 4]  A national security state going to enliven useful and advanced technology?  Certainly no better than the US DOD does with its national security SBIR.

Public growth, private shrinkage.  NSF, NIST laboratories, and the Department of Energy's Office of Science continue on the path to doubling their budgets. [SSTI, Feb 4]  As always, scientists believe that deficit reduction beef must come from some other sacred cow. But,   GSK plans to expand previous cost-cutting efforts by saving nearly $800 million more a year by 2012 than previously planned. Half of that savings will come from reducing research and development spending, which will affect its R&D hubs, including the one in Research Triangle Park [Raleigh News &Observer, Feb 5]

Ready, Set, Continue. Congress is extending non-DOD SBIR again, until Apr 30. Which, unfortunately, gives the agencies that don't like SBIR an avenue to interrupt the flow of proposals and awards.

Obama wants to offer tax credits to companies that hire new workers, a plan that drew a cool reception from Congress last month despite the nation's double-digit unemployment rate. With polls showing that jobs are Americans' top priority [AP, Jan 29] Some things the government does not do well, including stimulus by creating jobs that lasts only as long as the money.  Wealth creation belongs in private hands after the government has built a safe and invigorating milieu. But until people stop rewarding their politicians with re-election for handing out public money, the inefficient machine will grind on at least at the federal level where running bills up on the national credit card is rewarded with hands on the levers of power.  For a view of what can go wrong, look at Venezuela. Any program to fund private business must be done with great restraint and a structure that provides support only at critical junctures where there is a clear path beyond the barrier to privately based development. A greatly scaled down and highly targeted SBIR, for example, might - might - qualify; not the broad and loose handout of the last almost three decades.

federal deficits have only climbed to 5% of GDP four times since the end of World War II—in 1946, under President Harry S. Truman, and three years under President Ronald Reagan. Why are deficits labeled by president when the president has so little to do with it? One reason: Congresses are ID'd by a number that no one knows nor remembers. What's the number? Subtract 1787 from the year and divide by two to know that we now have the 111th Congress. Anyway the whole business of deficit is enfogged with attitudes that keep changing. The widening deficit and growing federal debt show how the political ground has shifted. During the Clinton administration, deficit concerns were pre-eminent. "Rubinomics," named for then-Treasury Secretary Rubin, said balanced budgets helped the economy flourish and kept interest rates down. By the time Vice President Dick Cheney famously said deficits didn't matter, the pendulum had swung back. Republicans passed tax cuts totaling nearly $2 trillion over 10 years and approved a Medicare prescription-drug benefit, the largest entitlement expansion since the 1960s. Now, there is a new orthodoxy. Democrats argue that fiscal discipline must be restored—but not before the nation regains its economic footing. The debate is how quickly to shift from fiscal stimulus to fiscal austerity. [Jonathan Weisman, Wall Street Journal, Jan 30]

The quasi-public agency Connecticut Innovations Inc. today released a report indicating that the 20-year-old authority has brought about a $23.80 return — measured in impact on the state’s gross domestic product — on each dollar invested in local companies.  ...  CI invested $152 million in 84 companies [1995-2008]. .. CI’s investments helped to create an average of 1,610 jobs each year, including 563 direct jobs and 1,046 indirect jobs. The activity also brought in more than $209 million in state tax revenue, an average of $14.9 million a year, according to the report. The report also said that CI’s investments led to an additional $1 billion in outside investments.  [Mass High Tech, Jan 21, 10]

Yet Another Subsidy. The highly lucrative market for radioactive isotopes used in cancer scans and other medical procedures is at the center of a political struggle in Congress ... over the uncertain future of a $4 billion market now controlled by foreign suppliers with aging nuclear reactors .. [Markey's] bill, which the House overwhelmingly passed and the White House supports, would require the Department of Energy to provide at least $130 million to encourage the creation of domestic manufacturers of the special compounds. [Bryan Bender, Boston Globe, Jan 29]  Governments are good at home cooking [protectionism] and spending public money, but terrible at wealth creation [competitive markets] and paying for the subsidies.

Over the past five years, Washington has tried to reform Social Security, immigration, health care and energy policy. All of these efforts have either failed or are close to failure — thousands of people working millions of hours and in all likelihood producing nothing. ..  as each party interprets victory as a mandate to grab everything  [David Brooks, New York Times, Jan 29]

Continuing Irresolution. SBIR Coach Fred Patterson reports that the House Small Business Committee has chosen not to respond to the Senate's compromise proposal, and we'll have a sixth Continuing Resolution, this one for 90-days. Since SBIR is mainly a political program, why be surprised that the politicians want to extract the most from it? And the advocates are still in angst over the $200M "stolen" by NIH in the stimulus handouts. If you're looking for a model of responsible political restraint, look to......

The board of the Massachusetts Life Sciences Center, a quasi-public agency formed to oversee the state's $1 billion life sciences initiative, today approved up to $3 million in new matching grants to small businesses in 2010.  ... will focus on emerging life sciences businesses with production-ready products and high potential to create jobs in Massachusetts. It will begin accepting online applications for the grants on Feb 1 through its website,  [Robert Weisman, Boston Globe, Jan 27]

Pay Me Now, Or ... Debt for jobs now, settlement later.  The world has issued so much debt in the past two years fighting the Great Recession that paying it all back is going to be hell--for Americans, along with everybody else. Taxes will have to rise around the globe, hobbling job growth and economic recovery. [Daniel Fisher, Forbes, Feb 8] No problem: politicians always prefer Pay Me Later when they will be out if office. We voters apparently believe the same thing because we keep re-electing them. But there are practical limits to the return on more debt: says Carmen Reinhart, a University of Maryland economist. The coauthor, with Harvard professor Kenneth Rogoff, of This Time It's Different: Eight Centuries of Financial Folly (Princeton, 2009), Reinhart has found that a 90% ratio of government debt to GDP is a tipping point in economic growth.

Despite federal programs that have pumped hundreds of billions of dollars into homeowner tax credits, automaker bailouts and other measures meant to stimulate the economy, more than two-thirds of economists responding to a nationwide survey say the stimulus so far has failed to create jobs. [John Schmid, Milwaukee Journal Sentinel, Jan 26] Bailout and stimulus "mandatory", deficit terrible, elect a Republican to Kennedy seat, bailout and stimulus bad, tax breaks to the angry middle class while freezing domestic spending (fat chance), jobs not being created, ... Politicians grope to find a solution to the free lunch dilemma. Bring back an adult president!  For clues as to what that means, read Michael Korda's biography "Ike."

between 1941 and 1960, she observes, the government’s share of R. & D. funding went up 13-fold until it supplied a whopping 64 percent of the country’s research funds   [Steven Mihm reviewing Joyce Appelby's History of Capitalism, New York Times, Jan 24]  Since 1960 we have become so besotted with government support of R&D that it hardly occurs to us to question the underpinnings of R&D handout programs like SBIR.

A possible new twist on SBIR:  since the Supremes said that corporations are people too and can give all the money they want to politicians, perhaps corporate America will argue effectively that SBIR isn't needed since DOD contractors already put 37% of their money into small business. With DOD and NASA removed from SBIR, it would revert to Roland Tibbetts's initial idea that non-mission agencies like NSF and NIH, who formerly put almost no money into small business, should avail themselves of small tech's innovation strength. There is hard evidence that the idea worked for NIH which has a boatload of SBIR awardees making big economic splashes.

The freshly inaugurated governor reeled off a litany of new actions  to increase college graduates, double the Governor's Opportunity Fund and target bioscience companies, invest in renewable energy, and provide tax credits for green job creation [SSTI, Jan 20]  How will he pay for all that plus a $4B starting deficit?  Don't ask, nor how all that fits into his required Republican  limited government.

Aurora Flight Sciences  (Manassas, VA (R&D in Cambridge, MA); $15M SBIR) to develop technology for a hot air balloon to operate on Saturn’s moon, Titan. [Brendan Lynch, Mass High Tech, Jan 18, 10]  NASA and the SBIR advocates will no doubt continue to bleat about commercialization while the Centers fund R&D for outer space. The company's website does standard R&D spin for government-use stuff.  It must be good stuff to get $15M and growing SBIR over twenty years from DOD and NASA. BTW: what would you consider a decent nursery period for small high-tech companies before they can compete on their own for government R&D work. What really happens is that the mission agencies won't let them compete for much of that work because the agency must put at least 3% of their outside work into SBIR. "Go get SBIR," say the agency managers to such companies.

NASA and InnoCentive, which operates a global network of 200,000 potential problem solvers, [to apply the principles of crowd-sourcing to solve the research and development problems that face its corporate customers] are collaborating to open a new NASA Open Innovation Pavilion designed to provide the public with the opportunity to solve difficult problems in human health and performance facing the US space program. ...  seeking input from the public on [among others]: How to keep food fresh in space and how to develop an effective aerobic exercise program that keeps astronauts fit in space, [Boston Globe, Jan 15]

$16.56 Impact for Each State Dollar, says North Dakota.  Providing strong evidence for how public investments in research and TBED pay off even on a short time horizon, a recent impact analysis calculated the total impact from the first $19.9 million North Dakota spent over the past four years for the establishment of 20 Centers of Excellence across the state.  Analysts from North Dakota State University reported a combined cumulative impact of $329.5 million for the 30 months ending June 2009. The total includes both direct reported results and estimates for indirect impacts .. seven new spin-off companies were created, five companies expanded within North Dakota, and five companies expanded to the state  [SSTI, Jan 13] Let me control the assumptions and the "indirect effect" and I can give you any impact you want.

Thousands of Massachusetts small business owners who have been pummeled by rising health insurance costs should see some relief under a program approved yesterday by state regulators. The Health Connector board voted to take over the administration of health insurance plans for roughly 17,000 small businesses, a task that had been handled by a private company, Worcester-based Small Business Service Bureau. The new program is aimed at the smallest of small businesses, those that employ between one and five workers. There are roughly 40,000 such employers in Massachusetts that offer health insurance to their workers, according to state figures. [Kay Lazar, Boston Globe, Jan 15]

The Government Accountability Office has recommended that the U.S. government establish a central national security budget and then set aside money by responsibilities, breaking with the current arrangement of letting departments and agencies decide how best to arrange their budgets. [Walter Pincus, WashPo, Jan 18] The investigating arm of Congress ignores the legislating arm of Congress where committee turf is guarded even more ferociously than the Executive Branch departmental turf.

The conservatives' focus on ideology, they say, is an opportunistic way of distracting attention from the mistakes of the Bush years and the role conservative policies played in bringing us to this point. To cite ideology rather than the economy in explaining the poll numbers is like analyzing the causes of Civil War without any reference to slavery or the rise of the New Deal without mention of the Great Depression. ...  many, especially political independents, are upset that the government has had to spend so much and that things have not turned around as fast as they had hoped.  [EJ Dionne, WashPo, Jan 18] The nation of instant gratification wants to know why the financial and economic mess isn't cured yet. T'row da bums out; bring back da odder bums?

I hope to God I know what I'm doing. -Dwight Eisenhower, the night of Jun 5, 1944 after visiting paratroopers before the Overlord invasion, as reported by his driver. From Michael Korda's 2007 biography Ike.

Jobs, or else.  [NY Gov] Paterson and other state officials have repeatedly said they want to replace Empire Zones with a new set of incentives called the Excelsior Jobs Program. Paterson and other critics have attacked Empire Zones for supplying millions of dollars of tax breaks to companies that generate few jobs in return. [Adam Sichko, The Business Review (Albany), Jan 7]  Administrations everywhere want to put their name on any jobs program.

Polspeak  Laying out her goals for the year, [NC Gov] Perdue promised to push tax incentives for small businesses and use federal training dollars to give small employers administrative support they wouldn't otherwise get. She also challenged business and education leaders to guarantee that every public school student is prepared for college or a career. .. "We're tired of business as usual."  ...  I am, and will continue to be, known as the 'jobs governor'."  [Raleigh News & Observer, Jan 14] She's looking forward to $400M federal handout for education (while Texas declines $700M).

We are no closer today to SBIR reauthorization than we were when the House and Senate SBIR legislation was passed back in July of 2009 with conference talks starting in August.  [SBIR Insider Rick Shindell, Jan 12] Rick sees a pure political stratagem by SB Chair Velazquez of two-year re-authorization which aligns with her bi-annual need for campaign contributions.  But since SBIR is mostly a political handout anyway, where's the great injustice of playing both sides of it? 

the N.I.H. currently prohibits its funds from being used to support the graduate or the postdoctoral training of foreign-born science students, who make up the majority of our talent pool in many fields.  In addition, the N.I.H.’s conservative review panels make it very difficult for young scientists to secure funding for creative, risky basic research, once they establish their own labs. This affects senior scientists as well.  [David Anderson, letter to the New York Times, Jan 13]

We are seeking submission of white papers that bring forward new and innovative science & technology ideas and/or educational programs that could support the future efforts of DoD biometrics and forensics capabilities.  Details.

Helping the Neighbor. Beavercreek-based UES (once called Universal Energy Systems (Dayton);  Beavercreek, OH; about $40+M SBIR) was awarded a $22.7 million [USAF-AFRL] contract [for] research, development and technology transition on advanced metallic and ceramic structure materials. In September, UES snagged a six-year, $44.5 million deal to provide research and development for the nano and biological materials. [Dayton Business Journal, Dec 31, 09] in 2009, it was still getting Phase 1 SBIR awards, its 140th Phase 1 following about 40 Phase 2s.  DOD's due diligence on SBIR must not include a check on whether a firm is ready to compete for mainline DOD R&R funding and thus does not need nursery funding.  Did the Congress intend such situations in SBIR?  Well, the Dayton Congressional delegation will certainly not be complaining about a firm parked outside the DOD gate getting a lot of contracts. What are neighbors for anyway? I do hope that the big contracts do not include consulting work on SBIR topics and selection of winners.

the federal research and development investment for FY 2010 is an estimated $150.5 billion, 2.0% more than FY 2009  [AAAS, Jan 7]  any stimulus money would be extra

what should we expect to be a good return on public investment in research? A new working paper available from the National Bureau of Economic Research helps clarify the range of possible answers, though, and strongly suggests the investment is worthwhile. Reviewing studies from the past half century, the authors conclude the rates of return for R&D are "usually higher than those to ordinary capital" and social returns "are almost always estimated to be substantially greater than the private returns" - both conclusions supporting an increasing role for public research investment. ...  Prepared as a chapter for the Handbook of the Economics of Innovation, the December 2009 NBER Working Paper is available for purchase at:   [SSTI, Jan 6]

The Ohio Business Roundtable’s independent assessment of the outcomes and impacts from the first $473 million invested from Ohio’s Third Frontier (OTF) Program since its creation in 2003 shows the program providing an annualized return of 22 percent – and climbing.  ..  the report reveals product sales of OTF-funded projects already equal $440 million alone, nearly matching the state’s investment. An additional $3.2 billion of follow-on funding has been secured for OTF projects as well. [SSTI, Jan 6]

The Missouri Science and Reinvestment Act (MOSIRA) would dedicate an annual portion of new tax revenues generated by biotechnology companies to a newly-created state fund administered by the Missouri Technology Corporation. Funding would be reinvested in a wide-range of technology-based economic development programs designed to grow science and technology companies across the state. More information regarding MOSIRA is available from the governor's office.  [SSTI, Jan 6]

Gov. Pat Quinn's Illinois Economic Recovery Plan .. would establish an Angel Investment Tax Credit program to allow investors making an early-stage investment in a technology startup to receive a capped credit against their Illinois tax bill. [SSTI, Jan 6]

Need an Investor? Look Abroad. Since October 2006, U.S. companies have raised more than $1 billion and have created over 20,000 jobs (directly and indirectly) through EB-5, estimates the USCIS. ... foreign investors--through the so-called EB-5 program--can snag a slice of equity and a quick-and-dirty U.S. visa in just three-to-six months; plus, unlike other immigrant visas that might expire in a few years, the EB-5 flavor promises permanent residency. EB-5 minimum requirements: a $1 million investment from a lawful source in a new or existing commercial enterprise that directly creates at least 10 U.S. jobs. Investors can put up as little as $500,000 if the company is in a rural area or in a county sporting 150% of the average national unemployment rate. [Katy Finneran., Jan 6] Meanwhile, A group of technology investors is trying to make Silicon Valley friendlier to foreign entrepreneurs.  The group is lobbying lawmakers for a new visa for noncitizens who want to found technology start-ups in the U.S. Dubbed the Startup Visa, it would allow entrepreneurs sponsored by a venture capitalist to come to the U.S. for two years to start their business.  [Jessica Vascellaro, Wall Street Journal, Jan 7]

Command economies [think China] are good at spending money on infrastructure, less good at getting a return on capital.  [Paul Maidment,, Dec 31]  USG mission agencies do the same since they don't see their R&D as capital that should have a measured return. But then, real capital investors don't have to get elected.

The economy is a complex, intricate subject. It is highly doubtful that the current crop of attention-seeking, power-grabbing legislators whose sole concern is their own re-election are equipped or inclined to tackle it in any meaningful and effective way, beyond, perhaps, reinstitution an old law [Glass-Stiegel] that they never should have rescinded to begin with. [carouzer blogging on, Jan 4]



Patent Mining.  to pay for a fraction of its largesse [pork], Congress added one late change to the budget: It slapped a restrictive spending ceiling on the U.S. Patent and Trademark Office, further cramping an agency that was already incapacitated by more than a decade of congressional raids on its fees. [John Schmid, Milwaukee Journal Sentinel, Dec 29, 2009]

Congress is urging the federal government to take a larger role in helping small businesses with exports. The Senate Committee on Small Business and Entrepreneurship this month approved legislation to bolster small business trade opportunities, and asked the [SBA] to appoint an official to focus on international trade programs. Federal lawmakers have also asked Ronald Kirk, the United States trade representative, to appoint a top-level official to open overseas markets to more American small businesses. [Elizabeth Olson, New York Times, Dec 31]

The board of the Massachusetts Life Sciences Center awarded $25 million in tax incentives to 28 life sciences companies that commited to creating a total of 918 new jobs in the coming year. The tax breaks were established under the Patrick administration's 10-year, $1 billion life sciences initiative. [Robert Weisman, Boston Globe, Dec 23, 09] Several "SBIR involved" companies in the list.

The Ohio's $1.6 billion Third Frontier [an unprecedented and bipartisan commitment to expand Ohio's technological strengths and promote commercialization]  will award $17 million to companies developing biomedical and medical imaging technology.  Proposals due Mar 1. [Dayton Business Journal, Dec 14, 09]

The Obama administration is setting aside $30 billion from the financial bailout fund for a program designed to encourage lending to small businesses to aid the economic recovery.  [AP, Dec 19]  The biggest problem will be finding willing and qualified borrowers since banks prefer to lend to people who don't need loans, and the banks already have a lot of burned fingers from government-encouraged landing.

It's becoming clear that the government's attitude to the beleaguered greenback can only be described as benign neglect. [David Rosenberg,, Dec 17]

SBIR Coach Fred Patterson says, As predicted, Omnibus Appropriations bills were rushed through this week, but SBIR reauthorization was not included among them. So it'll be January before any more attention is paid

NIST Market Intervention Still Alive. The FY10 Consolidated Appropriations Act that passed Congress during the past week includes $124.7 million for the Manufacturing Extension Partnership (MEP) and $69.9 million for the Technology Innovation Partnership (TIP). [SSTI, Dec 16]

Patrick Clemins, director of the AAAS R&D Budget Policy Program, said in a briefing on Capitol Hill that the $147.5 billion federal science budget proposed for next year, an increase of 0.3%, or $ 491 million over the previous year’s funding levels, is an all-time high. [AAAS, Dec 17]

Scholar and columnist Norman J. Ornstein told an AAAS audience that despite strong support from the White House, science policy and research funding could face challenges due to a weak economy and a sour national mood. Ornstein said that the public frustration with elected officials and financial and corporate executives has thus far spared S&T leaders, but in a sharply polarized political environment, issues such as climate change, science funding, and visa reform may face significant opposition. Read more about the current challenges and possible options discussed during the seminar, held 16-20 November.  [AAAS, Dec 17]

The University of Wisconsin-Madison has landed a $10.1 million, five-year [NIST] grant for research into use of nanotechnology in metal castings, the university said.  [Joe Taschler, Milwaukee Journal Sentinel, Dec 16, 09] The government has been sponsoring research on composite materials for a long time with a lot of money, but they are still too expensive, however wonderful. The story does quietly say Bringing down the cost of producing the materials also is a goal of the research. But scientists who do great research don't do economics. 

"Christmas is a time when children tell Santa Claus what they want, and we pay for it. Now, with budget deficits, we tell the government what we want, and our children pay for it." -- Josef Ackermann, CEO of Deutsche Bank  [Wall Street Journal, Dec 14]

The DOE hopes to lend or give out more than $40 billion to businesses working on "clean technology," everything from electric cars and novel batteries to wind turbines and solar panels. ... By contrast, venture-capital firms -- which have long been the chief funders of fledgling tech firms, taking equity stakes in the start-ups that will pay off if they go public -- poured just $2.68 billion into the sector in that time, according to data tracker Cleantech Group.  [Neil King, Wall Street Journal, Dec 14]  Guess which "investor" will be around to help with future management and equity funding? Oh right, these companies are so smart and agile that they don't want any business guidance from their investors?

GREENHOUSE-GAS emissions targets can be implemented through three sorts of policy instruments—regulation, carbon-pricing and subsidies. Governments generally like regulation (because it appears to be cost-free), economists like carbon prices (because they are efficient) and businesses like subsidies (because they get the handouts).  [The Economist, Dec 3]

Subsidies, Meet Prizes. Recently a scientist named Andrzej Bartke made a laboratory mouse live 1,819 days. He did it to win the Mprize, run by the Methuselah Foundation, which aims to find ways of extending human life. Prizes work, and they are cheap. In return for its $10m, the X Prize Foundation stimulated $100m in private-sector rocket research. A $30m X prize is now being offered for the first private-sector robot on the moon, $10m for a superefficient car and $10m for a way of giving your doctor an instant readout of your DNA. And so on. [Brian Appleyard, The Sunday Times, Dec 13] Subsidies generate a horde of government junkies; prizes stimulate private risk.

 all depends on policy. Nothing is written. It is for elected politicians to decide. They are vote-maximisers, and will calculate whether [downgrading American public debt] is more threatening to their futures than the hard steps necessary to rein in spending and avoid a downgrade. ... Meanwhile, the off-balance-sheet liabilities of the federal government are rising — the debts of troubled states, underfunded pension plans, the unbooked obligations to an ageing population.  [Irwin Stelzer, The Sunday Times, Dec 13] So, do the American thing: argue for a subsidy that diverts government spending into politically dictated inefficiencies that favor you.

How Slow the Mill Grinds. Many health IT firms that were promised stimulus funding [ARRA announced Feb 09] have yet to take action on their plans. The ARRA does not begin offering incentives to doctors and hospitals to implement electronic medical records until 2011, and providers are waiting for guidance on so-called “meaningful use” rules, which are expected to be finalized next month. [Julie Donnelly, Mass High Tech, Dec 9, 09]

Federal officials alleged that Nova Gen (LaJolla, CA; no SBIR)  bamboozled investors [through fraud and the unregistered sale of corporate securities] out of $2.3 million with promises of a new technology that would covert coal into green fuels and make trillions of dollars. [Onell Soto, San Diego Union Tribune, Dec 5, 09]  Note that you can still make outlandish promises of future benefits in SBIR proposals as long as you don't lie about any of the supporting facts. Sometimes the government wants to hear wild promises so it can pass out "stimulus" money for favored political programs like working on algae-based fuel technology, [with] a $50 million grant from the Department of Energy and a $54.5 loan guarantee from the Department of Agriculture... to expand a commercial-scale pond system in a desert state with lots of dust and sunshine but little water. [Thomas Kupper, San Diego Union Tribune, Dec 5, 09]

There is no doubt that politics and science make uncomfortable bedfellows. Politicians sell certainty. Science lives off doubt. [The Economist, Nov 28]

Raw fear has given way to anxiety that the recovery will be feeble and drab. Companies are hoarding cash. Banks aren’t lending to small businesses. Private research spending is drifting downward. ... What should USG do? ...  education reforms, pay for basic research, rebuild the nation’s infrastructure, find a fiscal exit strategy, gradually address global imbalances, loosen the so-called H-1B visa quotas, encourage regional innovation clusters, lower the corporate tax rate ...  Direct funding of innovation? National Economic Council argued that the U.S. should not be in the industrial policy business. Governments that try to pick winners “too often end up wasting resources and stifling rather than promoting innovation.” .. [David Brooks, New York Times, Dec 8]

As the military shifts its focus toward more high-tech and specialized warfare, experts predict that contractors will continue to rely heavily on the new technologies coming out of small and startup companies. ... “Small businesses tend to be the sources of innovation in technology and large primes are always looking for potential partners,” said retired Brig. Gen. Donald Quenneville, executive director of Defense Technology Initiative, a regional trade group. ... [DOD] requirements that 37 percent of large contracts go to small businesses  [Mass High Tech, Dec 2]

Social Investing. [North Carolina] is starting a $250 million equity fund to invest in North Carolina companies with two goals in mind: make money for the state pension fund and create jobs in North Carolina. [Mark Johnson, Raleigh News & Observer, Dec 3] Present and future state pensioners should question the fiduciary responsibility of sub-optimal investing for political purposes. Fortunately for SBIR, which is the same kind of political targeting, no pensioners are at risk except in the grand sense that federal investments are also sub-optimal, regardless of all the hoopla about small business virtue. But vote-getting always takes priority over efficient finance. 

Now, attention is turning to longer-term reform of the economic system (the good news) by hysterical populist politicians (the bad news) who just might destroy the system in their effort to save it. [Irwin Stelzer, The Sunday Times, Nov 29] With equally hysterical vested interests in danger.

Democratic state legislators plan to hold hearings, possibly as soon as next week, on a proposed $15 million economic growth package that would bulk up Wisconsin's angel investing tax credits, better connect businesses with university research, and include other measures to rebuild the state's economy. [Kathleen Gallagher, Milwaukee Journal Sentinel, Nov 29]

As the [New York] Times notes, “Nothing stirs passions for a massive public-works project like a wad of federal cash.” [CATO's, Nov 10]

Department of Commerce Office of Innovation and Entrepreneurship issued a notice seeking nominations of individuals to serve on a new Advisory Council on Innovation and Entrepreneurship.  ... who have "proven experience in innovation and entrepreneurship." Nominations are due November 30.  [AAAS, Nov 25]

91% for SBIR. The internet overwhelmingly favors SBIR 91-9 according to What Does the Internet Think?   Not surprising that SBIR has few enemies on such a poll since the many beneficiaries love it and no one has to pay for it. But since we have a democracy with a popularly elected legislature, the people will probably get what they say they want.

The University of Rochester's Center for Emerging and Innovative Sciences has added $600 million to New York’s economy in the last five years by creating jobs, saving companies’ money and spurring spending on new equipment and infrastructure, the center reported  ... The center is funded through the New York State Foundation for Science, Technology and Innovation. .... roughly $5 million in state funding ...  The state measures economic impact using a formula in which companies report how many new people they hired, new pieces of equipment they purchased, new sales they made and projects they started due wholly or partly to CEIS subsidies.  [Nate Dougherty, Rochester Business Journal, Nov 25]

Down to Earth Travel. Downey [CA] City Council has approved an agreement aimed at luring Tesla Motors' electric car manufacturing plant to the former site of a NASA plant that helped develop the Apollo program and the space shuttle fleet. ...  The city is pinning hopes that the car factory could bring $21 million in city revenues over 15 years, create about 1,200 jobs and help revitalize its reputation as Southern California's high-tech hub. ... a city of 115,000, was once a vibrant center of high tech manufacturing jobs where aerospace engineers designed and built parts for America's space program. At its height, there were some 30,000 employees at the complex, but when the plant closed in 1999, the complex fell into disrepair. .... In June, the company was awarded $465 million in low-interest loans from the U.S. Department of Energy to help build the Model S, which is designed to travel as far as 300 miles on a three- to five-hour charge.  [Daisy Nguyen, AP, Nov 26]

Surprise - Market Saturation. Two years ago, Congress ordered the nation’s gasoline refiners to do something that is turning out to be mathematically impossible. To please the farm lobby and to help wean the nation off oil, Congress mandated that refiners blend a rising volume of ethanol and other biofuels into gasoline. They are supposed to use at least 15 billion gallons of biofuels by 2012, up from less than seven billion gallons in 2007. But nobody at the time counted on fuel demand falling in the United States, which is what has happened during the recession. And that decline could well continue, as cars become more efficient under other recent government mandates. At the maximum allowable blend, in which gasoline at the pump contains 10 percent ethanol, updated projections suggest that the country is unlikely to be able to use all the ethanol that Congress has ordered up. So something has to give.  “The market is full,” said Jeff Broin, chief executive of Poet  [Matthew Wald, New York Times, Nov 27] Sound like a classic story of a great government sponsored innovation that the market doesn't need or want?

New Big Science. The Obama administration's push to solve the nation's energy problems, a massive federal program that rivals the Manhattan Project, is spurring a once-in-a-generation shift in U.S. science.  The government's multibillion-dollar push into energy research is reinvigorating 17 giant U.S.-funded research facilities, from the Oak Ridge National Laboratory here to the Lawrence Berkeley National Laboratory in California. [Gautam Naik, Wall Street Journal, Nov 25]

Forty-one Nobel laureates have signed an open letter to Congress in support of the Federal Research Public Access Act (S. 1373), which would direct all major federal research agencies to create policies that would allow public access within six months to publications resulting from federally funded research. [AAAS, Nov 18]

I asked Geithner what government could do to help promote innovation. Usually when I ask leaders that, they reel off some cool technologies that government should promote — windmills, nanotechnology, etc. Often they sound like children trying to play at being entrepreneurs. Geithner didn’t do that. He said that government’s limited job was to get the underlying incentives right so the market could figure out what innovations work best. That suggests a pretty constrained view of government’s role.  [David Brooks, New York Times, Nov  20]  In SBIR, like all government programs, the big boosters are the beneficiaries who get the money and don't have to find the money or suffer a true evaluation.  And as long as Congress is treated as a source of free lunch, we will continue down the road of financial irresponsibility. 

Like Japan, we have an aging population, which is pushing up entitlement costs. Our government seems not to have any economically realistic or politically feasible plans either to raise revenue or cut spending, but instead plans ambitious new spending programs (notably but not only on revamping health insurance). Proposed economies seem tokens. There is an air of complacency about deficit spending and public debt--again like Japan. [Becker-Posner blog, Nov 15]  Since we are not yet ready to bite the financial bullet , we continue so many government programs whose only beneficiaries are the firms that collect the money for mundane research.

Lerner provides more than a dozen rules of thumb for effective government intervention in the private sector. Attesting to his own belief in capitalism, he urges governments to “let the market decide the direction” of their stimulus programs and the selection of the appropriate companies and venture capital funds to carry them out.  [Harry Hurt III, reviewing Lerner's book Boulevard of Broken Dreams, New York Times, Nov 15]  Unfortunately, the Congress's ongoing wrestle with SBIR shows no sign of hearing what Lerner has to say as their dominant question is how to satisfy as many interests as possible.

Voices. More than a dozen lawmakers’ statements on the health care debate were ghostwritten by lobbyists working for Genentech, a biotechnology company. .. Genentech, a subsidiary of the Swiss drug giant Roche, estimates that 42 House members picked up some of its talking points — 22 Republicans and 20 Democrats, an unusual bipartisan coup for lobbyists. [Robert Pear, New York Times, Nov 15]

San Diego’s free high-tech incubator, announced that it has enrolled three more startup companies: TetraVue is developing a high-resolution 3D camera and video recording system; MicroPower Technologies is developing ultra-low-power wireless video surveillance camera technologies;  EcoATM plans to install self-serve kiosks for recycling mobile phones and other consumer electronics.  None has SBIR.

Administration officials say the Obama economic team is especially concerned that rapid deficit reduction could hurt the economy. [Wall Street Journal, Nov 12]  Of course, why pay down your credit card balance if the bank isn't threatening your credit?  Don't we have a no-limit card? Meanwhile, back at the ranch,  After months of spending cuts and layoffs, states are drawing up plans for tax increases and an even larger round of service reductions next year as budget shortfalls continue to widen. [Amy Merrick, Wall Street Journal, Nov 12] States don't have the open credit plan; they have to balance their budgets annually (except for California's smoke and mirrors pretense that borrowing isn't deficit finance). One difference is that states can cut public programs that aren't demonstrably pulling their weight, whereas the federal government can simply defer any action that would anger any constituency. That way, everybody can keep their pet programs and pretend that someone else will pay for it.

In NIST’s three year programmatic plan, the discussion of an R&D Investment Framework cites advanced materials as one research area for consideration because it is among the most strategic and enables other rapidly developing technologies.  [NIST White Paper on Manufacturing]  Do your proposals sound like such mush?

there is a role and an opportunity for the public sector to be directly involved in the funding of commercialization of innovative activity, but it’s a tricky matter and it really needs to be done right. ... one of the real problems with many of the public programs. They’re trying to encourage innovation, but they’re doing stuff from a very top-down perspective, where government bureaucrats are imagining what they’d like to see and then chasing after it.
The programs which have worked better have been ones that let the market tell where the exciting things are. 
[Josh Lerner, Wall Street Journal interview, Nov 12]  If you care about public policy on innovation, Lerner is one required reading. If you just want a piece of the government spending pie, keep crying for more SBIR; it won't do much public good, but you may get some spending money.

NIST with a twist. Fred Patterson (SBIR Coach) describes NIST SBIR's new idea: Essentially, if you can show how you'll close the gap [to commercialization] in some NIST research, Clara will give you a FREE non-exclusive research license to use the NIST technology in your project. On top of that, she'll fund your project with NIST SBIR money! Just as with any other SBIR project, rights to the results of the project are yours. And you get access to NIST personnel, facilities, and knowledge regarding the invention. What a deal!  FY2010 solicitation proposals due January 22. 

Economics and politics confront the same fundamental problem: What everyone wants adds up to more than there is. Market economies deal with this problem by confronting individuals with the costs of producing what they want, and letting those individuals make their own trade-offs when presented with prices that convey those costs. That leads to self-rationing, in the light of each individual's own circumstances and preferences. Politics deals with the same problem by making promises that cannot be kept, or which can be kept only by creating other problems that cannot be acknowledged when the promises are made.  [Thomas Sowell,, Nov 5]

Pork in the Right's Places. U.S. Senators Sam Brownback, R-KS, and Pat Roberts, R-KS, applauded Senate passage of the Conference Report to the Department of Homeland Security appropriations bill. The bill includes $32 million of funding for the new National Bio-Agriculture Facility to be relocated in Manhattan, Kansas. [the, Nov 3]

Small-business owners I have been meeting this past week tell me they are in a state of paralysis as they follow the debate over the healthcare “reform” bill wending its way through Congress. Lurking in its 1,501 pages (the Senate version) are provisions that will markedly raise their costs and their personal taxes. So even as business gets better, they won’t take on more staff.  [Irwin Stelzer, The Sunday Times, Nov 8]  Hope, choice, and a free lunch isn't quite happening on the dreamy scale of election euphoria. Good things take time.

[MI Gov] Granholm offered the company tax incentives, grants, and promises of federal funding while promoting Michigan’s charms: manufacturing expertise, a workforce loaded with engineering talent, and a population of ready-made clients. Today Mascoma, which makes a gasoline substitute from wood chips and other materials, is spending more than $200 million to build a factory in Kinross, Mich. ... Michigan is emerging as one of Massachusetts’ fiercest competitors in the race to become a hub for clean technology companies. And Massachusetts, despite being the birthplace of many of these technologies and the companies they spawn, is losing ground to Michigan’s money and determination.  [Erin Ailworth, Boston Globe, Nov 9]

A widening insider-trading probe is causing new tremors in Silicon Valley, as prosecutors say a network of employees at technology companies acted as paid informants for managers of a San Francisco hedge fund implicated in the case.  [Don Clark, Wall Street Journal, Nov 7]

The AZ TechCelerator, housed in the former municipal buildings [in Surprise AZ] is the city's attempt to grow a biotech industry by providing financial help, business mentoring and inexpensive rent. About $14 million in grant money is available to help fund start-ups for the next five years, said Ron King, president of Catapult Bio, an independent non-profit organization that has teamed with Surprise. [Cecilia Chan, Arizona Business Gazette, Oct 1]

 A biomass energy project was awarded $2.5 million in a congressional earmark that Utah Sen. Bob Bennett included in a pending federal budget bill. Viresco Energy (no SBIR) is a company headed by a Southern California real-estate developer who owns a ranch in Alton in southern Utah, where Jim Guthrie proposes to turn wood waste, manure or coal into 40 barrels of fuel a day. ... Bennett's office says it did some diligence before sponsoring the taxpayer-funded item.  [AP, Oct 29, 09]

Stryker Biotech (large firm) employees engaged in a scheme to deceive doctors into using its bone-healing devices for purposes that had not been approved by the FDA, the government alleged. [Mass High Tech, Oct 28, 09]

SBIR Insider says, Today (October 26, 2009), the Senate passed S. 1929 that extends SBIR/STTR for all agencies (except DoD) as well as other small business programs for 6 months, expiring on April 30, 2010.

DOE's ARPA-E will announce 37 grants totaling $151 million, mostly going to small businesses and educational institutions but also to a few corporations. Some of the ideas may be supported until they are picked up by venture capitalists or major companies, ...  the grants average $4 million ...  “It’s not supposed to be things that are 90 percent worked out, but more what-if kinds of things.”  [Matthew Wald, New York Times, Oct 25] Funding high risk stuff will produce a high percentage of technical failures which will eventually be criticized by elements of Congress who want brand new ideas that have been thoroughly tested, and something with which to beat the administration.

It takes a while for most start-up companies to gain the confidence of a U.S. congressman and the promise of federal funds. But last year, a small Illinois company accomplished its goal in 16 days with the help of Rep. Peter J. Visclosky, a little-known Indiana Democrat who sits on the House committee that funds the Pentagon. ...  In rapid succession, the three-employee technology firm, NanoSonix, filed its incorporation papers in Skokie, Ill., and hired a Washington lobbying firm, K&L Gates, which boasted to clients of its close relationship with Visclosky. A week later, Visclosky wrote a letter of support for a $2.4 million earmark for NanoSonix from the House Appropriations Committee's defense subcommittee.  [Paul Kane and Carol Leonnig, Washington Post, Oct 26]

I'm all for progress as you know/ Long as we keep the status quo. -- line from the 1950s musical "Oh, Captain"  From SBIR to health care to foreign war, everyone is for improvement as long as someone else pays for it. The reason Americans have turned against health-care reform, after electing President Obama in part for promising it, is simple: Despite protestations to the contrary, Americans don't like change. [Michael Kinsley, WashPo, Aug 28]

The DOD half of SBIR re-authorized for a year, says SBIR Insider. The other half is still in the political grinding mill. The bad news is that neither half  is likely to produce anything advancing an economic goal for SBIR, just more political handout to small business with neither success criteria nor economic evaluation.  Even any claim to job creation is a myth since the money for the jobs is diverted from other companies that would also buy the jobs. Are SBIR companies better economic creators than non-SBIR companies?  No one knows and the SBIR advocates avoid the question.  Ah well, government is not a wealth creator anyway, just a guardian and political re-distributor.

SSTI gave an attaboy to The TechColumbus TechStart Program supports and develops viable entrepreneurial companies from their earliest phase through their launch as significant economic contributors. The TechStart team in collaboration with its partners has invested $11.5 million directly in technology startups, resulting in the creation of 912 jobs having an average annual salary of more than $62,000. The team serves startups located in its business incubator and across the 15-county Central Ohio region. also in Ohio Since its inception (2004 in Northeast Ohio) , JumpStart has invested in 40 portfolio companies and worked with almost 400 others, assisted companies in raising $140 million in external funding, and created total economic impact of $177 million.

As reported by the various local Business Journals... Since Sept. 1, the National Institutes of Health (NIH) has awarded more than 12,000 research grants totaling $5 billion, the largest infusion into biomedical research ever, as a result of an increase in federal budgets as part of the "Stimulus" funding [LARTA, Oct 20]

When Government Bets on Companies. Battered by the ailing economy, stiff global competition, and plunging prices for solar panels, Evergreen Solar says it may be forced to downsize its new manufacturing plant, .... The company says it expects to burn through most of its $83 million in cash by year-end, and last month it persuaded the state to lend it another $5 million ... Once in office, Patrick sealed the deal by offering Evergreen more than $76 million in grants, land, loans, tax incentives, and other aid. It was one of the largest investments the state has ever made in the success of a private company. [Boston Globe, Oct 17, 09]

When consulting group McKinsey asked executives in February where the government should direct the majority of its stimulus spending, 59 percent of respondents said on "fostering innovation and potential new industries," putting it in the top spot, even before potential solutions such as "helping workers who have been laid off" or "helping existing companies."   [Daniel Harrison, Washington Post, Oct 18] Unfortunately, handing money to federal R&D agencies to do with as they please is highly unlikely to foster new industries. If economic gain is the objective, there need to be mandated economic objectives and criteria.

Momentum. Hydrogen car advocates said that the vote to restore funding represented a sensible step toward funding a variety of alternative energy possibilities. But critics said the vote reflects only the difficulty of killing a government program. The money keeps alive about 190 projects around the country, officials said. "It's an insult to the American taxpayer to pretend that hydrogen cars are a practical and affordable near-term or even medium-term greenhouse gas reduction strategy," said Joseph J. Romm, a former Department of Energy official in charge of clean-technology programs. [Peter Whoriskey, Washington Post, Oct 17]

The "S&T for National Security" study, conducted by the independent science advisory group known as JASON, is quoted as stating that defense basic research programs are "broken" and that "throwing more money at the problems will not fix them."  [AAAS, Oct 15]

While the Small Business committees argue, the Armed Services Committees agreed to extend DOD's SBIR for another year. SBIR Insider Rick Shidell observes that Almost everyone on the hill agrees that SBIR is a good program that accomplishes what it was created to do. If its purpose was to throw a fish to a section of small business, it succeeded. Whether it did much to satisfy the stated objectives can be debated endlessly.

As big-company R&D spending is dropping, investment in new and innovative firms has collapsed. One dollar of venture capital yields as many patent applications as $3 of R&D spending, say Samuel Kortum of the University of Minnesota and Josh Lerner of Harvard Business School. But investment by venture capitalists in America in the second quarter of this year was 51% down on the same period last year. ...  America has never been entirely faithful to the ideal of laissez-faire. In his forthcoming book “Boulevard of Broken Dreams”, Mr Lerner points out that even Silicon Valley in its early years depended more heavily on military contracts than its current denizens care to admit.  Mr Lerner has no theological objection to industrial policy and believes that bureaucrats can help entrepreneurs. But as the title of his book suggests, they mostly do not. One reason is that bureaucracies need a steady stream of quick wins to reassure their political sponsors. They do not cope well with a long series of defeats, interrupted by sporadic flashes of success. [The Economist, Oct 3]

DARPA Goes Long Again. In her conversations with researchers, [new DARPA Director] Dr. Dugan noted the criticism of the shortened time horizon for Darpa financing and acknowledged that increasing classification of research had lessened the impact of the agency’s technology on both civilian and military infrastructure, according to several people who participated in the discussions. ...  but some Congressional opponents have proposed a $500 million cut and there is language in a Senate version of the defense appropriations bill that would prohibit the agency from starting new projects. [John Markoff, New York Times, Oct 7]

The path of productivity growth will determine the nature of the new normal more than anything else. In the rich world, innovation sets the pace. Elsewhere, trade is often more important. Both are now under threat. Cash-strapped companies are skimping on research and development. Emerging economies are having to rethink their reliance on exports for growth. Both rich and poor governments will be tempted to intervene. They should avoid cosseting specific industries with subsidies or protection. Allowing market signals to work will do more to boost productivity than cack-handed industrial policy.  [The Economist, Oct 3]

Big Land, Big Dream. Texas gave birth to the modern oil industry, invented the handheld calculator and sent man to the moon. But can the Lone Star State cure cancer? Texas is ready to try by investing $3 billion over the next decade in cancer research and prevention, which would make the state the gatekeeper of the second largest pot of cancer research dollars in the country, behind only the National Cancer Institute. ...  now putting out the call to scientists: Come and get the money. ... A sagging economy also makes some skittish about whether the state will follow through with funding for an entire decade.  [Paul Weber, AP, Oct 3]  States have a way of starting big programs and then not finding the money to continue after the problem isn't solved in two years. If the NIH couldn't do it the four decades, why would Texas succeed with a mere $3B? Unfortunately, Molly Ivins is no longer around to puncture the Lone Star chutzpah. 

Three Oregon nonprofits that specialize in helping low-income entrepreneurs are among 58 nationwide that snared $5 million in grants from the [SBA] ... The SBA received about 400 applications for grants, which run as much $250,000 and require a 50 percent match, and are funded by the Program for Investment in Microentrepreneurs Act. [Jonathan Brinckman, The Oregonian, Oct 2]

The government is about to get a lot more involved in the economy, particularly the entrepreneurial sector of the economy.  I am sure the lobbyists are streaming from K Street to the Commerce Department to help "shape" how the government will be "shaping" entrepreneurship in the U.S.  I can't wait to see who gets a seat at that advisory panel table [National Advisory Council on Innovation and Entrepreneurship]....  [, Sep 28]

Since the new government fiscal year starts today, do you think that the government has a finance plan for the year? Not exactly, so far the only agreement is to seek as many political points are possible without actually doing anything.  And since there is no fixed budget and no agreement on whether SBIR will continue in its former shape, all is uncertainity for the high tech companies looking for a handout at that door.

The FDA said that four New Jersey congressmen and its own former commissioner unduly influenced the process that led to its decision last year to approve a patch for injured knees, an approval it is now revisiting.  ..  The agency’s scientific reviewers repeatedly and unanimously over many years decided that the device, known as Menaflex and manufactured by ReGen Biologics (Franklin Lakes, NJ; $400K SBIR a decade ago), was unsafe because the device often failed, forcing patients to get another operation. But after receiving what an F.D.A. report described as “extreme,” “unusual” and persistent pressure from four Democrats from New Jersey ... agency managers overruled the scientists and approved the device for sale in December.  [Gardiner Harris and David Halbfinger, New York Times, Sep 25, 09]

[The Commerce Dept ] plans to create a new Office of Innovation and Entrepreneurship and launch a National Advisory Council on Innovation and Entrepreneurship. ... The Council [expected to be comprised of successful entrepreneurs, innovators, investors, non-profit leaders and other experts] will advise the Commerce Department on policy relating to building small businesses and help to keep the department engaged in a regular dialogue with the entrepreneurship and small business communities. ...  the Office is to unleash and maximize the economic potential of new ideas by removing barriers to entrepreneurship and the development of high-growth and innovation-based businesses. [DOC Press Release, Sep 24]  Big old Democratic talk, big plans, perhaps big bureau probably with only a vague idea of how to pick winners with an economic future in a way that doesn't try to do what the market can do better.  Sounds like a resurrection of Clinton 1993 plans.

The White House instructed government agencies to keep politics away from the awarding of federal grants, a step taken as the administration sought to minimize the fallout after an official at the National Endowment for the Arts urged artists to advance President Obama’s agenda.  [Jeff Zeleny, New York Times, Sep 23]  The politics of earmarks and handout programs like SBIR are unmentioned.

More PhDs than money. Managers at [NIH] are increasingly ignoring the advice of scientific review panels and giving hundreds of millions of dollars a year to scientists whose projects are deemed less scientifically worthy than those denied money.  ... Many of the favored recipients are “new investigators,” or scientists who had never before received a grant from the health institutes. .. agency managers hope to use the scientific equivalent of affirmative action to encourage graduate students and newly minted professors to make careers in academia. .... But Peter Farnham, a spokesman for the American Society for Biochemistry and Molecular Biology, said the health institutes had gone too far. “At 19 percent, they’re taking too much from the more seasoned investigators,” Mr. Farnham said. “We would be comfortable with a somewhat lower level.”   [Gardner Harris, New York Times, Sep 21]

Mr. Gates's reordering of the Pentagon budget has improved the fortunes of many smaller defense companies, which account for many of the department's nuts-and-bolts technologies, as well as weapons systems used on the ground in Afghanistan and Iraq. Smaller companies focused on a narrower range of products can often react more quickly than the industry's giants, in part because they tend to be less bureaucratic.  [August Cole, Wall Street Journal, Sep 22]

Fred Patterson SBIR Coach sees the SBIR re-authorization negotiations going nowhere. There's as much spirit of compromise here as there is on the health care debate. Nada. Zilch. [Sep 11]

The U.S. Commerce Department has awarded a $4.7 million grant to build a technology park in Whitewater that is expected to spur business growth in that area of [Wisconsin]. [Kathleen Gallagher, Milwaukee Journal Sentinel, Sep 11, 09]

Using "economic geography", the study of the processes that make economic activity cluster in particular locations, the British government could follow in the footsteps of Silicon Valley and develop new industrial sectors to revive its economy. The trick for governments is to spot these innovation hotspots early on and facilitate their growth with an injection of investment. Innovation hotspots that occur accidentally can fizzle if they are not incubated. By spotting the spillover elements that give rise to such sectors, and helping them with tax breaks and targeted funding, the British government could seed many industrial communities for relatively little outlay.  [Paul Krugman, The Independent on Sunday, Sep 6]   And  If you want to attract the visionary nerds who drive innovation, pay close attention to how start-up culture in your country is financed. ... Seedcamp ( is trying to fill that gap in the UK, running a lean £3m fund to seed early-stage technology companies in the UK and Europe. Seedcamp not only provides small amounts of capital, it also mentors companies, connects them with industry heavyweights and introduces them to London's venture capitalists.   [Reshema Sohoni, The Independent on Sunday, Sep 6]   Heaven forfend that America gets into "injection of investment" into "innovation hotspots" - an irresistible invitation to pork. But the government might do something useful to get innovations started in disruptive technology wherever it happens to show bright potential. Let geography be no factor, but do demand some noticeable third-party investment interest. The more the interest, the better to prospects.  But as good as that scheme sounds, the federal government has little skill in picking such winners, as demonstrated by its failure to make much of SBIR in 25 years (with the exception of NIH which seems to have fostered a lot of good ideas once was forced into doing business with for-profit enterprises).

New York plans to invest $20.4 million in stem cell research. ...  $5.4 million would earmarked to recruit research fellows and transition them into research institutions in New York. The remaining $15.4 million would be used to establish multi-institutional research facilities. The facilities would be shared by researchers from across the state.  [The Business Review (Albany), Aug 28]

The question is whether anyone can come up with the breakthroughs to create millions of new jobs ...  The country's [R&D] leadership is no longer unrivaled. ... The key is recognizing that the future of research will transcend national boundaries and corporate walls.  ... The Obama Administration has promised to make science and technology top priorities, but the economic meltdown forced it to focus on the crises du jour. Thomas Kalil, deputy director of the Office of Science & Technology Policy, says the tens of billions in stimulus money allocated for science research, clean energy, and other projects is only a "down payment."  [Steve Hamm, Business Week, Sep 7]  And the more Congress lets the federal agencies pour SBIR into incremental life-style companies, the more the waste of whatever percentage is diverted into the socio-political program. It's not the percentage that matters, it's how it's used.

SBIR Still Delayed. With the conferees being extremely closed-lipped, it's hard to tell, but the smart money says "No," there will have to be another [continuing resolution].  The biggest sticking points are still the VC eligibility, the award amounts, the length of reauthorization, the direct to phase II path, and a litany of preferences.  [Rick Shindell, SBIR Insider]  Note that Rick's list does not include the idea that the SBIR is an economic waste of time. Rather it is a battle among vested interests for pieces of the pie.

It's Ugly But It's Money. Georgia's Republican senators voted against the $787 billion economic stimulus package, blasting the bill as a bloated government giveaway. But their disdain didn't stop them from later asking Defense Secretary Robert Gates to steer $50 million in stimulus money to a constituent's bio-energy project. [AP, Aug 27]

Status-quo anxiety: Why Americans support health care reform in concept, but grow uneasy when faced with actual change. [Loren Steffy, Houston Chronicle, Aug 25]  The same reasons why they cry over a deficit (when egged on by suddenly fiscally conservative Republicans) but oppose any action that would sacrifice their federal benefits while reducing the deficit.  Sacrifice? Our politicians suggesting that their constituents sacrifice anything? Not in free-lunch-land.

Virtually every strategic plan ever concocted for the United States or Wisconsin economy revolves around innovation as a bastion of competitive advantage. ... the finding by two Journal Sentinel reporters that it takes 3½ years for the U.S. Patent Office to issue the average patent is unnerving. The 1.2 million patent-applications backlog is an indictment of the government's management of this critical function for maintaining our lead in the rapidly changing world of technology.  [John Torinus, Milwaukee Journal Sentinel, Aug 23] The answer, of course, is to cut taxes and government fat.

investment for the long term requires more than simply throwing money at a problem. In the modern research environment, even well-intentioned governments fail to make good investments in scientific and technological infrastructure. ...  grant officers found they could no longer fund all of the promising young scientists who asked for research support and still keep the large educational programs in operation. "NIH research funding is more difficult to get now than it was before the NIH budget doubled," Michael Teitelbaum of the Alfred P. Sloan Foundation observed in Science in August 2008. ...  Many of the problems with scientific research come from the uncertainty of the scientific process itself and the inability of both researchers and policymakers to predict the consequences of policy decisions. [David Alan Grier, Business Week, Aug 21]  One innovation barrier in the mission agencies, who control a large majority of SBIR money, is their distaste for uncertainty of results. Better, they think, a small increment with high probability of technical success than a gamble on something really new.

For fiscal conservatives [a la Hoover], the answer is equally clear: Start cutting the federal deficit and slowing the growth in the money supply now, before the binge generates a burst of inflation.  Ms. Romer is "sending the absolutely wrong message -- that we can't do anything to worry about inflation until the recovery is locked in because of concern for unemployment," says Allan H. Meltzer, a political economist at Carnegie Mellon University. "The reason economists and central bankers have two eyes is so they can do two things at once."   [Michael Phillips, Wall Street Journal, Aug 24]  The people who believe in trillion dollar wars don't believe in trillion dollar economics.

The U.S. Patent and Trademark Office, the steward of the nation’s most important technologies, has been rejecting applications at an unprecedented rate during the past few years, yet it still cannot keep pace with the torrent of applications. [Milwaukee Journal Sentinel, Aug 17] The JS has a long feature article on patents

"New Century Cities" Spain's 22@Barcelona project, for example, involves transforming 115 blocks of industrial land in Barcelona's historic cotton district into an international hub for more than 1,000 media, information technology, and medical technology companies; research institutes; and university labs that could employ 150,000 in 15 years. Seoul's new 135-acre Digital Media City aspires to be a global ecosystem for developing and deploying cutting-edge technologies for entertainment, games, and interactive workplaces. And Singapore is pouring some $10 billion into futuristic architecture for a megadevelopment called One North, which integrates new research complexes and "living laboratories" for biotechnology, advanced materials, and medical services.  [Pete Engardio, Business Week, Jun 1]  Which raises an interesting question of whether an interventionist techno-hungry government should build large complexes or simply provide nursery funding for infant technologies. Nursery programs are a lot cheaper and don't develop expensive commitments to grand ideas. Not content with trusting in private incentives for innovation, University of Tennessee Board of Trustees approved last month the master plan for a 77-acre state-of-the-art research park called Cherokee Farm. The site will house technology and research-oriented centers focusing on renewable energy, supercomputing, materials science, biomedical science, and climate and environmental challenges. Construction is expected to begin in August to accommodate the Joint Institute for Advanced Materials, which will house the Tennessee Solar Institute. Approved last month by the legislature, the Institute is part of the $62 million Volunteer State Solar Initiative (see the July 1, 2009 issue of the [SSTI] Digest).

Suspicious of grand schemes, Last month, the House and Senate committees responsible for appropriating money to the Department of Energy shot down Chu's proposed "Energy Innovation Hubs," with the House killing funding for all but one of the eight proposed hubs and the Senate provisionally funding only three. The House committee called the hubs redundant and criticized the Department of Energy for a lack of planning and clear communication about them.  [Kevin Bullis, MIT Tech Review, Aug 7]

Congressional leaders have been fixated on short-term conventional priorities throughout this entire episode. There is no evidence that the power brokers understand the fundamental transition ahead. They are practicing the same self-indulgence that got us into this mess.   [David Brooks, NY Times, Jun 12]  As long as Congress is going to be fiscally irresponsible to (pretend to) satisfy voters' myths, SBIR might as well argue for its "fair share" (whatever that is and whatever the uncompelling basis).

[North Carolina] Lawmakers in the last hours of the legislative session Monday night began hustling through a new and unfamiliar funding mechanism to help small life-science companies expand or open shop in North Carolina.  Five hours later, as debate began tilting against the bill, House leaders shelved the idea until next spring.  [Raleigh News & Observer, Aug 11]

Neither of the two Austin firms that had hoped to win grants received any money. Valence Technology Inc. had applied for $225 million to build an advanced battery plant in Leander, which would allow it to move production to the United States from China. The company did not return calls for comment. It also applied for federal low-interest loans to build the plant. Austin-based ActaCell Inc. is part of the National Alliance for Advanced Transportation Batteries consortium, which had hoped to win a grant to help build a plant in Kentucky. [Dana Hedgpath, Austin American Statesman, Aug 6, 09]  Neither did Boston Power [Boston Globe, Aug 6]

“Ohio Third Frontier” program has up to $27 million to invest and is requesting proposals for its 2010 fiscal year.  The 2010 Request For Proposals [now open] for the following programs:• Fuel cell research;• Photovoltaic research (used in solar panels); and• Advanced Energy research.  Closes Sep 18  [Dayton Business Journal, Aug 3]

SBIR Coach Fred Patterson says: the DOE is putting a nice chunk of their ARRA Stimulus money ($8.5 million) into new Phase I SBIR and STTR projects that place an emphasis on near-term, clean energy technology commercialization. Sixty six-month Phase I projects will be funded in amounts up to $150,000.  The Funding Opportunity Number is DE-PS02-09ER09-27. (CFDA 81.049)  Here's the complete topic list (For details: technical topic descriptions)

A major effort to revamp research and development at the DOE, which Secretary Steven Chu says is critical to solving energy-related challenges, hangs in the balance as the Obama administration attempts to make its case to a skeptical Congress. ...  The House committee called the hubs redundant and criticized the Department of Energy for a lack of planning and clear communication about them.     [Kevin Bullis, MIT Tech Review, Aug 7]  The solution to a government productivity/effectiveness problem is rarely re-organization; moving tghe same people around into different boxes won't do much. And DOE has a hard time convincing Congress to appropriate more money for a dream machine. SBIR can get away with low productivity because no appropriation is needed. To test what Congress and the agencies really think SBIR is worth, make it either optional or requiring appropriation.

$2.4 billion in stimulus grants to jump-start an electric-vehicle industry centered in the Midwest. ... will leverage another $2.4 billion in private investment by recipients. The bulk of the Department of Energy money goes to seven companies in Indiana and 11 in Michigan, two states with the nation's highest unemployment that will play a strong role in Democrats' fates in 2010 congressional races and Mr. Obama's 2012 re-election run. ...  Some companies that failed to get grants questioned why most of the winners were large, well-established companies, such as GM, Johnson Controls Inc. and Saft Groupe SA of France.  "Innovation in this arena frequently comes from the smaller guys," said Mark Mills, chairman of International Battery Inc., a venture-capital-backed battery maker in Allentown, Pa., that had unsuccessfully sought DOE funding for an expansion. "If we wound the clock back to 1980 and had the government funding computer operating systems, the probability that Microsoft would have been funded then would have been small."   [Elizabeth Williamson, Wall Street Journal, Aug 6]

If the government builds a bridge, and... [do so] by taking tax money away from somebody else, and using that to pay the bridge builder -- the guys who work on the bridge -- then it's just a wash. It has no first-starter effect. There's no reason to expect any stimulation. And, in some sense, there's nothing to apply a multiplier to. You apply a multiplier to the bridge builders, then you've got to apply the same multiplier with a minus sign to the people you taxed to build the bridge. [Robert Lucas, Council on Foreign Relations, Mar 30] An exact parallel to why SBIR creates no jobs as it taxes away money from other federal contracting. .

Where Half-Truths Serve the Purpose (besides SBIR blather).   In certain GOP circles, the conclusion had already been drawn that the recent fiscal stimulus had failed to cure the patient even before the patient really swallowed the medicine.  [EconoSpeak blog, Jul 31]

Cutting Back. The Oregon Innovation Council (Oregon Inc.) will receive $16 million over the biennium to continue R&D and commercialization efforts in nanoscience and renewable energy through the state's signature research centers. This is scaled back from the governor's recommendation of $20.5 million and $12 million less than the 2007-09 biennial appropriation.  [SSTI, Jul 30]

More Waiting.  SBIR Coach reports that SBIR will be extended another two months while the conferees cook up a compromise (and the principles take their August break).  No harm done since the only people hurt are the SBIR junkies.

China can force government-owned corporate entities to borrow and spend, and spend quickly itself. This isn't some slow-moving, touchy-feely democracy. If the Chinese government decides to build a highway, it simply draws a straight line on the map. ... But don't confuse fast growth with sustainable growth. Much of China's growth over the past decade has come from lending to the United States.  [Tyler Cowen, Marginal Revolution blog, Jul 27]

The politics are still raging over renewing SBIR. Fred Patterson - SBIR Coach - suggests ways that you can add your half-truths to the half-truths already being promoted by the SBTC. Vested interests arise!

Get Charged for Subsidy. The Energy Department is getting ready to hand out about $2 billion in grants to create a domestic industry for electric-car batteries, and 122 companies are scrambling to get pieces. ... But U.S. hopefuls face stiff competition from foreign firms such as Japan's Panasonic and Sony and South Korea's LG Chem, which already dominate the lithium-ion battery market in power tools, laptops and cell phones. Some domestic firms have recruited foreign companies as partners. Some economists warn of the perils of government subsidies.   [Steve Mufson, WaPo, Jul 28]  How could my getting a subsidy ever be bad?

Feed Us ... Now!  The Economist has a cartoon of Obama watering a small garden next to which stands a bag of stimulus fertilizer while saying “Give it time; it will grow”.  Standing in a queue are a crowd of people with a plate and a fork while the front person in working clothes with a cap showing a large American flag says “No problem; we’ll come back in ten minutes.” 

A new study of University of Wisconsin-Madison start-ups shows more than 250 companies have been launched by the school's faculty, staff and students since 1950. [Kathleen Gallagher, Milwaukee Journal Sentinel, Jul 18]   Since its founding in 1948, BBN (Bolt, Beranek, and Newman) government contractor has been a birthing ground for at least 100 companies, based on an informal count provided by current and former employees.  [Mass High Tech, Jul 20]

I'd like to see Mars become the focus, just as John F. Kennedy focused on the moon. --MICHAEL COLLINS Astronaut [, Jul 20] A good bureau man: anything worth doing is worth overdoing; send money.  If we must shrink government to meet our willingness to pay for it, Mars is an expendable program.  After all, Collins's moon project Apollo was a Cold War gambit to beat the Russians at something in space after they beat us to the first satellite.  Who or what would be our target in for a trillion dollars or so to do some Mars spectacular?

Nine technologies developed at University of Texas System institutions were awarded Texas Ignition Fund grants totaling nearly $453,000.  Two of the nine technologies came out of the University of Texas Austin. One is a device for inducing hypothermia, the other is designed to increase the drug absorption rate of bloodstreams.  The grants are designed to migrate the advancements from the laboratory to the commercial marketplace. The winning entries were awarded grants of $48,000 - $55,000 apiece, officials said.  [Austin Business Journal, Jul 14]

Where's Our Handout? a string of decisions opening President Barack Obama to attacks that his administration hasn't done enough to help small businesses. Republicans, lobbyists and some small businessmen noted Thursday that the lender to many small and medium-size firms was left to fend for itself, while banks catering to major corporations and investors have received bailouts. [Jonathan Weisman, Wall Street Journal, Jul 17]  Angling for max advantage, all kinds of entities want capitalism when they can profit and socialism when they get in trouble. Having gotten a stimulus handout that saved police and teachers' jobs in their districts, Republican Congressmen criticize the stimulus for enlarging the public debt. A few small businesses want more SBIR handouts and competition restriction even though they cannot come up with a story that it would make an iota of national economic difference. All this opportunism points out the grand principle that we get the government we deserve.

Democrats elected from some of the U.S.'s richest districts have emerged as stumbling blocks to raising taxes on the wealthy to pay for Obama's health-care overhaul.  [Wall Street Journal, Jul 20]  It's the time-worn story: everyone has a great idea for a government program that someone else should pay for. Just listen to the bleating for SBIR.

the University of Wisconsin-Milwaukee's Catalyst grant program, which, for the second consecutive year, is awarding $500,000 to research projects that have scientific promise and strong commercial potential. The grants are funded by the Lynde and Harry Bradley Foundation, the state's largest foundation.  .... Seven University of Wisconsin-Milwaukee faculty members [Kathleen Gallagher, Milwaukee Journal Sentinel, Jul 16]

A recent survey by the Pew Research Center for the People & the Press, in collaboration with AAAS, shows a large disparity between scientists' and ordinary Americans' opinions on issues such as climate change, evolution education, and federally-funded research.  [AAAS, Jul 15]

On Wisconsin.  Tripling the Acceleration Wisconsin tax credit from $1 million to $4 million for angel and venture investors in support of startup technology companies, beginning retroactively for the 2008 tax year; ... Allowing angel investors to claim the entire 25 percent credit on their investment in the first taxable year; and, Permitting insurance companies to claim the venture capital investment tax credit against gross premium tax liability ... Creating a capital gains tax exemption for investments of up to $10 million in new businesses. [SSTI, Jul 14]

the 2009-11 budget signed into law by Gov. Mitch Daniels reduces by half funding for the state's 21st Century Research and Technology Fund and appropriates only a fraction of the requested $70 million for the Indiana Innovation Alliance, an initiative to grow the state's life science industries. ... [IEDC] will receive $35 million over the next two years - half the amount appropriated last biennium. Supporting numerous entrepreneurial ventures over the last 10 years, IEDC uses the fund to offer loans and grants to companies bringing new technologies to market, to match SBIR grants, and to create University Centers of Excellence. [SSTI, Jul 14]  States have little patience; they want results by the next election.

The Senate passed S.1233 - SBIR/STTR REAUTHORIZATION ACT OF 2009! .. with
a couple of amendment: one that basically prohibits earmarking of SBIR award funds, better metrics, and an 8 year reauthorization period; and one favoring security, energy, transportation, or improving the security and quality of the water supply.
[SBIR Insider, Jul 14] Still far apart but moving.

a petri dish for corruption  When an Air Force command in north Florida sought new battlefield technologies, John P. Murtha (D-Pa.) steered millions in federal dollars its way to hire defense contractors. The research effort at the Pensacola Air Force base fell apart, however, when investigators found evidence that it was used to improperly pay a series of companies linked to Murtha. A handful of defense firms were paid for work that was never done or not called for in the contracts. Some of the companies involved, based in Wyoming, Florida and Murtha's district in Pennsylvania, had hidden owners, prosecutors allege; one was secretly owned by the Air Force official who helped approve the payments.  ... "It really puts a fine point on the murky, unaccountable web that exists around earmarks," said Steve Ellis, of the watchdog group Taxpayers for Common Sense. "These earmarks, because there is very little accountability, provide a petri dish for corruption."   [Carol Leonnig, Washington Post, Jul 15]

Squawking Continues.  First, the [House SBIR bill 2965] says that only firms less than 50 percent owned by venture capital firms are eligible to receive SBIR grant money. Previously, there had been no limit for  VC-backed companies, but there had been a limit on how much each agency could give to VC-backed firms. That limitation — 15 percent of the total grant money by a federal agency — has been removed in the bill, known as HR 2965.  A second change would establish a “fast track” status for Phase 2 money that would eliminate the requirement that an SBIR applicant company receive Phase 1 money first. Third, the bill puts a much stronger emphasis on commercialization, saying programs should focus on projects governed by commercial business plans, and have significant potential to produce products and services.  Taken together, the focus on commercial potential, the elimination of the need to have taken Phase 1 money and the open door for VC-backed companies to elbow out other firms, could have a crippling effect on innovation, said Ann Eskesen of Innovation Development Institute, in Swampscott. “This is an absolute transformation from what has worked extremely well for 30 years,” Eskesen said. “Thousands of companies are going to go out of business.”  [Rodney Brown, Mass High Tech, Jul 10] Perhaps most of those thousands of companies have no business in competitive innovation anyway; they simply service the government need for R&D as small businesses did before SBIR.  Half the SBIR is in DOD which disdains economics. They add no new jobs during or after SBIR because they take money that would have bought the same number of jobs elsewhere and they create no permanent private economic activity after the SBIR. ... The other new features sound like a cry from the House to either make something economically useful out of SBIR or let it go away.

What's the big problem with SBIR?  The government!  The companies are just doing what comes naturally - exploiting an invitation to accept free money for doing what they like to do. But I have never met any government SBIR manager who can talk in terms of companies and competitive advantage and diminishing returns. They talk only of technology, their missions, and their procedures.  I've never seen any evidence that they hold a company to a progressively higher standard of ROI as the SBIR contribution to the new technology increases. It can be done (I did it) and until the mission agencies, which have most of the SBIR money, do it, SBIR will continue as a national waste of time.

A coalition of U.S. scientific societies and university organizations is urging Congress not to expand a $2.3 billion research program for small businesses. To succeed, however, the coalition must overcome one of the most influential interest groups in Washington and mend fences with legislators still smarting from a recent tweak to the program. [Science, Jul 3]

It will happen only if Exelon receives the generous loan guarantees for renewable-energy projects promised in this year's federal stimulus bill--funds that in this case would cover 80 percent of the project's costs. Barely viable with the loan guarantees and a handful of other federal and state subsidies, the $60 million solar plant would not be possible without such government support.  [David Rotman, MIT Tech Review, J/A 09]  Just like tons of SBIR projects - completely dependent on a huge subsidy.

[DOE's] recommendation to slash funding for some fuel cell development projects could be seen as a blow to the industry, but New England fuel cell companies are hoping the cuts are kindest to them. .... Much of those cuts would affect projects in the transportation arena, which Energy Secretary Steven Chu has said publicly are further away from large-scale deployment. The changes would refocus funding on fuel cells for power generation and storage, [Jackie Noblett, Mass High Tech, Jul 10]

TARP to Stimulus.  The Obama administration is developing an initiative to take money from the $700 billion rescue program for the banking system and make it available to millions of small businesses, which officials say are essential to any economic recovery because they employ so many people, according to sources familiar with the plan.  [WashPo, Jul 13]  Money sitting in a government account can always find some political use if left unfenced.

House Passes Christmas Tree SBIR Bill.  HR 2965 passed overwhelmingly with a load of political preferences; veterans, high unemployment areas, minority education institutions, renewable energy, water delivery, Native Americans, medical technology.  Chair Velazquez's preferences dominated (or what's a Committee Chair for, anyway?), including allowing VC controlled companies to compete for a (compromise) specified portion of NIH's SBIR.  The Senate has to act on its different bill before it can go to conference to resolve the differences into a law. [Thanks to SBIR Insider] Weeping and wailing from companies that don't want to compete in economic competition.

Not As Free as It Appears.  the prospect of large flows of government money to the industry is holding up private-sector investment. New incentive programs haven't yet been defined, and uncertainty about program rules has deterred investors from backing companies that also may get government money. At the same time, companies are holding off from accepting private capital because of the possibility of getting it more cheaply from the government. [AW Matthews, Wall Street Journal, Jul 8] SBIR has the same problem of inviting firms to commit economic suicide by taking free government money and thereby avoiding facing questions about "what comes after SBIR".

Former University of Tennessee-Knoxville computer engineering professor J. Reece Roth has been sentenced to four years in prison for enabling unauthorized foreign citizens to gain access to restricted military technology. Roth violated the Arms Export Control Act by giving graduate students, one from China and one from Iran, access to sensitive military arms information and by disclosing some of the information in lectures overseas. [AAAS, Jul 8] Don't play with the national security protectors; they have no sense of humor.

Small Business, Big Fable.  One of the most enduring lies in American politics is the myth of small-business job creation. You probably know it by heart: Small businesses create 60, 70, even 80 percent of all the new jobs in the United States. Back in the 1980s, I was a senior editor at Inc. magazine, where I worked on some of the articles in which some of the seeds of this myth were planted. Up to that point, there was a widespread tendency to conflate the success of the economy with the fortunes of big business, so it was rather useful to have some data highlighting the importance of small firms. By now, however, that analysis of net job creation has been repeated and embellished and oversimplified by so many lobbyists and politicians that it is only a matter of time before the magic number swells to 100 percent of job creation and small businesses will be demanding to be exempted from all taxes, all regulation and the Ten Commandments. [Steve Pearlstein, Washington Post, Jul 8]

the "Tennessee Small Business Investment Company Credit Act" ... designed to create a pool of at least $84 million in capital, utilizes a competitive process to select several venture capital funds to make direct investments in small business headquartered in Tennessee. ... a model intended to minimize the expense to the state, provide incentives for participation by venture capital groups, and encourage funds to invest in seed and early stage small businesses in Tennessee within a designated time period. language of the Tennessee Small Business Investment Company Credit Act  [SSTI, Jul 1]

State funding of Small Business Development Centers across Oregon has been cut by more than half, forcing managers to consider sharp changes in how the business-training program works while scrambling for new money.  [The Oregonian, Jul 2]

economists are beginning to wonder whether such [state subsidy] initiatives create or save jobs at all. Companies taking advantage of lucrative tax incentives are jumping from state to state—and bringing their jobs with them. ... states are handing out an unprecedented amount of tax incentives at a time when they're living on the federal dole. States, which face a $166 billion budget shortfall this year, together are getting more than $416 billion in government aid. The money is part of the Economic Recovery Act ...  The job gains, however, may prove fleeting. In 2002, Ohio lawmakers shelled out $1.7 million in tax incentives to Wal-Mart Stores (WMT) to build an eyeglass manufacturing plant in the state. Wal-Mart shuttered the operation in April, citing the worsening economy, and paid back the money. ... states often use tax breaks to poach jobs from each other. [Jessica Silver-Greenberg, Business Week, July 13]

Krepinevich said the military, like many bureaucracies, was in danger of “drinking its own bathwater” and discounting new challenges, including the proliferation of precision-guided weapons and threats from space and cyberspace. ...  His essay, The Pentagon’s Wasting Assets, has become essential reading for military and defence officials. ...  Although Krepinevich has received encouragement from Gates, his prescription is likely to run into opposition from powerful vested interests.  [The Sunday Times, Jul 5]

Rockville MD developer Opus East LLC filed for Chapter 7 bankruptcy Wednesday, less than two weeks after relinquishing its development rights to a massive business park at Aberdeen Proving Ground, MD (an Army installation where I worked for many years). .... In addition to general market conditions, the company cited $35 million in unpaid wages from GSA for a project it was developing in College Park for NOAA. [Daniel Semovitz, Baltimore Business Journal, Jul 1]

Congress had to bribe every business or interest that could afford a competent lobbyist. Carbon permits are valuable, yet the House says only 28% of the allowances would be auctioned off; the rest would be given away. In March, White House budget director Peter Orszag told Congress that "If you didn't auction the permit, it would represent the largest corporate welfare program that has ever been enacted in the history of the United States." Naturally, Democrats did exactly that. [Wall Street Journal, Jul 3] Good news for SBIR: Congress likes corporate welfare. But, since the WSJ op-ed page opposes anything that Democrats do (even things that Republicans do when they have the power), it's hard to tell whether the alleged corporate welfare is just representative democracy in action. 

Once again, Velazquez with the help of major Wall Street lobbyists have turned this SBIR small business reauthorization into a Wall Street vs Main Street battle, with the deck stacked on the side of the Wall Street special interests such as BIO and NVCA. [Rick Shindell, SBIR Insider, Jul 1]  House and Senate still far apart on SBIR re-authorization.

Safety in Increments.  The cancer institute has spent $105 billion since President Nixon declared war on the disease in 1971. The American Cancer Society, the largest private financer of cancer research, has spent about $3.4 billion on research grants since 1946. Yet the fight against cancer is going slower than most had hoped, with only small changes in the death rate in the almost 40 years since it began. One major impediment, scientists agree, is the grant system itself. It has become a sort of jobs program, a way to keep research laboratories going year after year with the understanding that the focus will be on small projects unlikely to take significant steps toward curing cancer.  [Gina Kolata, New York Times, Jun 28]  Bureaus, public or private, including legislatures, find comfort in statistics about percent "success"; they do not think like capitalists who want the largest return over the entire investment portfolio.  Which is one explanation for SBIR's high "success" and negligible return. 

NASA will issue the combined STTR/SBIR solicitation (web only) starting at noon Eastern time on July 7.

“Opening up the SBIR program is exactly the kind of legislation Congress should be passing to help small businesses create new, good-paying jobs,” said bill sponsor Rep. Sam Graves, R-Mo. [Mass High Tech, Jun 26] Although Republicans don't like corporate subsidies (unless their folks get a piece of the pie), Graves hits on SBIR's problem of paying for a lot of dead-end projects in life-style companies that have no economic future even if the technology worked.

Incentives and Relevance. [Presidente] Chávez said that researchers should stop working on "obscure projects," such as whether life exists on Venus, and instead go into the barrios to make themselves useful. The words sent a chill through the scientific community, as did Chávez's comment that his recently appointed minister for science, technology, and intermediate industry, Jesse Chacón Escamillo, should "put the screws" on "feeble scientists" to get better results. .... Chávez's dismissal in April of science minister Nuris Orihuela, a geophysical engineer,and her replacement by Chacón, an engineer and Army lieutenant. [Science, May 29]

The next time the world's most selfish lobby comes to Washington demanding drought relief, someone ought to have the good sense to tell them to go pound sand. .... True to form, [the farm lobby] has demanded another boost in his already lavish government subsidies before he'll even consider doing something about global warming. [Steve Pearlstein, Washington Post, Jun 26]  No matter how big your present subsidy, demand more!  After all, what's a Congress for except to grease squeaking wheels?

The board of the Massachusetts Life Sciences Center, a quasi-public agency charged with implementing the state's life sciences initiative, today awarded nearly $1.4 million in research grants to seven scientists whose research ranges from malaria to neural regeneration. Each of the grants will be matched by the scientists' institutions. [Boston Globe, Jun 25, 09]

Hogs, Keep Out. Last week the Senate Small Business and Entrepreneurship Committee approved a bill (S.1233) to reauthorize [SBIR] and increase the percentage of their budgets that some federal science agencies must devote to it. The legislation would require annual incremental increases in the percentage set-aside for SBIRs, from the current level of 2.5 percent to 3.5 percent over a 10-year period. Some scientific advocacy groups oppose that part of the bill, saying that SBIR funding should be increased through total agency funding boosts rather than increasing the amount of the set-aside formula. Agencies impacted by the legislation include NIH, NSF, DOE, and Department of Agriculture. [AAAS, Jun 24] The SBIR hogs must believe that if a policy isn't working, we need more of it.  Like the Republicans on taxes: whatever the problem tax cuts are the answer, regardless of larger issues, like financial sanity. 

Aneesh Chopra, who holds the newly-created title of Chief Technology Officer in the Obama Administration, and is also associate director for technology at OSTP, said that his major goal was "economic development using government policy to create business around technology." Chopra said he wants to change how the government looks at its R&D spending, focusing more on technologies that can be developed rather than purely on basic research. Measuring how much research is being commercialized is a key part of this, he noted. [AAAS, Jun 17] If the President is serious about such an objective, SBIR in the mission agencies is in for a big shift.  On the other hand, those agencies have seen bright ideas coming from many other geniuses with new White House power.  The hard rules will emerge from the Congress's prescriptions and action will depend on the willingness of the White House to pressure the agencies to focus SBIR on Chopra's ideas. But since Congress will try to please everybody and SBIR is too minor to engage the agency heads, don't expect any revolution.

CLEARLY, the innovation meeting [invitation-only affair was organized and moderated by John Kao, a former professor at Harvard Business School and founder of the Large Scale Innovation.] in California was a gathering of enthusiasts. ... the main participants were innovation-policy practitioners from nine countries: Australia, Brazil, Britain, Chile, Colombia, Finland, India, Norway and Singapore. ...  One view not heard was that innovation policy itself is a mistake — government meddling in decisions best left to the marketplace — as free-market purists contend. [Steve Lohr, New York Times, Jun 21]

Give Us More. While the pundits wring their hands about The next great crisis: America's debt (Shawn Tully, Fortune, Jun 22), the SBIR advocates cry for a bigger handout of government money.  They just don't hear any call to conserve government spending, nor to maximize the economic return from government investment.  Nor do they even show any sign that they understand America's financial dilemma. If there's any justice, Congress will treat them as just another grasping interest group loaded with platitudes.

Concluding that the Fed is leading us into inflation assumes a degree of incompetence that I simply don’t buy. ...  [The Fed] might miss and produce, say, inflation of 3 percent or 4 percent at the end of the crisis — but not 8 or 10 percent. [Alan Blinder, New York Times, Jun 21]

New Albany and TechColumbus have created a business incubator in the village that will widen the organization’s reach in fostering tech development in the region and satisfy the village’s push to step up economic development. .... funded by state grants and private investments. New Albany contributed $750,000 toward its project, which was complemented by $1.5 million from the state’s Third Frontier technology development program.   [First Business of Columbus (OH), Jun 18]

Rick Shindell - aka SBIR Insider - has an excellent review of the bidding in the SBIR re-authorization game. Much negotiation to go.

The government's massive intervention has shifted the way companies do business. Many are now are competing on the basis of their ability to tap government money, opening a divide between the gets and get-nots. [Wall Street Journal, Jun 15]  Sounds like the SBIR scramble for money.

Tax Revenue Drought, Services Demand Storm. States face a cumulative shortfall of $230 billion from this year through 2011, and there is little sign in bailout-weary Washington of any attempt to create yet another aid program to solve that problem. .... So far, 42 U.S. states have slashed enacted budgets to cope with rising demand for services and plunging revenue, according to the National Governors Association. About half have also raised taxes. Those policies run counter to Washington's efforts to prime the economic pump,   [Jonathan Weisman, Wall Street Journal, Jun 15] The gap is a natural consequence of the competitive bidding wars among interests in representative legislatures.

This month, the Supreme Court agreed to reconsider what can be patented. At stake are tens of thousands of existing patents and a rethinking of why we have patent protections in the first place. ...  patent law is at the shifting tectonic plate between the fading Industrial Age and today's Information Age. ... As one Silicon Valley lawyer says, "Unlike in the Industrial Revolution, many of today's inventions would not hurt if you dropped them on your foot."  ... Studies indicate that aside from the chemical and pharmaceutical industries, the cost of litigation now exceeds the profits companies generate from licensing patents. [LG Crovitz, Wall Street Journal, Jun 15]

Science wins one over mythology.  Anti-Evolution Bills Die in Texas Legislature.  One would have required the State Board of Education to reinsert language on so-called "weaknesses" of scientific theories into the state science standards. The other would have paved the way for the Institute for Creation Research to offer its master's degree in science education, a proposal which was rejected by a state higher education board. [AAAS, Jun 10] 

Obama's Cancer Plan Faces Opposition. During a hearing last week, House Appropriations Chairman David Obey (D-WI) said that he opposes dedicating extra money to cancer research on the grounds that lawmakers should not pick and choose one disease over others. President Obama hopes to double the cancer research budget over eight years. "The result will be political chaos in an area that ought to be determined by science," Obey said. [AAAS, Jun 10] It used to be that Senators favored research in the diseases of white men; then the Army suddenly developed programs for breast cancer. But politics should determine where public research money will be spent. If the research agencies have a great idea on how to allocate research spending, let them convince the public's representatives who have to raise the money.

Biotech Dreams, Economic Realities. At $500 million and counting, the Biopolis, officially called the North Carolina Research Campus, is a product of a national race to attract the biotechnology industry, a current grail of economic development.   Cities like Shreveport, La., and Huntsville, Ala., are also gambling millions in taxpayer dollars on if-we-build-it-they-will-come research parks and wet laboratories, which hold the promise of low-pollution workplaces and high salaries. At a recent global biotech convention in Atlanta, 27 states, including Hawaii and Oklahoma, paid as much as $100,000 each to entice companies on the exhibition floor. All this for a highly risky industry that has turned a profit only one year in the past four decades. ....  First, the industry is highly concentrated in established epicenters like Boston, San Diego and San Francisco, which offer not just scientific talent but also executives who know how to steer drugs through the arduous approval process. ... Second, biotech is a relatively tiny industry with a lengthy product-development process, and even in its largest clusters offers only a fraction of the jobs of traditional manufacturing.  [Shaila Dewan, New York Times, Jun 11]  No matter the economics, the politicians are not putting up their own money as they peddle dreams. Just like the economic nonsense peddled for SBIR.

Throw Money at the Economy and Energy 46 Energy Frontier Research Centers (EFRCs) that DOE hopes will bridge the gap between basic and applied work in energy research. Eight years in the making, the $777 million program will support 1100 scientists working in interdisciplinary groups examining everything from making lighting more efficient to using photosynthesis to create new fuels derived from solar energy.  [Science, May 8] Stand by for feeding frenzy.

I think the best thing for the small business community is to inundate NIH with an overwhelming barrage of high quality research proposals, says Jonathan in Fred Patterson's blog on the issue of NIH not allocating the nominal 2.5% of the stimulus money to SBIR. The SBIR community weeps over every slight to their cherished "fair share" of federal money. But high quality research is merely necessary for SBIR success, not sufficient. No good case can be made for pushing money into research firms that have no prospects for future profitable technology. The only competitive advantage small business has is market agility which is irrelevant for mere high quality research.

Only If Government Pays.  A windmill doesn't make economic sense, even though this poor entrepreneur is gouged 19 cents per kilowatt-hour from his utility. A 121-foot, 100-kilowatt turbine from Northern Power runs $500,000, installed. The air at Driscoll's site on Long Island Sound is so still that the average output would come to only 18% of peak output, meaning that the juice would be worth $30,000 a year. It's hard to cover the interest on a $500,000 loan with a $30,000 annual payback. ... So taxpayers are going to buy the turbine for him. Or 83% of it, anyway. Driscoll's firm, Phoenix Press, is getting a $263,000 grant from the Connecticut Clean Energy Fund, plus another $150,000 from President Obama's renewable energy honeypot.  [Jonathan Fahey, Forbes, Jun 22]  Why not? Uneconomical technology is perfect for government subsidy where politics trumps economics. Just look at all the junque funded in SBIR.

With less money to spend on risky endeavors, many states are taking more targeted approaches toward economic development, seeking out sectors of the economy they consider most likely to grow and be sustainable beyond current conditions.  [SSTI, Jun 4]

a pair of new [EPA] studies expose ethanol as a bad deal for consumers with little environmental benefit. The biofuels industry already receives a 45 cent tax credit for every gallon of ethanol produced, or about $3 billion a year. Meanwhile, import tariffs of 54 cents a gallon and an ad valorem tariff of four to seven cents a gallon keep out sugar-based ethanol from Brazil and the Caribbean. The federal 10% blending requirement insures a market for ethanol whether consumers want it or not -- a market Congress has mandated will double to 20.5 billion gallons in 2015. [Wall Street Journal, Jun 2] Missing in the usual anti-government diatribe is recognition that ethanol's prime advantage is replacing oil imports for national security.  Where are the strident Republican voices on national security?

Gotta Cut Something. Less than a year after state and industry officials heralded the enactment of the $1 billion, 10-year life sciences bill as a step toward positioning Massachusetts as a sector leader, one of more than 700 proposed amendments to the Senate version of the 2010 state budget sought to kill the program. [Mass High Tech, May 29]

Money on the Table; Proposals by the Truckload. Steven Chu, secretary of the US Department of Energy, urged scientists to volunteer to review new energy projects to assure the wise investments that will help create jobs, improve energy efficiency, support advanced US vehicles, and more. Chu stated the need for three or four hundred quality reviewers in various programs during the next six months to evaluate applications for funding. Chu cited President Obama's national goal of devoting more than 3 percent of the nation's gross domestic product (GDP) to help boost public and private R&D, surpassing the level reached at the height of the space race in 1964. Read more and access a video of the comments. [AAAS, May 19]  

Anti-Evolution Bills Fail in Three More States. Anti-evolution bills have not fared well during 2009 legislative sessions. Bills in Alabama, Missouri and Oklahoma recently became the latest to expire with the end of their respective legislative sessions. [AAAS, May 28]

Bribes in Kalamazoo. High-tech start-ups are increasingly setting up shop in places previously not known for attracting high-tech firms.   A number of cities, such as Kalamazoo, Mich., and Toledo, Ohio, are offering grant money and tax breaks to high-tech start-ups, just as the usual venture-capital hot spots, such as Silicon Valley and Boston, continue to see a pullback in venture lending. Many of the nontraditional cities require that start-ups receiving grants invest in their area, leaving companies little choice but to locate -- or relocate -- their businesses. .... "In the last 90 days, we've seen 50 or 60" start-ups that are willing to relocate in order to secure funding, says Ron Kitchens, chief executive of Southwest Michigan First, a privately funded economic-development company based in Kalamazoo  [Simona Covel, Wall Street Journal, May 26]

A Madison venture capitalist will be nominated by President Barack Obama to be chief counsel for advocacy at the SBA.   Winslow Sargeant, a managing director at Madison-based Venture Investors LLC, would have the job of protecting, strengthening and representing the nation's small businesses in the federal government's legislative and rule-making processes, Venture Investors said Friday. ... He was previously the program manager for the NSF's SBIR in electronics, and before that co-founded Aanetcom, a semiconductor chip start-up. [Kathleen Gallagher, Milwaukee Journal Sentinel, May 22]

PhD Employment Program. In real terms, Holdren said, the enacted 2009 budget and the proposed 2010 budget are among the two largest R&D investments in US history. The proposed $147.6 billion for R&D represents "a real-dollar turnaround in federal research investments across the spectrum of the sciences and engineering," according to the fact sheet from OSTP, which organized the budget briefing. [AAAS, May 19]

Why Government Can't Run a Business. Politicians need headlines. Executives need profits. [John Steele Gordon, Wall Street Journal, May 20] Which is also why programs like SBIR, that show no economic benefit, survive.

The dropoff in biotech investing could hit Massachusetts particularly hard. Governor Deval Patrick, who championed a $1 billion life sciences initiative approved by the Legislature last year, has made the industry a key part of his economic development plans. By most rankings, the state's cluster of biotechnology companies is second in size only to the San Diego area.  [Scott Kirsner, Boston Globe, May 9, 09]

The global recession and tight credit conditions have cast a chill on the solar-power industry after years of breakneck growth, and could usher in long-term changes in the industry.  Banks have curtailed financing for major solar projects, and Spain -- the world's second-largest solar-power market after Germany -- has slashed subsidies for the industry, leading to sharply lower demand for solar cells. Sales of the tiny chips that convert the sun's rays into electricity are expected to drop by at least 20% this year. [Leila Abboud, Wall Street Journal, May 11]

[Ian Bremmer in "State Capitalism Comes of Age: The End of the Free Market?" , Foreign Affairs] says, correctly, that state capitalism "has introduced massive inefficiencies into global markets and injected populist politics into economic decision-making," that "deeper state intervention in an economy means that bureaucratic waste, inefficiency and corruption are more likely to hold back growth," and that politicians tend to develop stimulus packages with their constituencies, not economic efficiencies, in mind. Therefore, he says, the state must eventually retreat. He probably is wrong because he underestimates the pleasure politicians derive from using their nation's wealth as a slush fund for purchasing political advantage. [George Will, Washington Post, May 10]

A Power Too Far. Cars powered by hydrogen fuel cells, once hailed by President George W. Bush as a pollution-free solution for reducing the nation’s dependence on foreign oil, will not be practical over the next 10 to 20 years, the energy secretary said Thursday, and the government will cut off funds for the vehicles’ development.  [Matthew Wald, New York Times, May 8]  Too bad; it made such good political speeches - miraculous promises that could never be delivered. Like The fight against poverty produces great programs but disappointing results. ... you look at the results from the serious evaluations and you find that these inspiring places are only producing incremental gains.  [David Brooks, New York Times, May 8]  Not to worry, though, the Grey Lady Times is unlikely to report a minor-league program like SBIR as such a program.

Prizes vs. Funding.  Call it crowd-sourcing; call it open innovation; call it behavioral economics and applied psychology; it's a prescription for progress that is transforming philanthropy. In fields from manned spaceflight to the genetics of aging, prizes may soon rival traditional research grants as a spur to innovation. "... Critics, though, dismiss the newest trend in prize-giving as a form of advertising that masquerades as public service -- and a clever ploy to attract top research talent at a discount. [Wall Street Journal, May 8] Prizes do reduce the chances for pork funding at specified locations.

[The Member of Congress] cited a plan to eliminate an early childhood education program called Even Start, which the Obama administration has called ineffective. [Washington Posit, May 8]  Where would SBIR be if "effective" were a dominant criterion for its existence?

On April 27, the Department of Energy issued the first solicitation for research proposals to be supported as part of the Advanced Research Projects Agency – Energy (ARPA-E). ARPA-E was created by the America COMPETES Act (P.L. 110-69) as a mechanism for investing in "transformational" energy research and technology development. Concept papers may be submitted starting May 12 but not later than June 2, 2009. Full applications will be due within 31 days after notification of approval of a concept paper. [AAAS]

Obama's detailed 2010 budget plan will propose to eliminate or consolidate 121 domestic and defense programs to save $17 billion, administration officials said. [Wall Street Journal, May 7] Fat chance! Every one of those programs have stout defenders, and Congress given a choice between a deficit and killing those defenders will choose deficit. smaller parts of government are already operating on bare-bones budgets. Ronald Reagan and both George Bushes found out they could not make significant cuts without significant harm. So the policy of the Republicans is to run on a platform [big tax cuts and big spending cuts]that cannot be accomplished. During the Reagan and Bush years they ran up $10 trillion dollars of debt trying to deliver on this nonworkable policy. Unfortunately for the GOP, it still thinks going back to this policy is the answer. I don't think the American people will buy it another time. [John Gorgiton, Wall Street Journal, May 7]

Where's Our Share?  [the U.S. Business & Industry Council ] calls Pres. Obama to task for what they view as his "almost complete neglect of the cascading crisis in domestic manufacturing, while his economic team focuses obsessively on the financial industry." ...  "To date, your economic team's approach seems to be trillions for banks, but hardly a dime for manufacturing. You save wrong-doing financial houses from failure, but send good-faith, if sometimes poorly run, manufacturing companies into bankruptcy -- a formula for disaster."-[Industry Week, May 6]

Religious Politics and Science.  On April 23, in a close vote, the Republican-controlled Oklahoma state Senate sustained Democratic Governor Brad Henry's veto of a bill that would have criminalized the conduct of any form of embryonic stem research in the state. Gov. Henry had vetoed the bill, which had been presented as a pro-life measure, after it was approved overwhelmingly by both houses of the legislature. [AAAS, May 6]  Should federal science agencies declare that federal science funds will not be sent to a state that opposes science?

SBA has implemented only two of the eight provisions that were included in the economic stimulus bill to boost lending to small firms.   On March 16, the SBA eliminated fees on the agency’s 7(a) and 504 loans, and increased the maximum government guarantee on 7(a) loans from 85 percent to 90 percent. The actions have stimulated SBA lending; the agency is approving28 percent more loans each week than it was before the changes. [Kent Hoover, The Business Review (Albany), Apr 28]

The President is waiting to hear from you. kind of.  OSTP has just opened a new blog and is open to receiving your comments on S&T issues.  You'll find it at   [SBIR Insider, Apr 30]

All in all, with a few exceptions, this [House SB Committee] hearing was a disappointment, mainly a myopic rehash on last year's Small Business Committee's VC/NIH dominated themes.  With an all or nothing approach on the VC issue, there is likely not to be an SBIR reauthorization. [SBIR Insider, Apr 30]

MIT and the UMass are among 46 newly-established "Energy Frontier Research Centers" across the nation being partially funded by federal stimulus dollars. Three groups of local researchers -- two at MIT and one at UMass-Amherst -- will receive between $30 million and $75 million in total over the next five years as part of an effort to spur scientific breakthroughs, federal officials said.  [Erin Ailworth, Boston Globe, Apr 29, 09]

SBIR Love Fest. When asked what time it is, he explained how the clock works. In testimony before the House SB Committee, DOD's SBIR manager/coordinator said next to nothing about what DOD has achieved toward SBIR goals in more than two decades. The NIH coordinator hinted that VC participation (codeword=flexibility) is important for health related innovation to get to market. The big difference is that DOD doesn't care about post-SBIR economic success. The DOEnergy manager said he didn't have money to explore program payoff. SBA reported "success" that would get any VC fired.  Lynntech (College Station, TX; 400+ SBIR Projects) said it is the largest SBIR contractor in the State and one of the largest in the country. It is fair to say that we have found the program to be beneficial for our company. Having taken down zillions in free capital, Lynntech further says: Government is not well-organized to assist in the transition effort. That is: a new government handout program to help us pretend that the $100+M poured into our company has long term economic payoff. All of which would trigger a revitalization of the SBIR program and continue to improve an already stellar level of performance. The whole show avoided any hard questions about what SBIR is supposed to do and why it is even needed.

Without a fixed, long-term, durable price on carbon, none of the Obama clean-tech initiatives will achieve the scale needed to have an impact on climate change or make America the leader it must be in the next great industrial revolution: E.T., or energy technology. At this stage, I’d settle for any carbon price mechanism — cap and trade, fee-bates, carbon tax and/or gasoline tax — as long as it real and provides consumers and investors a long-term incentive to shift to clean cars, appliances and buildings.  [Tom Friedman, NY Times, Apr 26]

In a nod to emerging dangers, as well as his political constituencies, Mr. Gates said the department planned to keep financing research meant to improve existing defenses against rogue states — a threat, he added, that “North Korea’s missile launch this past weekend reminds us is real.”  [William Broad, NY Times, Apr 26]

Don't Tax You, Don't Tax Me; Tax that guy behind the tree.  like most small-business owners, Johnson reports her profit on her personal tax return. In a typical year, she and her husband make more than $500,000, according to her accountant, a figure that throws them squarely into the ranks of the richest Americans -- and makes them a prime target for the Obama administration's tax policy. ... "You hear 'tax the rich,' and you think, 'I don't make that much money,' " said Johnson ... Republicans argue that those who fall into the upper brackets tend to be firms with the greatest capacity for job creation. ...  But government services "can't be paid for equally by everyone," he said. "It's a big burden, but we're fortunate to be successful."   [L Montgomery & VD Haynes, Wash Post, Apr 27]  And be sure to keep those subsidy programs rolling, like SBIR, that give SBs the free income to be rich.

President Obama has selected Aneesh Chopra as the nation's first Chief Technology Officer, a new White House position. His purview will be overall national technology policy, including technology innovation. The position will not be part of OSTP, and how its responsibilities will relate to OSTP's is not yet clear. Chopra has been serving as Virginia's Secretary of Technology  [AAAS, Apr 22]

What is SBIR for?   Aurora Flight Sciences (Manassas, VA; at least $7M SBIR) reports it has landed a NASA Phase 2 SBIR to develop a method for conducting multiple-spacecraft maneuvers to more efficiently synthesize astronomical images. ... will share the grant with the MIT Space Systems Laboratory, and will collaborate with the lab.  [Mass High Tech, Apr 21, 09]  Says the company: For twenty years Aurora's entrepreneurial culture has created an environment where innovative ideas turn into reality in the form of new aerospace vehicles. And we have only just begun!  The company websites boasts more than $80.6 million of SBIR-related work for government agencies. and Bell Helicopter selected Aurora as the airframe provider of the Bell Eagle Eye UAS.  A month later, Aurora broke ground for a permanent Columbus, MS manufacturing facility at the Golden Triangle Regional Airport.   The company currently has more UAS development projects underway than at any other time in its history. and in 2004 had 270 employees and growing.  All of which raises the SBIR question: when does a company graduate from the nursery?  Or is the government using SBIR to fund contracts in established companies that would easily compete for open procurement?

Depending on Government.  Why are sane people trying to convert $2.70 of soybean oil into $1.50 of bus fuel? They thought they had a deal with Congress. ...  The problem: economics. To make a gallon of biodiesel you start with a gallon of edible oil (palm, rapeseed or soybean) that costs, say, $2.70 today, then spend another 80 cents or so on transportation and additives. Biodiesel competes with petroleum diesel, priced around $1.50 wholesale. The biofuel gets a $1 federal subsidy. Still, it's hard to get buyers to pay $3.50, or even $2.50, for something when the alternative is $1.50. ...  Imperium has stayed alive by striking a deal to store another firm's biodiesel in tanks at Grays Harbor. It hopes to get a contract from a Hawaiian utility. Imperium also produced fuel for an agribusiness concern that sold most of the fuel in Europe. That contract ended when Europe enacted a steep tariff on imported U.S. biodiesel in March.  [Rebecca Buckman, Forbes, Apr 29] When private companies depend on subsidies, success depends on politics, not on economics. Which is why SBIR still lives.

A state-backed bioscience organization and the Ohio Department of Development are hosting three career fairs: Cleveland – April 22; Cincinnati – May 14; Columbus – May 27.  To pre-register and get more details on the fairs, click here[Dayton Business Journal, Apr 17]

I'm standing by my prediction that April 27th (the Challenge Grant due date) will be the Armageddon.  [Fred Patterson, SBIR Coach] Don't dally, hints Fred.

I've even created a special URL to take you quickly to my SBIR Coach wesbsite's SBIR Reauthorization section:[Fred Patterson]

Something More for Every Taste. The 2009 omnibus budget, which includes nine unfinished appropriations bills from last year, was approved by Congress and signed into law by President Barack Obama in March. R&D funding will increase by $6.8 billion, or 4.7 percent over 2008, after several years in which funding declined in real terms. Every federal R&D agency will receive increased funds, with the biggest boosts allocated to energy, health, and education. [AAAS, Apr 17] All the beneficiaries will see the undoubted merit of such an increase.

Technology startups are likely to miss out on stimulus funds as the $787 billion federal economic stimulus intends to favor “shovel-ready” projects that can produce immediate, though temporary, jobs. ...  Startups say they need long-term financing to test their technologies at scale, build factories and move their scientific breakthroughs to market more quickly. The $6 billion in stimulus money that will fund new loan guarantees could help, but that’s not assured either.  [Lindsay Riddell, San Francisco Business Times, Apr 17]

a small pilot program in DOD that seeks to find and engage new or “non-traditional” companies, engineers, innovators, and scientists. We want them to provide their best ideas and build prototypes to help DOD resolve some high priority needs. ... that identifies the needs ... After the best ideas are selected, we will use a funding mechanism called Other Transactions, the government's version of a commercial contract. ...  to rapidly produce functioning prototypes ... funding for a project to be in the $300-500K range for 1-2 years   [DOD's Dave Edwards via SBIR Coach Fred Patterson, Apr 16]  In other words, DOD wants fast answers on crucial topics but doesn't want to use SBIR (wonder why?). Army had such a program before SBIR, called Advanced Concepts Team, which never got enough high level attention to overcome bureaucratic obstacles. This one may come a cropper also on procurement rules that Army apparently thinks it can run around. Wait until the losing proposers start to complain. Fast and good is great, but favoritism and running out of money before the best proposals show up could well cut the efficiency dramatically. The Army could make it work if it had a single decider with a deal that hyper-good proposals will get funded from some available pool. Unfortunately, it would take a saint for a manager with backing from flexible seniors who stay around long enough to care about results. But the frequent shift of Army officers dims long term prospects for staying power.  Go to it, Army, but we'll see how much enthusiasm remains three years from now. I hope the Army publishes the list of winners as they occur. Should we also observe that the need for such a program says that Army doesn't know how to use SBIR to get new ideas going. They could, for example, have had a Surprises and Opportunities SBIR topic.

Says Mr. [TJ] Rodgers, "First, Sarbanes-Oxley mandated byzantine corporate bureaucracy to 'protect' investors. Then, the SEC damaged the Silicon Valley economy by forcing companies to count stock options twice, both as dilution and as expense. As a result, Silicon Valley, for decades the bright spot of the American economy, produced only one [initial public offering] in all of 2008. Now, Geithner wants to regulate venture capital firms to protect us some more. It's like watching children deface an economic work of art."  [James Freeman, Wall Street Journal, Apr 9]  On Treasury soundings on treating VC funds as hedge funds.

Rice Bowls Talk. Within minutes of the budget's release, Republican Senators were speaking out against the missile defense cuts as irresponsible in the wake of North Korea's missile test last weekend. There are also concerns about the loss of jobs that could result from the cuts. While congress is likely to push back against some of Gates's plan, he did win the support of longtime procurement-reform advocate John McCain.  [Foreign Policy, Apr 7]  What's good for (your state here) must be necessary for America.

NASA started an SBIR Quarterly Newsletter The Concept with the usual inward-looking multisyllabic language and pictures of NASA bureaucrats. Free e-mail subscriptions available, worth every penny. No hint of any economic value or return, more evidence that the mission agencies just don't care about SBIR's economic goals. It does list the e-mails of the Technology Infusion Managers, but not the names and numbers of the people who make the real decisions about SBIR awards. 

The Technology Innovation Program (TIP) has scheduled 3 additional public meetings (Proposers' Conferences) for those interested in applying for research funding under this year's competition. These Proposers' Conferences are scheduled on Monday, April 13, in Boston, Massachusetts; on Wednesday, April 15, in Detroit, Michigan; and on Friday, April 17, in San Jose, California. These are in addition to the previously announced Proposers' Conference on Wednesday, April 8, in Gaithersburg, Maryland. For details on times, locations and registration information see

P.L. 111-8 made NIH's open access policy permanent. The provision reads in full: "Sec. 217. The Director of the National Institutes of Health ('NIH') shall require in the current fiscal year and thereafter that all investigators funded by the NIH submit or have submitted for them to the National Library of Medicine's PubMed Central an electronic version of their final, peer-reviewed manuscripts upon acceptance for publication, to be made publicly available no later than 12 months after the official date of publication: Provided, That the NIH shall implement the public access policy in a manner consistent with copyright law." This is a change from the existing policy that went into effect last year, whereby the open access requirement was subject to annual renewal by Congress. Rep. John Conyers (D-MI) is planning legislation that would overturn the newly adopted policy. [AAAS, Apr 1] AMRI  up 10%% [Mar 31, 09]

Buying Experience. The Army's latest list of Phase II SBIR selections featured multiple awards to companies who already have had multiple, multiple awards. One company that has already had something over $250M in SBIR from at least 760 projects got nine new Phase IIs. Four awards went to a company with 445 projects funded at least in Phase I and probably half that in Phase II. Four went to a company with 400 projects. Three went to a company with 276 projects.  Three went to a company with 227 projects.  Three went to a company with 117 projects. Three went to a company with 101 projects.  One went to a company with 114 projects. Etc, etc.  These are the types of companies that wail big tears when Congress wants to let in more money from VCs as indicators that technology success will have a future. But the advocates ignore the problem as they focus on theoretical arguments how SBIR is critical to American innovation while tons of actually innovative companies are crowded out by these SBIR junkies. 

Because of lax oversight, undeserving companies collected millions in federal contracts from an $8 billion government program designated for small businesses in poor neighborhoods, congressional investigators charge.   The SBA repeatedly failed to verify paperwork and conduct audits to weed out sham firms claiming to have main offices in economically distressed areas, the GAO said in a report released last week, raising questions about an agency seeking to take a greater role in helping business owners stave off job losses. [Hope Yen, AP, Mar 28]

[Texas Board of Education] members also deleted a reference to the scientific consensus that the universe is nearly 14 billion years old. The board's chairman has said he believes God created the universe fewer than 10,000 years ago. [Stephanie Simon, Wall Street Journal, Mar 28]  Looks like he can't separate his religious beliefs from his duty to science education.  If his belief isn't testable, it doesn't belong in science education.

Biotech drugs that now cost thousands of dollars a month would have to compete with lower-cost generic versions after just five years on the market under a new congressional proposal. ... The proposal from Sen. Charles Schumer, D-N.Y., and Susan Collins, R-Maine, suggests generic drug makers are gaining traction for their long-sought goal: a speedy, low-cost pathway to market for generic biotech. [Matthew Perrone, AP, Mar 27]

A group of Oregon investors and entrepreneurs, upset at the pace of public investment in startup companies, plans a rally today to launch a grass-roots effort to shake $100 million loose from the Oregon Investment Fund.  ..  However, the investment fund's managers warn that a series of rapid investments wouldn't generate the long-term return the Oregon Public Employees Retirement Fund requires. The state treasurer's office says those funds are committed, and it can't use retirement funds for economic development efforts anyway. [Matthew Rogoway, The Oregonian, Mar 19]

The Technology Innovation Program (TIP) of NIST is seeking proposals for high-risk, high-reward research projects in two areas of Critical National Need: Civil Infrastructure and Manufacturing. ... expects to award $25 million in first-year funding. For more information, see

Religion-Based Science. Controversy is brewing over language that the [Texas] Senate Finance Committee put into its proposed budget Monday that would bar state funds from being used for embryonic stem-cell research. ... The language "would effectively bar some of Texas' top researchers from the state's universities and laboratories," said Sen. Kirk Watson, D-Austin. [Jason Embry, Austin American Statesman, Mar 25]  Naturally, the religious objectors don't care that Texas science would be a place for scientists to avoid if science questions cannot be pursued to their fullest discovery of the laws of nature. Texas is already brewing again a religion-based treatment of evolution in its so-called science textbooks.

Policymakers believe a dangerous myth. They think that start-up companies are a magic bullet that will transform depressed economic regions, generate innovation, create jobs, and conduct all sorts of other economic wizardry. So they provide people with transfer payments, loans, subsidies, regulatory exemptions, and tax benefits if they start businesses. Any businesses. ... Encouraging more and more people to start businesses won’t enhance economic growth or create a lot of jobs because start-ups, in general, aren’t the source of our economic vitality or job creation. ...  To get more economic growth by having more start-ups, new companies would need to be more productive than existing companies. But they’re not. ...  Very few people work in new firms. Companies with at least one employee that are less than two years old account for only 1 percent of all employment in the United States, according to analysis published in Regional Studies by economists Zoltan Acs and Catherine Armington. By contrast, companies with at least one employee that are more than ten years old account for 60 percent of all employment in this country. ...  Far from being job creators, as a whole, new firms have net job destruction after their first year. .... We need to reallocate resources to programs that support high-growth companies. For instance, we could shift money into the SBIR Program, which requires federal government agencies to set aside a portion of their budgets to support commercially viable R&D projects at small companies. The recipients of these funds are much more likely than the typical start-up to contribute to economic growth and to create jobs.  [The American, Dec 08] 

“Keynes at home and Smith abroad”  The new faith in global governance is mostly wishful thinking. The G20 is unlikely to be more than a chat forum given to non-binding pledges. Even in the improbable event of a Doha conclusion any time soon, it will not contain protectionism: what is on the table is a very low common denominator and a dog’s breakfast of loopholes and exemptions. Given their records, it is not a good idea to place too much faith and too many resources in the World Bank and the Fund. As for most organisations in the UN system, they are dysfunctional bureaucracies run for the benefit of the elites of poor countries and well-heeled consultants from rich countries.  [Razeen Sallly, Financial Times, Mar 19]

The North Carolina Biotechnology Center has dedicated $2.6 million to help turn research ideas into new medical devices and medicines. [Raleigh News 7 Observer, Mar 18]

Brief Extension.  The House and the Senate compromised to extend the SBIR Program and other SBA small business programs until July 31, 2009  [SBIR Insider, Mar 16] 

Ann Eskesen's Innovation Development Institute reports the following SBIR stats: $26B cumulative funding to 17000 firms which got 67000 patents and supported 450,000 employees.  Which no doubt impresses fans of input figures. Ann has put tons of work into advocating SBIR and collecting data about it. And she is somehow getting enough support from subscriptions to keep the service going.

Techno-jolt. The economic stimulus package should generate an estimated $101.2 billion in technology spending over the next five years, according to an estimate from IDC, a Framingham firm that focuses on global market intelligence. .... includes spending on both information technology as well as spending on such technology as smart meters, in-home display devices, energy management systems, and renewable energy technologies surrounding wind and solar power,   [Chris Reidy, Boston Globe, Mar 17]

Cable and big phone companies have a message for federal officials overseeing $7.2 billion in stimulus money set aside for new high-speed Internet lines: Don't subsidize upstarts planning to compete with existing broadband services.   [Amy Schatz, Wall Street Journal, Mar 17]

Obama freed billions of dollars to help the nation's small businesses on Monday, hoping to get credit flowing again to Main Street, and showered praise on the little guys of American industry. .... spend up to $15 billion to buy the small-business loans that are now choking community banks and lenders.   [AP, Mar 17]

inconceivable, unconscionable and inexcusable  is how SSTI describes Congress's apparent state of non-play on renewing SBIR which officially expires next week.  Actually what expires is the legal mandate, since the agencies are free to continue doing SBIR if they choose with whatever rules they invent.

SBTC urges all small companies involved in heath care innovations to follow the lead of the Maryland companies and contact Congress to protest this unfair and unwise move by NIH (of getting itself exempted from SBIR for a stimulus add-on) especially since SBTC claims that a recent independent study calculated that the SBIR Program delivers about one-fourth of the most important technological innovations -- including health care innovations -- in the U.S. each year. [SBTC web page] 

Who's In Charge of What?  nodialtone writes with a Reuters report that Rod Beckstrom, director of the National Cybersecurity Center (NCSC), has tendered his resignation, citing clashes between the NCSC and the NSA with regard to who handles the nation's online security efforts. In his resignation letter (PDF), he made the point that "The intelligence culture is very different than a network operations or security culture," and said he wasn't willing to "subjugate the NCSC underneath the NSA." He also complained of budget roadblocks which kept the NCSC from receiving more than five weeks of funding in the past year. Wired has a related story from late February which discusses comments from Admiral Dennis Blair, director of National Intelligence, who thinks cyber security should be the NSA's job to begin with.  [, Mar 7]

Florida has decided to make a Texas-style bet on biotechnology. The strategy: entice world-class centers of biomedical research to establish local campuses. The Scripps Research Institute, where I am an adjunct professor, was the first taker: the La Jolla-based Institute was promised more than $500 million in state and county funds to launch a campus near Palm Beach. After several years of intense public discussion, a site was selected in Jupiter. The new campus was inaugurated on Thursday, a beautiful state-of-the-art biomedical research facility that will house over 600 researchers. .... Scripps Florida will soon be joined by a cousin from Germany, a branch of the famed Max Planck Research Institute. The Burnham Institute for Medical Research will open a campus in Orlando, while the Torrey Pines Institute for Molecular Studies will construct a facility in Port St. Lucie. In all, the state and counties will spend more than $1 billion to build international leadership in biomedical research.  [William Haseltine,, Mar 3]

Fatter FAR Coming. Since every provision in the Federal Acquisition Regulations is designed to fix a problem, look for even more such provisions after President Barack Obama plans to change how government contracts are awarded and who can earn them, a move his aides say would save taxpayers about $40 billion a year by making the process more competitive. [Phillip Elliott, AP, Mar 4]  New presidents love to attack contracting problems, until they realize that the real problem is the Congressional desire to pass out money to favored constituencies.

Time Left Until SBIR Expires: 15 days,  says SBTC.  Most Americans believe small business, science and tech leaders will lead the U.S. to a better future, says SBTC also, which is probably true, but that doesn't mean that SBIR is an efficient way to reach that future.

Trouble Sign. President Barack Obama said Tuesday that Wall Street has been hammered so hard that "buying stocks is a potentially good deal,". .... The stock market slipped ever lower, and Republicans suggested Obama was "cooking the books" in rosy recovery predictions. [AP, Mar 3] A big sign of real trouble is a president's recommending the buying of stocks because jawboning stocks does not work and looks like a sign of desperation. And the Republicans have nothing but chutzpah to complain of rosy scenarios.

More Nimble Military Technology  US defense expert Paul G. Kaminsky stressed the need for reforms in military technology development, noting that it can take up to 20 years to develop a missile or aircraft at today’s pace. This compares with more crisp acquisition in the past, including the three-year development of ICBMs in the 1960s and the four-year development of the F-117 stealth aircraft in the early 1980s. Read about the keys to rapid deployment of systems, including development planning and enhanced S&T education, presented at the January briefing co-organized by AAAS and the Center for Media and Security.  [AAAS, Feb 23]

No Help, Please. Hundreds of the country's venture capitalists this past month blogged against or otherwise rejected proposals that the U.S. government fund early-stage investing. ... They rightly brag that almost 20% of U.S. gross domestic product is generated by companies built by venture capital, such as Intel, Apple and Google. .... "The top venture firms don't want, don't need and are never going to take government money. The same is true of the top entrepreneurs," Fred Wilson of New York's Union Square Ventures wrote on his blog. "The worst firms, on the other hand, will gladly accept government money," which would go to investors who can't raise funds privately and to entrepreneurs whose ideas shouldn't be funded. "It's a problem of adverse selection." .... The lesson of accepting government involvement often is something ventured, nothing gained.   [Wall Street Journal, Mar 2]  Companies with poor prospects for profitable markets can always approach government programs that fund mediocrity - like SBIR.

Obama wants to spend a 10-year total of $630 billion for a downpayment on a government takeover of the healthcare system, green the nation’s energy economy, make college education an entitlement and otherwise heavily involve the federal government in an education system that until now has been under the control of local and state governments. [Irwin Stelzer, The Sunday Times, Mar 1]

Alleged Fraud. Federal investigators are accusing a University of Florida professor and three members of his family of fraudulently receiving millions of dollars from NASA and then funneling money to their personal bank accounts, court documents show. .... the university’s Innovative Nuclear Space Power and Propulsion Institute ...  According to court documents, Dr. Anghaie and his family members set up a company called New Era Technology  (Gainesville, FL; $2.5+M SBIR) ...  Court documents assert that the company submitted fraudulent proposals to NASA for research contracts. As a result, the company received several NASA contracts. The company is also accused of submitting fraudulent invoices to NASA for hours it said were worked by employees. ... Dr. Anghaie has served on and been the chairman of several research advisory boards and review panels for the National Research Council, NASA, and the Departments of Energy and Defense.  Results of Dr. Anghaie’s research have been published in more than 500 papers and reports.  [AP, Feb 27, 09]

Free Lunch. Obama enthusiastically perpetuates the myth that the American people can have everything they want without a dose of shared sacrifice. They can have health care, education reform, even a cure for cancer, and 98 percent of them need pay nothing. The burdens of progress will be borne by the rich while everyone else can enjoy their tax cuts and go shopping.  ... the same old [Congressional] chairmen habituated by the same old interest groups will dominate everything. ...  Obama blew a mighty trumpet, but after you blow the trumpet, you actually have to charge.  [David Brooks, New York Times, Feb 27]  Unfortunately for all the people who want the President to work magic, that's not what the founders gave us for a government. They built a legislative government in which the president is not even directly elected by the people. And we demand that our legislators tell us what we want to hear.

Democrats who have spent recent weeks moaning about centrist appointments and attempts at outreach to Republicans should hang their heads in shame. This is the budget they have been dreaming about for years.  [Clive Crook, Financial Times, Feb 27]

Mice at Work,  Last week, in a midnight "slight of hand" by special interests, SBIR & STTR were expressly stricken from the NIH portion of the stimulus bill, effectively removing almost $250 million in SBIR/STTR award funding. [SBIR Insider, Feb 24] The usual advocates call for action to save SBIR.

This week, a historic $787 billion economic stimulus package was signed into law that provides more than $21 billion for research and scientific infrastructure, including $10 billion for the National Institutes of Health, $3 billion for the National Science Foundation, and $1.6 billion for the Department of Energy's Office of Science.  [Science, Feb 20]

Missing from this legislation is anything more than token support for the long-proven source of most new jobs and new growth in America: entrepreneurs. These are the people who gave us everything -- from Wal-Mart to iPhones, from microprocessors to Twitter -- that is still strong in our economy. ... Only entrepreneurs have the flexibility, the freedom and the risk-everything ambition to find the path back to prosperity in a rapidly changing, technology-driven global economy.   [Tom Hayes and Michael Malone, Wall Street Journal, Feb 24]  The authors have a laundry list of government measures to liberate entrepreneurs for re-shaping American business. SBIR is not one of them.

it never hurts to go on the record in opposition to a billion imaginary deaths. But I have a more immediate concern: Will Mr. Obama’s scientific counselors give him realistic plans for dealing with global warming and other threats? To borrow a term from Roger Pielke Jr.: Can these scientists be honest brokers? ...  the author of “The Honest Broker,” a book arguing that most scientists are fundamentally mistaken about their role in political debates. As a result, he says, they’re jeopardizing their credibility while impeding solutions to problems like global warming. [John Tierney, New York Times, Feb 24] Not to worry: every scientist looking for a handout will dredge up a compelling story. Democracy thrives on self-interest.

the spigot of defense funding opened by 9/11 is closing,” Mr. Gates said in Congressional testimony. .... But cuts cause bleeding and bleating.  Among those opposed to cuts, military industry lobbyists and members of Congress are likely to question whether cutbacks in arms purchases, with the threat of shutting down production lines, would be the proper response to an economic crisis already marked by deep job losses. [New York Times, Feb 18]

[The stimulus] also provides $300 million to the [DOD] to assist with the development of energy efficiency technology. Each of the Research, Development, Test and Evaluation (RDTE) offices within the Army, Navy and Air Force will receive $75 million, with another $75 million allotted for the Defense-wide RDTE office. These funds will provide financial support for pilot projects, demonstrations and energy efficient manufacturing enhancements ...    NASA will receive $1 billion  with $400 million targeted for earth science climate research missions and improving NASA's supercomputing capabilities; $150 million for activities related to aviation safety, environmental impact mitigation and the NextGen Air Transportation System; $400 million for exploration activities .... SBA will receive $730 million in funding for operations and programs. The majority of this allocation, $636 million, will fund the Business Loans Program for direct loans and fee reductions. [SSTI, Feb 19]

States have lavished perks on private industry for decades. In recent years, though, some have brazenly crossed the line between the public and private sectors, designing strategies that look a lot like industrial policy.  ....  States from Pennsylvania to Oregon have become increasingly important sources of early startup capital to technology companies.  .... Public officials can be bad at picking winners. .... But now, many states face vast budget shortfalls and must choose between protecting public-private R&D programs that could create jobs in the long term and slashing public education and health benefits.... [Pete Engardio, Business Week, Feb 9] 

that’s politics. That we can resolve research questions rationally does not mean the moral or economic consequences of science offer a clear consensus. [Peter Dizikes reviewing Varmus's The Art and Politics of Science, New York Times, Feb 15]

Worry About Hangover Tomorrow. Stimulus expectations run high. Massachusetts companies could benefit from the billions of dollars earmarked for clean energy, medical research, and other industries in the economic stimulus package.  [Boston Globe, Feb 13]  For now, the near zero interest rates on Treasuries make the stimulus look cheap, at least in relation to the wished for results. But tomorrow, when such rates reach competitive levels, we can complain about our short-sighted politicians again.

High technology and diversified tech conglomerates that made efforts to shape the stimulus plan emerged as big winners in the draft bill expected to come up for a vote Friday. ...  from billions of dollars slated for technology infrastructure, environmental and educational projects aimed at improving U.S. competitiveness.  ...  NSF $3 billion for research  [Wall Street Journal, Feb 13]

Even Bigger DOD.  OMB is considering shifting management of nuclear weapons production from [DOE] to [DOD]. ... would transfer two national labs, the Nevada test site, and four bomb plants to DOD and end 60 years of civilian control of nuclear weapons, ...  Transfer of the huge weapons complex presumably would focus DOE more closely on its civilian energy mission. [AAAS, Feb 11]  The New Mexico Congresscritters screamed protest.

But some of the debate is correctly and appropriately centered on whether the SBIR program is being effective in producing results. [SBIR Coach Fred Patterson] Fred has great advice for companies thinking about using SBIR and a recognition that there is a real question about whether SBIR is worth the effort for the federal agencies as SBIR is now structured and practiced. If Congress wants to move beyond two decades of handout, it should listen to Fred's ideas on small company investment.

Harin Ullal, a solar expert and senior project manager at the National Renewable Energy Laboratories in Golden, Colo., says he expects thin film's share of the solar-power market to increase to 25% by 2015, compared with the 10% to 15% market share thin-film manufacturers say they have now. A recent report on the thin-film solar market by Greentech Media, a clean-tech news agency, and the nonprofit Prometheus Institute puts the market-share increase even higher, at 40% by 2012. [Cassandra Sweet, Wall Street Journal, Feb 9]

The nation’s smallest state has big ambitions for its budding biotech industry, as evidenced by the opening late last month of a $54 million life sciences center at the University of Rhode Island.  [Mass High Tech, Feb 6]

Forward Wisconsin, which uses public and private funds to promote the state for business expansions, is ending 25 years of selling Wisconsin to out-of-state executives. [Milwaukee Journal Sentinel, Feb 7]

Kansas Bioscience Authority gave  Edenspace Systems (Manhattan, KS; $4+M SBIR) $360,000 to help match a $750,000 grant from the USDOE and a $350,000 grant from the USDA. The money will support the further development of technology to lower processing costs and increase yields of biofuels from sorghum, corn and switchgrass. ... The authority is a $581 million initiative created by the Kansas Economic Growth Act of 2004 to expand the state’s research capacity and bioscience clusters, support the growth of bioscience startups and stimulate bioscience business expansion and attraction. [Kansas City Business Journal, Jan 27, 09]

The European Union warned the US yesterday against plunging the world into depression by adopting a planned “Buy American” policy, intensifying fears of a trade war.  ..... Last night Mr Obama gave a strong signal that he would remove the most provocative passages from the Bill.  [The Times (London), Feb 4]  BuyAmericaSteria “The Senate may have taken longer than the House to reflect the popular hysteria over trade, but they are certainly getting there,” says Susan Aaronson, a trade expert at George Washington University.   [Allan Beattie, Financial Times, Feb 1]

no president in modern times has seriously attempted to reduce the size of government, and for good reason: Voters don't want it reduced. What they want is government that's "big" for them--whether it's Democrats who call for job-training programs and universal health care or Republicans eager to see billions funneled into "much-needed and underfunded defense procurement," as William Kristol recommended  [Sam Tanenhaus, The New Republic, Feb 18]

Kansas Bioscience Authority gave  Edenspace Systems (Manhattan, KS; $4+M SBIR) $360,000 to help match a $750,000 grant from the USDOE and a $350,000 grant from the USDA. The money will support the further development of technology to lower processing costs and increase yields of biofuels from sorghum, corn and switchgrass. ... The authority is a $581 million initiative created by the Kansas Economic Growth Act of 2004 to expand the state’s research capacity and bioscience clusters, support the growth of bioscience startups and stimulate bioscience business expansion and attraction. [Kansas City Business Journal, Jan 27, 09]

To be honest, nobody really knows the SBIR future, says SBIR Insider Rick Shindell.  On the plus side, SBIR has been a very successful program ... [many experts]  believe that the SBIR program will most likely survive, but the bigger question is, "In what form?'  .... Don't think for a minute that the large special interests that lobbied congress have gone away.  They've started their work!   SBIR's best three reasons:  it does no harm, provides an open national channel for new ideas, and every politician loves small business. All the other arguments I've heard are only half-truths which would not convince a economically thinking Congress but will suffice for a Congress that wants to be seen doing something for small business. They will ignore the ugly truth that every dollar going to an SBIR company is a dollar taken from another company (large or small) that might have produced a greater result for the agency and for the economy. SBIR has no net money for R&D. And as is true in all economics, the question is not whether an investment is good or bad but whether is is better than the available alternatives.

"There is a lot of great experimentation in commercializing new technology at the state level," says CEO Dan Berglund of State Science & Technology Institute (SSTI) in Westerville, Ohio, a nonprofit that advises regional governments. "But at the federal level, there is little funding and no strategy." Incoming SBA head Mills led a 2008 Brookings Institution study that found that 14 U.S. agencies spend $76 billion a year on economic development. But these efforts are not "linked, leveraged, or aligned," Mills said in an interview prior to her nomination. "The federal people don't talk to the state people or to industry."   [Pete Engardio, Business Week, Jan 29]

Remember the golden rule ... If We Buy American, No One Else Will. [Douglas Irvin, New York Times, Feb 1] ....  For all practical purposes there is no difference between the Smoot-Hawley tariff bill of 1930 and the “Buy American” provisions in the $819 billion spending bill that passed the House Wednesday.  Smoot-Hawley was the catalyst for a pandemic of tit-for-tat protectionism around the world, which helped deepen and prolong the global depression in the 1930s. “Buy American” provisions will no doubt inspire similar trade barriers abroad and will have the same effect of reducing global trade—and therefore prospects for economic recovery  [Dan Ikenson, CATO Institute]

With Malice Aforethought“President Obama, backed by the conclusions of a broad range of economists, believes that China is manipulating its currency,” wrote the then-nominee [Geithner]. Premeditation matters, and the use of the inflammatory word “manipulation” clearly was a carefully considered act.  ... And Ugly ConsequencesIf China decides it doesn’t want to buy the new IOUs, interest rates in America will climb, offsetting the effects of much of Obama’s stimulus package. Secretary Geithner might then find that he can’t peddle the billions in IOUs he will soon be issuing, and regret emboldening the Schumers of the world to believe that the Obama administration intends to replace talk, talk, with war, war – trade war, that is. [Irwin Stelzer, The Sunday Times, Feb 1] Never mind, xenophobia is a regular convenient American political opportunity, which seems to be inversely proportional to the voter's education level. 

Academic research is a $1.1 billion industry in Wisconsin, but it's threatened by a 25-year trend toward weaker state support for higher education, a report released Wednesday by the Wisconsin Technology Council says. ... says the state must fund research and development to ensure that Wisconsin has a vibrant economy going forward. ...  Read the full report[Milwaukee Journal Sentinel, Jan 29] Note that spending on R&D says nothing about SBIR which does nothing more for R&D than divert federal agency R&D money into a politically favored class of business - small business.  If SBIR cannot prove that it has a much better return than what the federal agency would do with the money, it has no case for the program. So far, after two decades, SBIR has made no such showing. To see the arguments being made by the SBIR advocates, see Fred Patterson's latest blog entry [Jan 29] which ignores the comparative ROI question.

Obama won a well-timed plug for his economic-rescue plan from the U.S. high-tech industry, a group he nurtured heavily during the campaign.  Mr. Obama's gathering with 13 chief executives at the White House Wednesday -- the first corporate sit-down of his presidency -- showed how much the two sides now need one another's support. [Neil King and Don Clark, Wall Street Journal, Jan 29]

In a memo to staff, EPA Administrator Lisa Jackson cited openness as one of her tenets, noting "As your Administrator, I will uphold the values of scientific integrity, rule of law, and transparency every day."  [AAAS, Jan 28]

The vast economic stimulus package now making its way through Congress could bring a welcome bounty to New England's high-tech industries. .... at least $37 billion will go to projects aimed at upgrading the nation's digital infrastructure. ... Massachusetts has a host of companies, large and small, that are well positioned to cash in on the need  [Hiawatha Bray, Boston Globe, Jan 28]

former president of Fiber Materials (Biddeford, ME; $13M SBIR) agreed to plead guilty to federal charges arising from a bribery scheme ....  accused of orchestrating a conspiracy that involved two officials at the Army Space and Missile Defense Command. He faces up to 20 years in prison. ... Prosecutors say [he] and the officials agreed to split and personally use money earmarked for missile defense contracts. [They] have pleaded guilty and are awaiting sentencing. .... Most of the material delivered by [sub-contractor] was worthless, a fact that [the Army officials] covered up while continuing to funnel earmarked money to [his] sham companies in return for a share of the gains  [AP, Jan 24]  Fiber had a very nice business in ICBM nose cones until the Cold War stopped.

Federal agents raided two small Pennsylvania defense contractors that were given millions of dollars in federal funding by Rep. John Murtha, chairman of the defense appropriations committee and one of the most powerful men in Congress.  Kuchera Industries  and Kuchera Defense Systems (Winber, PA; $800K SBIR) shut down for the day  [Wilkie, Cole, and Farnam, Wall Street Journal, Jan 23]

the stimulus bill emerging in the House ... is a muddled mixture of short-term stimulus haste and long-term spending commitments. It is an unholy marriage that manages to combine the worst of each approach — rushed short-term planning with expensive long-term fiscal impact. [David Brooks, New York Times, Jan 23]  Surely, some silver-tongued SB lobbyist will come up with a plea that what stimulus truly needs is more SBIR. Indeed, Feingold's proposition to put SBIR up to 10% is that kind of junk talk.

DOD Commercialization. The United Arab Emirates is in the process of acquiring both the Patriot Advanced Capability (PAC)-3 and the Terminal High Altitude Area Defense (THAAD) missile defense systems. ... expected to cost $7 billion, and will be an unusually large investment in THAAD, given that the first THAAD battery in the United States just became active earlier this year   [Center for Defense Information, Jan 7]

Spread It Around. Small businesses want to extend a set of one-year tax incentives for investing in new equipment. And a broad range of industries want to scrap a requirement that government contractors set aside 3% of the value of contracts to pay for possible cost overruns. ....   The growing lobbying efforts underscore a challenge for the new president and Democratic leaders on Capitol Hill: managing the demands of lawmakers and interest groups with a stake in the outcome of the evolving economic-recovery package. [Weisman, Hitt, and Mullen, Wall Street Journal, Jan 26]  Everybody's got a self-serving stimulus idea.

The $825 billion stimulus plan presented this month by House Democrats called for $37 billion in spending in three high-tech areas: $20 billion to computerize medical records, $11 billion to create smarter electrical grids and $6 billion to expand high-speed Internet access in rural and underserved communities. .... Beyond creating jobs, advocates say, government investment in these technology fields holds the promise of laying a lasting foundation for more business innovation and efficiency, while helping to create new digital industries.  [Steve Lohr, New York Times, Jan 26]

Americans FirstI am concerned that Microsoft will be retaining foreign guest workers rather than similarly qualified American employees when it implements its layoff plan, ....Our immigration policy is not intended to harm the American work force. ... Microsoft has a moral obligation to protect these American workers by putting them first during these difficult economic times. said [Sen] Grassley ... But good politics may be illegal (IAW law made by the concerned politicians) Cletus Weber, co-founder and partner with Mercer Island-based immigration law firm Peng & Weber, said determining layoffs by nationality or immigration status could violate anti-discrimination laws.  "I know of no immigration law that would require Microsoft or any other U.S. company to lay off its lawfully employed foreign workers first," Weber wrote in an e-mail. "To the contrary, I believe arbitrarily laying off lawfully employed foreign workers first would subject these companies to potential legal liability under federal anti-discrimination laws." ...  In 2007, Microsoft said that about one-third of its 46,000 U.S.-based employees at the time had work visas or were legal permanent residents with green cards. [Benjamin Romano, Seattle Times, Jan 24]

SBIR Inaction. With the economy continuing to nosedive and less than six weeks remaining until expiration of one of the most successful federal tools for supporting technology commercialization and innovation, some analysts expected SBIR would be an easy target for immediate attention by its authorizing committees in the House or Senate. Perhaps, for no other reason than to keep the direct capital injections of nearly $2 billion flowing into the nation's small tech firms at the same time other capital sources are running dry.  Instead, no action is readily visible, or being discussed through traditional SBIR news sources, such as Rick Shindell's SBIR Insider or the Small Business Technology Council.  The Senate Committee on Small Business and Entrepreneurship appears yet to have opened its doors in 2009 .. The committee's website has only one update since December.  Separately, on Jan. 8, Sen. Russ Feingold (D-WI), a member of the committee, introduced S. 177 to extend SBIR and its companion STTR program until 2022 and increase the SBIR set -aside to 10 percent by 2012. That bill was read twice and referred to the committee, which has yet to hold its first hearing. ... No SBIR-related legislation has been introduced in the House yet for the 111th Congress. ...   [SSTI, Jan 21]

Texas Religion v. Science.  Business leaders, meanwhile, said Texas would have trouble attracting highly educated workers and their families if the state’s science programs were seen as a laughingstock among biologists. “The political games we are playing right now are going to burn us all,” said Eric Hennenhoefer, who owns Obsidian Software.   [James McKinley, New York Times, Jan 22]

“The corporate welfare commission and military acquisition reform are two things the president-elect wants to do very soon,” Rahm Emanuel, Mr. Obama’s chief of staff and a participant in the meeting, said in an interview. [David Kirkpatrick, New York Times, Jan 19].  Questions about corporate welfare and military acquisition cannot be a plus for DOD SBIR which pours gazillions into companies with no future beyond SBIR contracts. Not that DOD would shed a tear if SBIR disappeared anyway.

Ice, mosquitoes, and taxes. The Small Business and Entrepreneurship Council’s report on the best states to launch a company ranks Minnesota near the bottom of the list- 46th out of 50 to be precise. The report bases its rankings from a public policy perspective: the more a government taxes and borrows, the less likely new businesses will flourish. In other words, government is not the solution but the problem, the council says.  So from that sense, it’s not entirely surprising that Minnesota, which has a reputation for high taxes, would fare poorly. The state finished near the bottom in categories like capital gains taxes (46th) and corporate income taxes (48th) and dead last in health care mandates (51st.)  To read the entire report, click here[Thomas Lee, Minneapolis Star Tribune, Jan 20]  Yet, the Minneapolis area has lots of innovative tech companies, which must mean that taxes and government are not decisive factors for entrepreneurs. "Will the highways on the internet become more few?"  GW Bush

Some Republicans and Democrats think the deficits the package will create will unleash inflation and a run on the dollar. ... But in the end Obama will get most of what he wants, not least because the economic situation seems to deteriorate daily. [Irwin Stelzer, The Sunday Times, Jan 18] If a new trillion starts floating around as stimulus, it will bid-up goods.

IN NOMINATING John Holdren to be director of the Office of Science and Technology Policy - the position known informally as White House science adviser - President-elect Barack Obama has enlisted an undisputed Big Name among academic environmentalists. ...  also a doom-and-gloomer with a trail of erroneous apocalyptic forecasts dating back nearly 40 years - and a decided lack of tolerance for environmental opinions that conflict with his. .... long associated with population alarmist Paul Ehrlich .... advocated the "long-term desirability of zero population growth" .... argued that "a massive campaign must be launched . . . to de-develop the United States" [Jeff Jacoby, Boston Globe, Jan 18]

Conservative Hoosiers. Gov. Mitch Daniels said the state's weakening economy will require the suspension of funds for some initiatives supported by his administration. ..., delays funds for research aimed at building the state's life sciences portfolio, including elimination of a $20 million Life Sciences Fund at the Indiana School of Medicine and Purdue University and $3 million for the High Growth Business Incentive Fund to encourage high-wage companies to locate or expand in the state. [SSTI, Jan 15]

Squeal or Deal? the Grand Bargain could come in. Like Humpty Dumpty, the budget is going to be broken anyway. In putting it back together, would retirees be willing to accept that idea of having more prosperous seniors pay a monthly premium to receive their Medicare health coverage? Would liberals accept cuts in their favorite social programs? Would conservatives accept the idea of a carbon tax, to both raise big money for entitlements and prod the nation to move more quickly away from fossil fuels?  Those would be the big trade-offs. Washington may shy away from them once again. But the Obama era of big problems at least creates the opening for that kind of big debate.  [Gerald Seib, Wall Street Journal, Jan 16]

GAO has released a report stating that NASA’s Office of the Inspector General, which is charged with improving agency efficiency, returns just 36 cents for every dollar in its budget, compared to an average among 30 federal IG offices of $9.49 per dollar. House Science and Technology Committee chair Bart Gordon (D-TN) called for the removal of the NASA IG. [AAAS, Jan 14]

Got Religion, Don't Need Science.  Oklahoma now has a so-called "academic freedom" bill pending. Like similar bills passed by Louisiana and introduced in other states last year, it labels evolution a controversial theory. As previously reported, Oklahoma lawmakers have already reintroduced the Religious Viewpoints Antidiscrimination Act, which last year appeared designed to allow religion into public schools (including science classes) but was vetoed by Gov. Brad Henry. Meanwhile, Mississippi now has a bill that would mandate placing in textbooks disclaimers that challenge the teaching of evolution.  [AAAS, Jan 14] Meanwhile, no doubt the state chambers of commerce are touting their states as great places for high-tech companies. But where will they find high class techies to live in an anti-science world?

And Rising. The federal government already has run up a record deficit of $485.2 billion in just the first three months of the current budget year, the Treasury Department said Tuesday. The deficit is on track to surpass $1 trillion for all of fiscal 2009 and some economists believe it could go much higher.  [Yahoo Finance, Jan 13] Hoping for a handout from the world's largest debtor?

The USG lacks an effective plan for ensuring the safety of nanotechnology, a new report by the National Research Council (NRC) concludes. The report, released last week, finds that the current plan for coordinating federal research on environmental, health, and safety (EHS) risks of nanotechnology amounts to an ad hoc collection of research priorities from the 25 federal agencies that make up the U.S. National Nanotechnology Initiative (NNI), which coordinates federal nanotech programs.  [Science, Dec 19]

Me Too.  Scientists seeking stimulus. A collection of U.S. research universities is making the case for science to be included in legislation aimed at reviving the moribund economy. In a letter to President-elect Barack Obama, the 62-member Association of American Universities (AAU) proposes $2.7 billion in immediate spending on academic buildings, scientific equipment, and young researchers. [Science Insider blog]  Never a shortage of great ideas when there's money available.

After more than 150 years of being a destination, California is becoming a place entrepreneurs, investment capital and the hardy workers who made it a global leader in agriculture, technological innovation and scientific research are fleeing. ... Over the past few years, we've witnessed the state government's response to the capital and entrepreneur flight out of our state: Taxes remain high, and lawmakers employ all the tricks in the book to produce "balanced" budgets from shifting expenses around to borrowing ever larger sums of money.  [Devin Nunes, Wall Street Journal, Jan 10]  The WSJ op-ed page never met an unpleasing argument against taxes. But if Silicon Valley, for example, is the best place to make a lot of money, the tax rate will not keep entrepreneurs away. A decent fraction of a big number is a lot better than a huge fraction of nothing. The reality of high tech industry is that success will not happen alone in mid-Kansas or low tax Alabama.

North Carolina's widely lauded economic transformation of the last three decades -- in which the state diversified away from its dependence on agriculture and textiles and into technology, banking and pharmaceuticals -- is proving no match for what could be the longest and deepest U.S. recession since World War II.  ... A record number of people in the state are now out of work, and its unemployment rate of 7.9% for November was the highest in 26 years  [Dan Fitzpatrick, Wall Street Journal, Jan 10]

NIST's Technology Innovation Program (TIP) is seeking white papers to help shape the Program's collaborative outreach and competitions in the future. TIP is interested in receiving white papers from anyone including academia; Federal, State, and local governments; industry; and professional organizations/societies.  ...  see the Federal Register Notice at for further details. It may help if you blather like they do with: sufficiently large in magnitude and barriers preventing the successful development of solutions.

Obama made promises during his campaign to create 3 million new jobs upon taking office. The problem with that statement is the verb: create. What's really happening is that we, the taxpayers, are buying jobs.  ... with borrowed money, much of it coming from lenders like the Chinese government. That has consequences of its own in terms of foreign and defense policy. But a bigger issue is the temporary nature of the jobs being bought.   [John Torinus, Milwaukee Journal-Sentinel, Jan 12]  We should note also that most of SBIR, particularly in the mission agencies, is also merely buying jobs. All the political blather about small firms as engines of growth means nothing if the SBIR "investments" don't go to the firms and ideas most likely to produce downstream growth.

Military or Economic Security. When Barack Obama takes office as president, he should immediately change or even scrap many cold-war-era regulations on high-tech exports and on immigration by foreign scientists and engineers, an expert panel said.  Restricting foreigners’ access to strategically important technology might have been useful decades ago, when the United States was the undisputed world leader across the technological spectrum, the panel said in a report issued by the National Academy of Sciences. But today, it said, the nation is losing scientific and engineering dominance even as militarily useful advances come increasingly from civilian research. The regulations do little for the nation’s security, the panel said, while significantly hampering economic growth and innovation.  ...  The report is at   [Cornelia Dean and William Broad, New York Times, Jan 9]

Howard Gleckman of the nonpartisan Tax Policy Center summed it up in the title of a recent blog posting: “lots of buck, not much bang.” [Paul Krugman, New York Times, Jan 9]  We live in a representational democracy where interests get what they want, despite even some allegedly perfect plan that passes out money.

Feds Approval is Enough.  A federal judge threw out lawsuits on behalf of thousands of patients with heart-defibrillator wires that have been shown to fracture and dispatch potentially lethal shocks, concluding that a recent Supreme Court opinion made the dismissals inevitable. U.S. District Judge Richard H. Kyle in Minneapolis dismissed the lawsuits, citing the February decision that federal law "pre-empts" product-liability lawsuits under state law, effectively precluding such cases. That decision triggered an effort in Congress to change the law.  [Wall Street Journal, Jan 7]


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