Ohio Rejects Tech Handouts. $500 bonds to fund technology-based economic development project?  No, said Ohio voters. No corporate welfare and feel good spending as part of  the unpopular governor's  $1.6B Third Frontier project. Political analysts opined that the measure went down because it smelled of corporate welfare (heaven forbid anyone should say the same for SBIR), a 150-year old ban on government direct investment in private companies, and not buying off the interests who would get nothing (like the farmers). [SSTI, Nov 7]. 

BrainChild Maryland will try to profit from tech transfer, the billionth or so such dream of turning new technology into spin-out companies and licensing deals. The first million comes from Maryland taxpayers (who probably have a lot of suspicion that the only beneficiaries will be the people drawing a salary to spend the money) on the premise that Maryland is rich with technology resources and, on a per capita basis, receives more federal funding for research and development than any other state in the nation,” DBED Secretary Aris Melissaratos .  Got a hot prospect?  Jessica Tiller at 410-727-6855 

My fear is not that government will fail to pick winners. Government bureaucrats can, and often do, select good technologies. What government is incapable of doing is abandoning bad technologies. The failure rate in new technology businesses is very high. Markets discard unsuccessful innovations relatively quickly and cleanly. Stock market speculation takes place on the investor's nickel, and bubbles come to an end sooner or later. In contrast, once a government program gets started, it is almost impossible to stop, and its fuel of tax dollars never runs out. Everyone with a business idea would love to finance it with Other People's Money, and a government bureaucrat with a budget to spend on technology is like an entrepreneur with an endless supply of venture capital.   [Arnold Kling, Tech Central Station, Nov 13]

Dig into your attic. A new agency SBIR is about to appear. Homeland Security will put out a solicitation on Nov 14, which should result in every old idea getting dusted off and floated again to the new kid. No, with no history, no one knows what kind of approach the DHS bureau will take toward SBIR. But as with most agencies, look beyond the words in the solicitation or the agency mouthpieces to judge the real criteria. 

NIST SBIR is on the street. This is one agency that wants real commercialization and is even willing to engage in corporate welfare to get it. Only relatively mature or tiny scale projects need apply because Phase 2 will be only $300K. Unless of course NIST wants to play the continuous project game that the mission agencies play to get around the target amount limits of the SBIR law. The federal officials will have no trouble funding their favorites if they choose since there are no SBIR investment police to collar them for wasting SBIR money. Who gets the 10 or so annual Phase 2s?  The usual suspects are well represented. 

And what about ROI for the agencies such as NASA and NSF? Do they see commercialization activity from the "SBIR Mills" that churn out proposals weekly? The real welfare in SBIR is given to these sorry excuses for corporations. I have reviewed proposals for two agencies, and have seen firms with 150 Phase 1 awards and 40 Phase 2 awards, that have generated $130,000 in total revenue. THAT'S OVER $60,000,000 IN SBIR AWARDS TO ONE COMPANY, THAT GENERATED A $130,000 RETURN, FOR YOU, THE TAXPAYER.  So says one of the minority YES votes for allowing VC funded companies to be eligible for SBIR. How people vote on such a question goes as the adage, "Where you stand depends on where you sit."  The SBIR advocates want a guaranteed cut of federal R&D for small companies regardless of ROI; the SBIR winning companies don't want competition from real money; some of the VCs would like the supplement of SBIR for their companies; the government should want an ROI that justifies the investment (although "government" is also divided into two camps neither of which cares much about ROI - the elected politicians want to please the small business constituency while the bureaucrats want to protect their budgets and will do whatever they have to to make Congress happy). Vote YOUR opinion!

A Few More Improvements.  One reason SBIR has no economic story to tell is that the agencies spend most of their SBIR money on nice safe projects with predictable results of more knowledge by the agency about something it is already doing. That is usually called defensive research. One agency, for example, recently funded a Phase 1 to update yet another math model of a physical system:  A relatively new failure theory for composites, the Strain Invariant Failure Theory (SIFT), is proving to be far more accurate at predicting failure. SIFT in conjunction with a robust finite element analysis (FEA) tool offer an efficient method aimed at streamlining the design certification process for laminated composite structures. Phase I activities address the necessary enhancements to StressCheck®, a parametric p-version FEA tool, to facilitate the use of SIFT methodology during post-processing. Enhancements include: 1) Add a General Shell element and a Transition element that will enable the connection of a shell to a 3D solid element. 2) Add laminated orthotropic material properties that follow the general curvature of a shell or solid element. 3) Add a Contact element and 3D Fastener element with clamp-up simulation.  Innovation? Well I suppose it has never been done, and neither have I ever painted a wall purple and chartreuse. Downstream economic impact. SBIR requires the company to pretend: Successful demonstration of the proposed enhancements in combination with SIFT will provide analysts with a tool enabling the design certification of composite structure at a significantly reduced cost compared to certification methods in place to date.  Any wonder the companies who get funded for such stuff object to opening SBIR to VC backed companies? 

Did you know that 80%of the country's basic scientific research - the foundation for gee-whiz biotechnology and medical device development - is performed in federally funded labs? The federal government pours $23B into federal labs like the National Institutes of Health and National Institutes of Environmental Health Sciences. Washington funnels another $18B to university research facilities. [a message brought to you by Joe Allen, director of the NTTC,  and LARTA advertising for its Project T2: A Technology Transfer Conference coming Nov 13]. 

Pull Up That Lifeboat Ladder! The people who sail in the SBIR lifeboat  vote overwhelmingly against letting in any more people. Especially firms backed by VC money that the government is likely to ignore anyway. About 40 people have voted in the SBIR Gateway informal poll meant to help Congress decide to ignore the arguments of the VCs and listen to the present beneficiaries. The arguments against the change ignore any larger meaning of SBIR (which is reasonable for beneficiaries but not for policy wonks). Got a useful view? Vote or comment yourself.

The Scariest Customer.  How juicy - a $300B buyer that cannot be arbitrary in picking its vendors.  But Matthew Swibel and Janet Novack (Forbes, Nov 10) tell a horror story of a small company that sold to the fed and would up acquitted by a jury in a criminal trial. The company used surplus materials, apparently of acceptable quality, without doing a "mother may I" required of a buried materials clause. Before this whole crisis Aerometals didn't even have a government contracts lawyer, let alone one from a big firm who bills at $500 an hour. "What Aerometals did was manufacture parts well," says Metzger. "But it didn't realize how easy it is to get yourself in trouble with the government in arcane areas and how difficult and expensive it is to get yourself out of trouble."  The moral" don't sell the government goods and services without a good procurement lawyer. R&D, including SBIR, though is more forgiving since you are only promising to deliver best efforts. 

Marines land first. The Navy has released a partial list of its Phase 1 winners from the summer solicitation. Only the Marines have winners for all their topics. And, guess what, the list sounds like the usual list of suspects.  The list shows that the debate over whether VC investors should qualify for SBIR awards is moot because the Marines, like the other mission agencies, pay no obvious attention to the kind of economic criteria that would interest VCs. Consistent with the idea that mission agencies render economic questions moot, all the Marine projects sound like incremental engineering. 

Fast Track is back in the news.  After a term of hiding the facts, DOD has once again listed its Fast Track Phase 2 awards. Fast Track favors Phase 2s with third party CASH by matching the cash from some formula which changes from time-to-time, by markedly higher award probability, and by prompter contract negotiation. Ft'ers also do not have to compete for an invitation to submit a proposal.  In 2002 there were 41 FT awards out of a 660 Phase 2 total awards. In 15 of the awards, the cash came from other federal programs. 

DOD so wants more SBIR ideas more often that it is adding a third annual solicitation. The new 2004 schedule has solicitations closing June 17 and August 12. STTR will still be once a year. Eventually, maybe, a federal agency can have a nearly continuous solicitation for really new ideas (regardless of what it does for the ordinary stuff that dominates SBIR). Actually, that would bring it back to the standard R&D program's Broad Agency Announcement. Of course the agency would have to have a way to shut out the umpteenth variation of the same old idea from companies who have more persistence than imagination. One idea is to permit monthly submissions on broad topics from companies who have never won an SBIR before. 

The establishment of SBIR beneficiaries is solidly opposing a proposed opening of SBIR to VC firms.  VC and Biotech organizations propose that the rule that SBIR firms must be owned by individuals be expanded to include VC enterprises. See the debate unfold and join in.  The old rule of government programs is that any change is stoutly resisted even if, and perhaps especially if, the program has no demonstrable success. SBIR's only success is steering government contracts to a politically preferred interest group.  The opponents claim the change would admit "corporate welfare" (as if what happens now is not corporate welfare). Ah well, waste, fraud, and abuse always means someone else's program. 

"I'm not saying Arizona is behind, but you have to run to keep up," said Bob Goforth of site selection consulting firm Leak-Goforth .  Arizona's  second annual Semiconductor Forum emerged with some hints for the state to keep its semiconductor industry conducting. Small companies or university researchers developing new technologies could use a pre-production center [nice idea; who will pay?] .... Educators and industry need to work more closely [a perennial academic recommendation which costs nothing] in developing a workforce that can transition products from a lab to a wafer-fabrication plant. ...  research and development at Arizona's universities is too well kept a secret inside and outside the state.      establishing Arizona as a distribution gateway to Asia   [Jane Larsen, The Arizona Republic, Oct. 23, 03]  It might help if AZ could get more SBIR help IFF AZ could convince the federal agencies to fund companies and technologies with future market prospects instead of just short-run R&D service contracts. AZ might also do some in-state introspection and ask companies like MER (Tucson) how many permanent post-SBIR jobs have resulted from its piles of SBIR money.  

Next time you're tempted to twaddle about productivity benefits of your amazing new technology to a government that doesn't care anyway, at least make a decent argument like you understand productivity.  Politicians want contradictory goals of more of both productivity and jobs. They usually accept the myth that info tech created the productivity gains of the 90s. After two decades of 1.4% average annual gain, it rose to 2.4% in 1995-1999, 2.9% in 2000, only 1.1% in 2001 and an amazing 4.8% in 2002 while technology goods rose from 2% to 12% of GDP in the 90s. But two thirds of the productivity gains were in just six industries and only three of those (semiconductors, computer assembly, and telecommunications) were technology creating industries. [facts from Diana Farrell, Harvard Business Review, Oct 03] Even the Secretary of the Treasury fumbles the productivity issue as he (foolishly) predicts scenarios desired by the White House re-election squad that get more job growth from a decline in productivity growth. [J Eisinger, Wall Street Journal, Oct 21] And ``Real manufacturing output has risen 77% even though the number of manufacturing workers has fallen 22% since the 1979 peak,'' [Steve Wieting, senior economist at Citigroup} says. Similarly, real farm output rose 96% since 1979 with 31% fewer agricultural workers. [Caroline Baum, Bloomberg News, Oct 14]  So, if you don't want to sound like just another babbling politician, make a decent argument with some hard facts and realistic analysis. For the mission agency SBIRs, you're probably better off talking about the weather anyway.  

For small companies that supply the defense giants, these should be boom times. Pentagon spending on new weapons is up, and military officials are eager to expand their pool of traditional suppliers with innovative entrepreneurs.... But for small defense contractors, the price of vying for that work is enormous personal stress and frequent brushes with financial disaster. One reason is growing competition. As a global downturn in air travel depresses demand for new commercial aircraft, suppliers fishing for defense work offer cut-rate prices just to keep their factories open. ... The industry "goes like this," says Mr. Hoffman [CEO of Summit Design & Engineering Co, Helena MT], making a wave motion with his hand. "You have a decent year and then it goes in the toilet. If things go downhill, we've lost everything."   [A M Squeo, Wall Street Journal, Oct 22]

For a while, nanotech will have to rely on government funding, says VC Steve Jurvetson, because the profit motive will not energize the VCs. "Nanotech is the next great technology wave," Jurvetson said.  ...  but because most nanotechnology research won't produce a marketable product for at least three to five years or longer. One notable exception is medicine, he said, where there are several promising nano-treatments for illnesses such as cancer that are nearing trials in humans.. [Eric Berger, Houston Chronicle, Oct 15]

What does that empty plastic juice bottle on your desk have to do with a more efficient, less expensive fuel cell?   Oxford Performance Materials, developer of high-performance thermoplastic polymers, spawned from a company that started out recycling plastic scrap materials, recently was awarded a $250K contract from the Department of Energy’s Inventions and Innovations program to expand its high-temperature fuel cell membrane research and development activity.  OPM’s research applies to proton exchange membrane (PEM) fuel cells, which use a thin plastic film to separate hydrogen ions from electrons and whole atoms, and more specifically developing a replacement for Nafion, the perflourinated polymer used in most PEM systems now.  .... The initial R&D was funded by a pair of Yankee Ingenuity Grants totaling $600K from Connecticut Innovations, the state’s top investor in and supporter of high technology and technological innovation.  [Jay Rizoli, Mass High Tech, Oct 6]  More government money into PEM technology after decades of small contracts, especially SBIR to companies like Lynntech  (College Station, TX) and Giner (Waltham, MA).

Don't cut you, don't cut me, cut that guy behind the tree. The porkers are lining up to save MEP from the free-marketer administration's efforts to gut it. W won't do any better at it than his father. To woo conservatives, W proposes cutting MEP after which Congress re-instates it. After all, how can Congress cut manufacturing help programs while moaning about the loss of manufacturing jobs?  "I'm rather stunned that this program was attacked," says Lawrence Rhoades, president and chief executive officer of Extrude Hone Corp. in Pittsburgh, who also serves on a panel studying the program at the National Academy of Public Administration. "It offers a good return on taxpayer investment." quotes Timothy Aeppel (Wall Street Journal, Oct 8). Whether it's a "good return on taxpayer investment" depends on your view of what taxpayers should be investing in at all. The beneficiaries and their Congress reps can see endless virtue in such "investment". Just like the phantom good return from SBIR. Where's the money to come from? The same place where all the other spending comes from - lower tax collections offset by liberal borrowing. 

Ask Not What Your State Can Do For You.  Less than before. Conservative estimates project that states have already axed between $20 and $40 B from their budgets, ...   Across the nation, state cuts include technology spending - on their own IT infrastructures and in financing innovations in the public and private sectors. For this reason, tech industry observers have stopped asking, "How low can they go?" Instead, they're asking new, tough questions:  · Who's going to get the biggest slices of the steadily shrinking new economy pie? · Will the lack of funds spur innovation or diminish it?  · What will the funding crisis mean for the future of state-supported technology development?  [Margot Carmichael Lester, LARTA, Sep 2, 03]

The big guy is prowling the street with lots of money to hand out. DOD SBIR topics are public  along with the technical point of contact who will answer certain questions about the topic.  Ask them sensible questions if you want a sensible answer. Your prime goal should be to estimate how competitive your hypothetical proposal might be. You want to know if they are keenly interested in your proposition which you can state in 1-2 sentences. If they don't applaud right out loud, you're probably NOT competitive and you're wasting your money and their time proposing it.  A lukewarm answer means either you babbled your idea or it is NOT as exciting as you think. The question period will last ONLY through November. Remember that you must talk to the topic POC with technical questions. Don't waste you time and money going to the National Conference in Cleveland 27-30 October where you will only find the SBIR bureaucrats who can tell you where to send the proposal and how to count to 25 pages but NO TECHNICAL guidance. 

Eye Wash or Incentive?.  Kansas has a plan for econ development including Rural Development Tax Credits which would create (in the politicians' mind)  regional pools of venture capital to assist entrepreneurs and fledgling businesses in rural areas and would be issued to regional foundations. The foundations could then sell the credits to raise money for their regional venture capital pools. Just one problem: why would an ROI-driven VC invest in rural enterprises? 

MPI Needs a Shelter.  Minnesota decided to economize (what state hasn't) by wiping its Minnesota Project Innovation from its funding menu. The SBIR arm now needs a supporter to continue its mission of helping state companies tap the federal SBIR spigot. MPI's Procurement Technical Assistance Center, which claims to have helped more than 1,200 companies last year found its sugar daddy in the Metropolitan Economic Development Association (MEDA). [story Minneapolis Star Tribune, Sep 29]  Why might the legislature gut a program that brings in federal dollars? Maybe because the federal dollars have little staying power - one shot medicine with little downstream economic activity that produces tax revenue or self-supporting jobs. While that result is not Minnesota's fault, it does contribute to a picture of a mere jobs program with the only beneficiary being the federal agencies who grab the technology.  

Increasing global competition and increased efforts in the 1990s toward greater efficiency in government has boosted pressure on federal agencies to conduct economic impact assessments, according to the report. These pressures are relatively new and the majority of agencies have not obtained the internal means to select proper metrics, data sources and analytical methods. Agencies also have struggled in selecting contractors outside of the agency with the skills necessary to perform such assessments, the report argues. As a result, the need for proper impact assessment is often lost, as most R&D agencies are managed by technically trained individuals unfamiliar with tools for economic assessment and uncomfortable using and interpreting data produced by a field of study in which they are not trained.  [SSTI Weekly Digest, Sep 26,03] The subject is NIST's Greg Tassey's report on the economics of government R&D. He argues here that government is too dumb (not enough economists in R&D) to evaluate R&D programs. If SBIR evaluation were the standard, he would be obviously right, but than again the real reason for non-evaluation is the lack of economists (they can be outsourced); it is the political unwillingness to do so. .

Political Sense and Economic Nonsense.  NIH congratulated itself after a comprehensive evaluation of its SBIR by surveying (yes, another survey of beneficiaries) companies with Phase IIs 1992- 2001  to determine if the goals of the program were being met.  The usual overwhelming majority claimed the usual benefits.  In the usual outburst of enthusiasm, 98% said that SBIR support had been or will be “very important” or “important” in the research and development of the product, process, or service developed under the funded project. Imagine that - people who asked for money and got think it was a good program. It even bragged that 52% of Phase 2 winners got more SBIR. Then it claims superior evaluation methods: NIH now has the basis for a systematic approach to collecting and analyzing NIH SBIR Program outcomes. The one economic measure was that $551M of Phase 2 money resulted in $821M of sales some of which may have been more SBIR. A real economist like Josh Lerner would scoff at both the method and the conclusions.  What's wrong? The evaluation has no comparative economic measures, no control group, no independent validation of the data, no measures of innovation, no subtraction of SBIR-funded employment from employment growth, no concept of ROI. But it does have a lot of numbers in multi-color tables. It also has a survivor bias (as do all small business surveys) and thus the money for Phase 2s in companies that failed is not included. Although it reports 20 companies going public, it make no attempt to grab that obvious economic measure (as did BMDO recently in calculating an ROI). The report's bottom line: we passed out a lot of money to people who asked for it and they report that they did some good with it.  No matter, Congress will love it and NIH will NOT be called to task because the agencies are required by politics to pretend that SBIR is a great success even though they would sack it in a heartbeat if they could. The so-called free market Bush administration will keep its mouth shut about market distortion and industrial policy; it's small potatoes, doesn't require appropriations, and doesn't get in the way of tax breaks for wealthy individuals and corporations.  Find the report.

SBA's Office of Advocacy pumped out another report to claim that small business drives the nation’s economy, claiming that over 99% of all American businesses are small and create 75% of net new jobs, and employ over half of the nation’s non-farm private employees. Office of Advocacy is the driver and defender of SBIR and other programs that try to intervene in normal business to protect and advance small business. SBIR is so important to SBA that SBA tries to block any economic evaluation and advocates that EVERY SBIR PROPOSAL be funded that passes technical muster. Find Advocacy's list of reports.

Grow Wisconsin, Grow Wisconsin! The governor has a plan; don't they all when elections are nearing? 1. A new Manufacturing Competitiveness Program. $10M  for grants to 50 manufacturers to improve their productivity through training Does he know that productivity raises profits and cuts jobs? 2. A $300 VC fund for  seed and early-stage companies. Put state funds at risk and have a repeat of the 1990s bubble? Why would state investment be managed better than strictly private investment?  Other states have tried it and lost interest when the payback period goes way past the next election.  3. A new program to commercialize research.  $5M for technical assistance, matching grants and bridge grants that will help researchers win federal funding and turn scientific discoveries into jobs. Noble goal unfettered by experience. Getting federal funding is NOT commercialization and may actually push the R&D in the wrong direction.  4. Greater investment in job training. $1.5M is small money for something that might actually help. 5. Accelerated broadband deployment. A useful tool for smart companies but also something the private sector can do. [facts from SSTI, Sep 19]

Is it a good idea for Massachusetts to spend $125M of taxpayer money to "create more jobs"? Or Nebraska or New Mexico? Would it work in theory, or in practice? Or is it merely a handout to special interests who claim expertise in economic development? Can a political entity create jobs that last longer than the money handed out? What would those jobs do? Who would be customer with the demand? If there is no new demand, then the jobs must come at some other place's expense. Isn't it mere sub-optimizing for a state of the United States to seek competitive advantage over neighboring states? If we are a united nation, we would let economics dictate where jobs will be done and the workers would move to those jobs. That was the intent of the free internal trade clause of the Constitution. Oh, don't worry, such larger considerations won't bother state politicians who need to be seen "doing something". They follow the old Army adage, "Do something, even if it's wrong." 

NIH posted sample annotated Phase 1 and Phase II SBIR proposals of Elitra Pharmaceuticals. .Good move, Joanne. Such advice MAY improve the chances of a proposal winning an award.  Proposers should note, though, that few government technical types pay a lot of attention to how nice a proposal looks. They want to know whether you have a competitive idea and all the eye-candy won't elevate mediocrity. They are generally willing, especially for Phase 1 to overlook amateurish looking proposals from what they view as educable companies. Don't agonize over presentation; agonize over clarity.  

Nolan Bushnell. He's the über-entrepreneur who founded video-game pioneer Atari and Chuck E. Cheese's Pizza Time Theater in the 1970s, plus nearly 20 other startups since. "Venture capitalists are people looking for innovation -- until they see it," he thunders. "If you have an innovative idea, your chance of getting funding is virtually zero." Cranky as he is, Bushnell has a point. Great ideas often look trivial to most people.  [Business Week, Aug 25] How about government then as a source of start-up capital for great new ideas?  Little chance. Risk takers don't inhabit the halls of government. Even alleged start-up helpers,, like SBIR, are run by the risk-averse  bureaucrats who would rather fund a 99% chance of a 1% improvement than a 1% chance of 10000% improvement. Maybe DARPA has some entrepreneurial spirit but even DARPA gets whacked for visionary thinking. Witness the furor over the terror futures market scheme, an innovation that has actually had some real market testing. BMDO once had as much spirit as is allowed in government before the crats power-grabbed that SBIR. The political SBIR advocates add dousers to any fire with their lobbying for the ordinary stuff as a piece of the money pie for their constituents. 

A Future for Futures? Neoteric Technologies (Huntsville, AL) lost a $750,000 FutureMAP grant, but its vice president, William Adkins, still hopes that the Department of Defense will find use for information markets. His company is involved in a project that will use a market to measure the progress of a Pentagon weapons project. "It'll give evidence whether the project will be on time or whether the program manager is whistling in the dark," says Adkins, who notes that the market could break bad news to officials without whistleblowers having to risk their careers. Adkins has also been working on a market of epidemiologists that he hopes might give early warning of an epidemic, such as a resurgence of SARS. [Science, Aug 8] Neoteric was denied its Phase 2 SBIR as the storm broke over the terrorist futures market. Neotheric got to the party too late; Net Exchange (San Diego, CA) had already won a Phase 2 in 2001 for roughly the same thing, before the politicians realized what was up and was connected to John Poindexter. 

Who Speaks for Tech? For decades, Jack Valenti has represented the movie industry with an unwavering voice. Silicon Valley could learn a thing or two from Hollywood's master lobbyist.  ...  a cross between a Southern snake-oil salesman and the consummate Washington fixer. ... the Valley needs to learn a thing or two, and that Valenti himself has an awful lot to teach it. 1. Define the debate.  2. Extra points for humor. 3. Pucker up for Washington. 4. Check, please. 5. Find the next Jack Valenti.  [John Heilemann, Business 2.0, Sep 03]

Had an SBIR and you're ready to sell something to the government? It's easier than ever. IFF the government wants it. (Don't misinterpret those diplomatic nods as enthusiasm for your gizmo.)  Dave Metzger, authoritative SBIR procurement lawyer lays out some of the rules and rights in a recent briefing at an SBIR conference. Copy provided by the SBIR political arm - SBTC. 

The Twin Cities isn't necessarily the best place to start a new venture, but it's the best place in the country to be if you're operating a small business, according to the October edition of Entrepreneur magazine. And, the magazine says, the business climate for local entrepreneurs is getting better. The Minneapolis-St. Paul area moved into first place from 15th in an annual study of the best cities in which to be an entrepreneur.  [Minneapolis Star Tribune, Sep 17]

Paul Rummell 1920-2003. Paul spent 30 years at Watervliet Arsenal rising to Chief of Benet Lab, the R&D arm of gun making. Watervliet did one big thing really well - it bored a lo-o-ng straight hole in big hunk of the hardest steel. 

States still trying to invent tech industries. A small portion of Florida's pension fund will go toward venture capital investments, according to the Orlando Sentinel. Though not widely publicized, the state's pension fund managers have decided to invest up to $400 million in venture capital funds — barely one-half of 1 percent of Florida's pension ... a $5 million venture capital fund to help Iowa's start-up companies ... Massachusetts Pension Reserves Investment Management Board has decided to commit two percent of its $28 billion in assets for economically targeted investments in economic development and housing projects. Types of investments to be considered include seed funding for industries "overlooked" by private venture capitalists. ....at least $100 million in venture capital investment in Oregon businesses by Jan. 1, 2008.from pension funds  [SSTI, Sep 12]

NASA bought a new cookie cutter and now offers $600K for the few Phase 2 STTRs. 

CalTIP Sacrificed.  Born in the panic of the disappearance of the Cold War, CalTIP went along with the defense conversion fad of the early 1990s as evidenced in the 1993, pre-election, Defense Appropriation. One solution for every committee was more SBIR. And California invented a handout (investment) in companies getting federal money. Now, a decade later, California's financial panic has led to killing the goose to save money in the post-Enron world. CalTIPs defenders cried that it produced $2.27 for each dollar invested. attracted $900M to the state, and eased 134 products into the market. 

Nothing Too Innovative, Please.  After the controversy-shy politicians whapped DARPA over Total Awareness and Terror Futures, Hiawatha Bray [Boston Globe, Aug 4] defends DARPA   Good news for American liberty, say DARPA's critics. Maybe. But it's certainly a defeat for the kind of daring, edge-of-the-precipice attitude that is supposed to motivate the researchers at DARPA. The agency finds itself condemned for doing its job --and not too badly, either. For both of these controversial proposals have considerable merit.  It's always been DARPA's role to pursue ideas ahead of their time. And to be a whipping boy for generals and politicians who want more of yesterday's solutions. 

For a while, SDIO/BMDO had a forward looking posture also. After all, some of the programs came from DARPA. But MDA's SBIR has heeded the DARPA critics and retreated to conventional solutions devised by committees. 

Hoover Republicans Reign.  As the economy struggles, unemployment rates rise to a nine-year high, and manufacturing continues to shed jobs, the Modernization Forum reports that a House Appropriations Subcommittee cut MEP 63%. Maybe they should, or already have, read the history of the Republican Party in the 1920s and early 30s.  Cutting the government handouts, especially to the lower and middle classes of both individuals and businesses, and cutting the progressivity of taxes is still the Holy Grail of the Neo-Con theorists. On the other hand, such programs have little economic evidence, other than benefits to the recipients, that they do any net economic good. 

Unlike the ill-fated space shuttle Columbia, however, Helios was exactly the sort of programme that NASA should be funding—an unmanned craft that is pushing technology to its limits.  ...  A single UAV could provide connections of at least five gigabits per second to around 200,000 subscribers, and a rotating fleet of them would provide continuous coverage.  [The Economist, Jul 5] 

Familiar Homeland Security.  Pres candidate Lieberman calls for concrete measures to stem the flight of high-tech manufacturing to countries that have well-funded national programs designed to woo away American industry and American-trained talent. The emotional hook in the report is an outline of what the Connecticut Democrat sees as the clear and present danger represented by dependence upon "unreliable" foreign suppliers for the cutting edge technology that supports our military superiority. In a post-911, post-Iraq America, in which the nation is as concerned about reigning in military spending as a hungry diabetic in a candy shop is about cutting down on sugar, the Senator's military angle is shrewdly chosen. But is the Senator's wake-up call prescient or merely political? Is it based on a xenophobic paranoia that rails against the way business is done in the modern economically cosmopolitan world, or conversely, does the warning about the danger of leaving the door open come after the cyber-cow has already left the virtual barn?  [LARTA, Jul 1] 

Tactical Tutor.  You’re a tank commander in the U.S. Army. As your battalion approaches a bridge, you see that it’s in enemy hands. Do you retreat, engage the enemy, or try to stop the flow of enemy troops crossing the river? That’s a scenario posed by training software being developed by Stottler Henke. The software mimics a human tutor, examining the decisions a trainee makes on a simulated battlefield. Unlike existing training programs, the system uses artificial intelligence to interact with the trainee in dialogues where there isn’t one correct course of action. It also adapts to the user’s individual strengths and weaknesses, coming up with questions based on his or her battle plan. Currently, the interface is a keyboard and screen with maps and text, but programmers may design a new speech interface. Initial versions of the software will be ready for use by the army within a year, says Eric Domeshek, the project’s manager. Commercial applications abound, he adds—such as e-tutors for teaching marketing strategy in business schools.  [MIT Tech review, J/A 03]  Stottler-Henke loves SBIR awards and the Navy seems to love Stottler-Henke. 

Once again, the sound of grinding is soon to be heard in the many companies spending Energy's Phase 1 SBIR money to keep working on their favorite hobbies. Energy, like Defense, honors experience and worries little that money spent on experience yields little startlingly new or disruptive. These experienced hands have been spending SBIR money for two decades now and still easily qualify for a handout despite repeated proof that their ideas are so uneconomical that only a government could love them. Read the list of old warriors with multiple contracts: Radiation Monitoring Devices, Aerodyne Research, Southwest Sciences, Eltron Research, Lynntech, ADA Technologies, Ultramet, MER Corporation, Precision Combustion, TDA Research, Foster-Miller, Physical Optics, Ceramatec, Supercon. Such companies form the core of Techmology Coalitions to argue in a political forum that not only should their work be preferentially funded, the results should not be evaluated by any economic criteria.  "Trust small business" is their political appeal in friendly Congressional committees who dare not call the bluff of them and their cohorts in the federal agencies who systematically decline to fund either disruptive technology or.economically fruitful infant technology. Can we find a way to hold agencies accountable for the ideas they reject even though they escape accountability for the ideas they fund? If you are one of the Phase 1 winners, remember to emphasize the scientific merit and gloss over the reasons why only government will "invest" in it. And you might consider joining one or more of those technology coalitions to abuse the economics of innovation by small enterprises. You need all the political support you can rouse to keep the SBIR machine running. 

Government Want Take Your Data Rights to Get a Phase III?  SBA would prevent such pressure in a proposed clause in the new STTR Policy Directive. SBA proposes a provision that agencies can not condition a Phase III award on a concern giving up its STTR data rights. Likewise, the proposed Policy Directive clarifies that STTR data rights can not be negotiated or diminished by the funding agency. Further, the proposed Policy Directive prohibits the negotiation for STTR data rights before awarding an STTR funding agreement. SBA proposes that negotiations with the STTR awardee regarding intellectual property rights must be via a separate agreement, made without pressure or coercion by the agency or any other party.

Texas Downsizes. No, not its bluster nor its geography, only its tech development efforts. The Texas Department of Economic Development (TDED) evaporates, to be replaced by an Economic Development and Tourism Office within the Governor's Office with 20-some% fewer employees. Sounds like a Dubya/Nixon move to have White House control of everything. 

Another Fuzzy Evaluation.  Although business incubators are beloved of state governments, particularly if privately funded, there's not much evidence that they do much good except for the politicians. Now the federal Department of Commerce has made a fluffy study and found that the top 17 of 79 incubators studied These top programs offered a full array of incubator services and had a strong relationship with either a research-intensive university or medical research institution, or were located in a metropolitan area with a high concentration of technology-based companies and associated business support firms, according to the study.

Santa Clara County has lost one of every six jobs, the worst job loss for a region of its size in the past 40 years -- even surpassing the infamous decline of the auto industry in Detroit or the near bankruptcy and eight-year slump in New York City.  And based on the experiences of other major regional downturns, Silicon Valley can't expect to return to its previous peak of employment for the rest of this decade. .... For 2003, Economy.com expects a 2 percent contraction in employment in the valley, followed by a 2 percent increase next year. In 10 years, Santa Clara county is expected to have only 1.01 million jobs -- 50,000 fewer than at the peak of the Internet boom.  What makes this forecast uncertain is that technology has a history of big surprises, such as the Internet. ``You can't forecast technological breakthroughs,'' says Cochrane.  [David A. Sylvester, San Jose Mercury News, Jun 21,03]

Looking for Your First NASA Phase 2?  Proposals due now and review starts in late July.For reasons of bureaucratic neatness, you have to submit your proposal on a strict schedule tied to the start of your Phase 1 but NASA is free to let your proposal sit on a pile unread until its review start date.  Walk up to the plate with about two strikes against you. Taken by the sound of NASA's commercialization speeches? Forget them! NASA loves solid companies making safe incremental advances. Study the list of winners and their projects year after year and see a repeating list of favorites with technologies they have been grinding on, albeit with the titles slightly changed from year to year.  Some of them go back to the founding of SBIR in the early 80s.They and NASA have a solid relationship and neither will appreciate your disrupting that deal with new stuff. And after every disaster, like Challenger and Columbia, the call for relaibility and well tested stuff forces NASA deeper into a defensive crouch. What can you do?  Do what the veterans do - make friends in the NASA centers where the decisions are made. 

Better Days for SB Are Coming. Talk It Up.   Small Business Economic Indicators for 2002 figures indicate that the economy is ready to pick up steam. It notes that small businesses are well placed to take advantage of an economic upturn. Business bankruptcies continued their downward trend, non farm proprietors' income increased by 4.9 percent, and corporate profits increased by over 7 percent, giving owners the financial ability to expand their firms. "Small businesses are ready to lead America's economic recovery," said Thomas M. Sullivan, [SBA's] Chief Counsel for Advocacy. [Michigan Technology News, Jun 16]

The Re-Elect Me campaign takes its flag waving and buzzword backdrops to a small Minnesota company, Micro Control, that tests chips (electronic, not potato).  its 73-year-old founder and president, Harold Hamilton, will be hosts to President Bush on Thursday when he brings his economic recovery plans to the Twin Cities. Hamilton, a fiscally conservative entrepreneur and frequent Republican Party contributor, has seen his company struggle through a three-year downturn in high-tech industry and sees Bush's tax plan as a way to grow again. [David Phelps and Dane Smith, Minneapolis Star Tribune, Jun 18]  Micro has not resorted to SBIR for any of its developments which helps prove that there is much high tech small business outside SBIR. 

The Army's next-generation soldier uniform took another step forward yesterday as Foster-Miller and General Dynamics announced their share of a major military development contract. Both enterprises will help develop the advanced uniform for ground troops under the Army's Objective Force Warrior program. The uniforms are scheduled to be issued to troops by 2010....  Foster-Miller stands to take in $13 million in revenue over two years and expects to add 15 to 20 engineers to its work force of 350.   [Ross Kerber, Boston Globe, 6/18/2003]  Foster-Miller is the national champ for SBIR money collected of which it has had 34 Army Phase 2s (so far) from 96 Phase 1s, all for what sound like modest engineering advances that wouldn't scare the Army.  None of the Phase 2s was directly for uniform components. 

Company X floated an unsolicited proposal (a nearly hopeless cause) for a technology innovation to Agency A which summarily rejected it. Many months later, X says, the idea showed up as an SBIR topic which was won by Company Y, an experienced SBIR winner. Did the agency diddle X by appropriating the idea and,  even worse, conspire with Y to get the idea funded without having to deal with an inexperienced (or fatally naive) X? A further bothersome facet:: Y is in the same city where Agency A does that topic's SBIR. Does Agency A have any safeguards to keep its energetic minions from doing what they see as the public good without regard to private ownership?

AF Materials Conflab.  The AF Materials Lab will have an SBIR workshop July 24 in Dayton (where else?) where it promises the chief SBIR mouthpiece will talk maybe along with the technical folks who actually make decisions. At least the price is right.  www.mlroadmap.utcdayton.com/,    Marvin Gale (937) 255-4839 or Lt.Williams  (937) 255-2094. 

Help the Eyes. The National Reconnaissance Office (NRO) wants innovative proposals increasing spectral diversity of NRO systems, eliminating communications as a constraint, providing agile response to changing target sets, and transforming reconnaissance to surveillance. Better spying from the sky. Awards will be up to $350K for nine months. More information at http://dii.westfields.net.. Not only is NRO no longer a black program, it has a web page for children. 

The Big Guy On the Street   DOD published its summer SBIR all-electronic solicitation closing August 14 at 0600. The odd closing time wants to cut the "traffic jam" that has plagued the DOD SBIR  Once again they warn submitters to Plan ahead and submit early! DOD sounds like it will again try the full mailbox defense when its servers cannot handle the unlimited traffic that the solicitation invites.  The agencies playing this go-round are: Army, Navy, DARPA, OSD and SOCOM.  I guess MDA has already had its fill of two solicitations a year when they wish they had zero. 

SBTC Erects a Wall.  While the SBTC advocates free-money handouts to small business through SBIR, it has closed its heretofore open website to the public. Members only through the National Small Business Association which advocates such progressive policies as ending the death tax (write your Congress, it says, for which it provides a model letter). I wonder who they think will pay for all those freebies? 

While the Great Plains slowly depopulate, the state governments are fighting rear-guard actions to make the prairie look like the states where the people are going. Iowa just passed a five-year, $503 million Iowa Values Fund to support economic development opportunities in the specific areas of life sciences, software and information technology, advanced manufacturing, and value added agriculture. [SSTI, June 5]  The biggest problem is that the percentage of US population in agriculture has shrunk to 2% from 40% a century ago. And the conditions for Silicon Valley or Route 128 simply do not exist and cannot be invented with a Values Fund. The weather alone discourages many people who prefer the year-round golf climes of Texas and California or the Euro-culture of New York and Massachusetts. . If the Congress isn't watched, it will find itself pushed by the two senators from each of the many red states to pass appropriations to support such ventures with federal money. Some SBIR advocates, for example, argue than SBIR is good for Iowa because it provides money to keep grad students in Iowa. Dubya should even support such an attitude because it was the additional electoral votes of those two senators gave him his razor-thin margin of victory in 2000. 

Yet Another Incubator  Maryland and the US Dept of Commerce will sink $400K into another business incubator. Baltimore's newest technology incubator dream, Emerging Technology Center @ Johns Hopkins Eastern, s a collaborative effort involving the university and several city, state and federal agencies. ... The $6.7 million renovation project for the Emerging Technology Center @ Johns Hopkins Eastern is expected to be complete by late September or early October. It will have the capacity to house up to 35 small businesses.  [Stacey Hirsh, Baltimore Sun, Jun 3,03

NIH Gets It.  In a recognition that commercializing is a long slog for biological products, NIH re-opens its COMPETING CONTINUATION AWARDS program to extend Phase 2s for 2-3 more years at decent money for projects that  ultimately require: 1) clinical evaluation and 2) approval of a Federal regulatory agency. If it is given to humans, it needs extensive trials and approvals. Up to $1M per year for up to three years. That's the kind of enlightened SBIR policy that leads to SBIR success at its major goal - to have an impact on the US economy through exploitation of new technology. It beats by far the shrunken approach of the anti-commercializers who want to be left alone in their government funded labs to play with their hobbies and never be judged on whether anyone ultimately cares. BMDO once had a similar policy of extending Phase 2 awards where there was solid evidence of market attention to the ultimate product, which NSF and the Army copied in restricted form. 

The Navy seems to have recovered from the DOD SBIR input hiccup and has announced many of its Phase 1 winners. Oh, of course the usual suspects are well represented. 

In sync with the SBTC plea for mediocrity, a group of high technology companies  with a strong history of successful participation (whatever that means) in SBIR (no web site found for the New England Innovation Alliance) also sent a white paper advocating watered-down metrics and a hand in shaping the metrics. In an interesting admission they claim that there is no reason to expect and systemic difference in the quality of the SBIR R&D product compared to that performed by either large companies, non-profit institutions, Federal research laboratories or universities.  Which completely undercuts the basic SBIR claim that the government and the economy need small business because it is better. In other words, the two gaggles of SBIR junkies claim that they neither commercialize nor do better research, but that they should get 2.5% of federal R&D anyway because .... yes?

Apologia Pro Mediocritas.  In a white paper, the Small Business Technology Coalition argues that SBIR should simply hand over its budget to small business and forget evaluation. Besides admitting that SBIR has failed to get small business any larger share of federal R&D, SBTC says that commercialization was only a bonus objective, not a primary objective. The SBIR mills, which organized and pay dues for SBTC, want to be left alone to spend agency money on what the companies think is innovative R&D. They spew a list of reasons why commercialization, or indeed any other hard evaluation criterion, must fail as a measure. Their anti-commercialization relies on a bi-polar world of either government or venture capital as the source of any use and impact of the new technology. They thus ignore the biggest commercial buyer of new technology – thousands of commercial companies. Unfortunately for SBTC, if there is to be no growth and no evaluation, the only support for SBIR is either blind faith or blind politics. 

"Wall Street doesn't believe in most alternative-energy companies," says analyst David Kurzman of H.C. Wainwright. Indeed, many analysts have stopped covering the industry, and information on it is scarce. ... Solar power has also become a viable energy alternative. "Twenty years ago, solar technology was only good for heating your swimming pool," says Giesen. "Now, it can add energy to your house throughout the day and store extra power overnight in batteries." Energy Conversion Devices  has developed the best solar technology for industrial use, Giesen says, while AstroPower  is tops for homes. Both have suffered sharp declines in the bear market even though their revenues are climbing. AstroPower trades for half its book value; Energy Conversion sells for only 1.6 times its book value.  [Lewis Braham, Business Week, Jun 2,03]

More.  A National Academy of Sciences panel of distinguished experts in technology, industry, and economics recommended  more university-industry cooperation, more money for science education, and more incentives for engineering students as a solution for the problem of slipping US semiconductor dominance. To avoid getting entangled in the political thicket of government support for industry, the panel limited itself to "best practices".  As for more money from the government, no speaker offered to pay more taxes to fund it. Their policy is manna, and about the providing God, Don't ask!  The doom-mongers fear that foreign competitors will succeed where the US will fail in generating more smart engineers and more research money that gives the US companies a lead in the next generation of semiconductors. Like the attitude of SBIR beneficiaries and their SBA cheerleaders: someone else must pay. But as long as the Republicans slice tax revenues to starve the government beast in the name of unfettered capitalism, there   will be even less money for research and corporate welfare , not more. 

Slightly Biased Stats. Energy says that In 2002, 37 companies won a Phase II award for the first time out of 84 companies, which can be only partly true. SBA stats show that only 23 of the companies had not won a Phase 2 in some agency by 2000 (2001 winners still unpublished). Since we presume that the Energy-crats can count,  they must look only at DOE awards in making such claims. Anyway, 23 new awardees of 84 companies (106 awards) is at least decent. The probably most wasted awards are to those companies with lots and lots of prior awards that are not held to any rising standard of proof that their funding actually produced well above average economic growth of some sort. If rising money doesn't produce rising results, it is time to re-deploy the money to younger companies. SBIR is, after all, a program aimed at infant companies and infant technology. 

VC for the Navy Too, Maybe. After getting upstaged by the CIA and the Army, the Navy says it is exploring, its way of course, a venture initiative. The Navy way to sidle up to the problem is two “wargames,” exercises that help the Navy and Marine Corps explore opportunities for sharing technology with the commercial marketplace. The latest game had participants from government, industry, and the private venture capital community.  [SSTI, Mar 23] It used to be suspected in the Pentagon that the driving reason for the Army's doing something new was that either the Navy or the Russians were doing it. All three VC ventures are small potatoes, experiments that has some publicity value but too small to do any damage to vested interests in R&D. 

Competing for Energy Phase 2s?  Energy passed out 106 Phase 2s last year, 22 of which went to 14 companies that already had won at least 20 Phase 2s. Two went to a company that has had at least 167 Phase 2s. ("at least" because the SBA data base has a long lag). One wonders what the agency's strategy is for SBIR, other than to pass out the required money to the qualified (politically targeted) companies.  How many Phase 2s does it take to get a company onto its own hind legs and running on its own? Why a long SBA data lag? It is in no agency's interest to provide good SBIR data to the public. 

Nano-Hysteria - Better Than A Tax Cut.  The Nanotechnology Research and Development Act authorizes $2.135 billion in federal research money over the next three years for a burgeoning field with the potential to revolutionize everything from medicine to industrial manufacturing to the limits of computer memory. With strong White House backing and wide bipartisan support, the legislation is expected to easily pass the House today and is on a fast track to pass the Senate in the coming weeks.  ...  Researchers are working on more far-reaching uses. .... ``The potential for this technology is so immense and vast, it probably exceeds anyone's imagination,'' said Rep. Mike Honda, D-San Jose, the lead Democratic sponsor of the bipartisan legislation. ``It's going to be a big shot in the arm for the economy.''   ... `I think it is the future of technology across the board,'' said Phil Bond, U.S. undersecretary of commerce for technology. ``Once you get down to the atomic level, you're touching everything. It's terribly important for American leadership in the technology age that we lead in this space, and I think we will.'' [Jim Puzzanghera, San Jose Mercury News, May 7,03]  When politicians claim "vast potential" keep your hand on your wallet.  If it's as good as they claim, the private sector will sniff out the profit possibilities and over-invest in them. I smell superconductivity redux. 

ENTREPRENEURS AND UNCLE SAM.  Three years ago, it seemed like every entrepreneur was fixated on getting venture capital. Today, it seems like government contracts are the new fixation. .. the Federal government has become the target customer of both first and last resort for many new companies. ..  Be careful what you wish for!   ....  Even though government agencies encourage new competitors, competing and winning a contract can be tough. First, the competition can be intense. For example, in the aftermath of September 11th, the Pentagon issued a call for "new ideas" in the war against terrorism. The response was incredible as 12,400 proposals rolled in. Yet, only $40 million was available to fund these new ideas.  .... it's difficult to break into the government market and once there, government agencies are often difficult customers. ...  Consider the case of Boston's Tenebraex [which]  sold a patented technology that limits glints from the glass of binoculars and sniper sights; ... Once the Army began using this technology, other contractors used this patented technology in their own products. Current contracting rules allow such re-use, as Tenebraex painfully learned after years of litigation. ...  The good news is that there are many signs of progress. [newsletter, National Commission on Entrepreneurship, Nov 02] 

SBA's SBIR Overseer said, I would like to thank you for your efforts in response to my "last minute" request for success stories in support of the SBIR ROP and FAST programs.  The hearing went much as I expected, very well!  The committee had some interesting questions for the witnesses, and their overall comments were in favor of funding the FAST and SBIR ROP programs.  Surprise, the oversight committee liked spending money for constituents. FAST is a handout to states to help conduct interstate competition for SBIR funds, especially to the have-not and flyover states. SBA likes it because it gives the agency more to do and helps maintain the image that SBIR is a highly competitive and valuable small business innovation program. 

small firms are much more innovative per employee than are the large patenting firms, 13-14 times more innovative. ... firms do not become serial innovators by accident. These firms focus on innovation. They tend to set a goal that a certain percentage of their earnings should come from new products. 3M is famous for doing this, but many of these small firms do the same. ...  Small firm patents are more technically important on average than large firm patents, and a small firm patent is more likely than a large firm patent to be among the top 1% most cited patents. ...   small firm contribution to innovation is most intense  in new technologies.  [Small Serial Innovators: The Small Firm Contribution To Technical Change, by CHI Research, Inc., Feb 27,03]

Profits of Doom.  Let us now praise famous men, the wild-eyed enthusiasts who begat the bubble-boom. Conventional wisdom, you may remember, once rode side by side with the prophets of change. When the stock market hit the puke stage, conventional wisdom turned. ... In fact, history will look back and see gain and gain. That's because profits are not the same thing as social value. Just because a group of firms, an industry segment, flopped as a profitmaker does not mean it failed as a producer. Profit is primarily a signal about the size of a set of enterprises: If too small, then customers are desperate for your products, prices are high, and profits abundant; if too large, then customers are satiated, you can barely give the stuff away, and profits are absent. If profits are high, the industry segment should grow; if absent, it should shrink. ... But just as the profits made possible by the railroads showed up in the pockets of Sears stockholders, we will be surprised all over again. And what a rush that will be.  [J. Bradford DeLong, Wired, Apr 03]  If  you are an SBIR proposer who needs some rationalization other than profits for government investment in your enterprise, trot out some history and economics and societal gain (make it credible, please), even though agency technocrats are unlikely to pay much attention. 

Newfound Conservative Principle. : Times have changed in Alaska. In a May 4 opinion piece for the Anchorage Daily News, Gov. Murkowski's Chief of Staff Jim Clark writes, "Funding entrepreneurship is not an essential function of government." [SSTI, May 16]  Alaska is abandoning its Alaska Science and Technology Foundation (ASTF) after 15 years and an annual direct return under 2% a year. Like many government support programs for business, the agency would have done better to buy T-bonds with the money. Help Alaskan industry: Eat more salmon! 

The myth of small business is one of the more ridiculous bipartisan superstitions that influence government policy. Small businesses, by their nature, come and go. They create more jobs than big businesses and wipe out more jobs, too. ... Small businesses are swell. But special favors for small businesses make no sense in terms of either fairness or prosperity.  [Michael Kinsley, Washington Post, May 17]  Kinsley recounts the story of Bush using a small Albuquerque company that built its wealth with government contracts as a backdrop for an appeal for a mythical economic growth package. 

The Principle Problem. Hordes of well educated people in and around SBIR fumble "principal" and "principle". Seems they paid more attention in chemistry class than English. "principle" is always a noun meaning standard or law, as in "the uncertainty principle"; "principal" can be either adjective or noun depending on its use.  As a noun, it is a person or an amount of money; as an adjective it means "main" as in "Principal Investigator". Although I've never known an SBIR proposal to be down-rated for such fumbling (maybe the government guys don't know either), why risk it? 

Pork is What the Other Party Does. Republican advocacy of science pork is back. Exhibit A for 2003 is nanotechnology, the cutting-edge science of direct manipulation of matter at the molecular level. Government wants to get involved in a big way, despite companies such as IBM, Hewlett Packard and Intel - and numerous venture capitalists - already taking the lead. ... The field sports its share of hype: ... the little technology has clearly reached the big time. Michael Crichton's best-selling novel Prey, the story of destructive, out-of-control nanobots is surely only the latest in pop culture's speculations on the dark side of micro-engineering. Meanwhile, the ETC Group, while alarmed about the potential hazards of unrestrained nanotechnology, points out that yearly scientific citations to "nano" have grown nearly 40-fold, the number of nano-related patents is surging, and nine nanotechnology-related Nobel prizes have been awarded since 1990. .. .  To many in Congress, what's needed is not a free hand for technology entrepreneurs to explore this blossoming field, but government money.   ... couple billion a year.  That's not huge by Washington standards, but such programs only grow. Politicians have no innate ability to pick among competing technologies, whether nano, macro or otherwise. If they did, they'd be entrepreneurs themselves. ...  Politicians can merely transfer wealth, which automatically invites wasteful pork-barreling to propel funds to one's home state. ....  technology reporter Declan McCullagh about federal nanotechnology funding: "I suggest giving them nanodollars."  [Wayne Crews, TCS, May 15,03] 

At Least It's Useful.   NIH has so much SBIR money that it often uses it for non-innovative awards. The classic was a smoke-enders video in the 90s. Now it has awarded SBIR for software to write SBIR grant proposals to Cayuse which proudly trumpets its GrantSlam enabling grantee organizations (like your institution) to send proposals in an electronic datastream directly to NIH.

Another Slice of Pork, Please. The consortium of Northeastern University, the University of Massachusetts at Lowell, and the University of New Hampshire is one of five finalists selected by the National Science Foundation to develop nanotechnology research centers. The foundation, which narrowed the field from 65 applicants, will fund two centers nationwide, with each getting $2.7 million a year for up to 10 years.  ... They'll be selected based on their proposals' potential for bringing new technologies to market within five to 10 years, as well as their scientific merit, [Robert Gavin, Boston Globe, May 10]  Don't worry Montana; your two senators will find something in trade for their votes to hand this small amount of money to one of the big coastal tech centers. Unfortunately, such a project must go to the rich who can show that their area actually produces economic gain from technology R&D whereas Helena can only dream of more gold mines. And how will NSF judge how well an academic consortium will get new technology to market? I suppose they have lots of people who can fantasize technology capital markets without having any money of their own at risk.  A better idea might be to let NSF fund the basic research in academia and let SBIR type programs seed interesting ventures for applied research to begin to develop the research into products. But that won't happen unless someone besides the usual federal agencies runs it. Maybe W will next argue that the rationale for his tax cut for big money investors is new nanotech products since he does seem to have a bottomless bag of rationalizations for war and tax cuts.  

Army Goes Venturing.   Although its SBIR is a model of conventionality, the Army (with prodding from Congress)  will invest $25M in its own venture capital fund.  Can't let CIA hog all the glory.  The first investments will seek better energy sources (live-forever batteries).  Such a tech target is by itself conservative since batteries have not had many remarkable innovations for a long time and the military investments in electro-chemistry have been a long slow slog.  The fund will be run by OnPoint Technologies Inc.which apparently won a bidding contest for the contract. (I wonder how the bureaucratic Army decided which VC to go with.)  The Army actually had some VC driven technology in Iraq, although a San Jose Mercury Mar 20 story said that a new IFF transponder by Sierra Monolithics (supported in its infancy by SDIO) emerged from $11M from Palo Alto's Storm Ventures went unused. [story from ANN GRIMES,  WALL STREET JOURNAL, May 9]

GAO poked a hole in the fed's claim of 23% contract awards to small business by noting that DOD doesn't even know who's small. David Cooper, the GAO's director of acquisition and sourcing management, said that federal databases of small businesses are inaccurate and include many major national companies.  [The Guardian, May 7]

Want a Government Buck?  Winning Government R&D Money: 2003 Federal Technology Funding Guide. LARTA claims its booklet is the nation's leading survey on technology funding by the federal government (over $90 billion per year).

Something Old, Something Borrowed...  DHS's new science chief, former defense industry executive Charles McQueary, plans to spend  $800M on technology. As long as it is old and time-tested, apparently from his  million budget.  new sensors, software, and other equipment as quickly as possible into the hands of everyone from border guards to local police. He expects "little funding for a while in the farther out science. [story by David Malakoff, Science, Apr 18]  We'll see whether the university gang stands lets their Congress OK that scheme. Even if he does, he will have to have get an SBIR program going by 2005 with something like . 

Porkers to the Rescue. Congress is preparing to save the MEP from the conservative White House hatchet. Or so they say for the benefit of constituents around 60 centers with 400 locations. Just like SBIR, government handout programs live forever. . 

Guns, guns, and more planes. AAAS says President Bush's FY 2004 budget proposal calls for overall increases for the federal investment in R&D, especially for the priorities of defense development and homeland security R&D, with a mixture of flat funding, cuts, and at-best modest increases for other R&D programs.  another record at $122.5 billion, up 4.4%Most of the increase would go to defense development of weapons systems,   Two agencies get diminished expectations after years of favored treatment. ...  growth in the NIH budget would slow to just 2.7% ... DHS would become a major R&D funding source with an R&D budget of $1.0B, a dramatic increase of 49.6 percent from the estimated FY 2003 level for comparable programs  Nondefense R&D would increase by just 1.2%  Defense R&D would total 55% of the federal R&D portfolio  up 7.2%  ..., with the entire increase for the development costs of new weapons and missile defense systems; DOD basic and applied research would both decline

There is no question that our political process has produced a fiscal policy machine that spews out promises to voters that—while providing short-term benefits to politicians of both parties—expose our nation and our economy to significant long-run risks. [Kevin Hassett, testimony before Congress, 4/25/.03] Tax and government cutter Hassett goes on to claim that The problem is not caused by taxes, but rather by spending, which is always possible to "prove" with enough economic gymnastics and repeated applications of supply-side theory.

Indiana boosts tech budget. $75M for its 21st Century Research and Technology Fund, which serves to stimulate the development and commercialization of advanced technologies in Indiana. $50M over five years for tax credits to promote Indiana venture capital initiatives. $10M to expand the I-Light fiber optic network that presently includes Indiana and Purdue Universities, $9M for certified technology parks, and .$344M in university construction projects. [SSTI, May 1,03]

DOD Need More Small Business Innovation?  The governments of the world now know that if they try to launch a fighter against American air power, their planes will be blown to smithereens before they finish retracting their landing gear. [Gregg Easterbrook," American Power Moves Beyond the Mere Super", New York Times, Apr 26] Before the small business advocates finish their latest speech they might consider how that superiority was built: - with gobs of real money - hundreds of billions a year for decades - handed to dedicated military contractors.   DOD rules the world, and needs NONE of SBIR's unproved pretensions of critical contributions. DOD long ago adopted the path of least resistance by bowing to the small business politics and paying the couple percent tax for the social program. DOD rarely gambled its SBIR money of ideas that would make much difference. It then ignored any standards of efficiency or proof of effectiveness and simply used most of the money in support of its large contractors. The result was unquestioned world military domination. SBIR advocates must hope that their political clout remains and that no powerful politician ever asks whether SBIR is worth the bother. Fortunately, the pork barrel politics protects SBIR from ever being asked to prove its worth, only its ability to provide campaign value as one of the American untouchables - motherhood, apple pie, the flag, and small business.  

The Greenwoods advocate schmoozing before and during SBIR. Find out all you can about how the topic author and his superiors think (even though they will not necessarily think alike). Especially for the mission agencies who want the technology for themselves. The big trick is finding the right  schmoozee in less than a thousand phone calls. If you want to schmooze in a blackout period during an SBIR solicitation, talk about your technology and the schmoozee's wants without ever mentioning that you are even thinking about SBIR (or indeed ever heard about it). Their wants are continuous, the solicitation period is short, and they do have other occasionally used avenues for adopting small company technology.

Executives at major defense contractors are bracing for the changes. While none would speak on the record, all those interviewed agreed that lessons of the war, combined with the high cost of rebuilding Iraq afterward, would have a big impact on Pentagon weapons-spending plans. [ANNE MARIE SQUEO and GREG JAFFE, THE WALL STREET JOURNAL, Apr 11,03]

If the rich are going to pay less tax, and the military is going to get all its toys and operations, somebody has to take less government money. At the federal level, we can pretend all is well by running a deficit - a national credit card - but the states cannot so pretend. So, several states are whacking their tech programs (which don't vote).  NJ, CA, AK, and MI are making visible cuts, sometimes to zero, says Jeffrey Mervis in Science (Mar 21). 

$3B for Rural VC.  Austerity, sacrifice during war? Not in the politics of rural handouts. S. 602 calls for a federal injection of $200M annually between 2004-2013 into the New Homestead Venture Capital Fund, after $100M investments have been made each year from private and nonfederal sources. Is there any evidence that such handouts create the kind of infrastructure that the original Homestead Act did for settling the West? Only in the minds of the beneficiaries and the vote-seeking politicians. Such a program arises from the idea of "fair share" for states rather than a national program that would raise the general tide. It's an inefficiency of representational democracy. Tax the prosperous states to pay off the weak states.  

While Colorado wants to eliminate its Governor's Office of Technology, and Texas its Department of Commerce, Utah hopes to keep plugging with its tech support funding of its state VC fund and other programs like Centers of Excellence. [SSTI, Mar 7]

Lobbyists as an Arm of Government. The SBIR lobbyists claim a raft of good things done, including passing legislation and assisting SBA in drafting revisions to the Policy Directive, reauthorizing STTR, defending the new program rules from attacks by the Defense Department and other agencies, restoring $73M to SBIR that MDA tried to steal. Shades of Newt's rule where lobbyists were seen writing legislation in House staff offices. We presume such claims are mere puffery, that the government is still run by elected and appointed officials and not by lobbyists and that lobby activities are limited to screaming, shouting, and bribing. SBTC seems to have claimed such a government mantle since Jere Glover took over as honcho after leaving the SBA Office of Advocacy in a classic revolving door move. 

Mitch Waldrop (MIT Tech Review, Mar 03) tells how Jeff Jonas of Systems R&D was shocked to discover that NSA was way behind his small company in pattern recognition. How could that happen, and how should DOD escape the technology lag that comes from a requirements mentality?  CIA is trying with a venture capital operation, In-Q-Tel, that gets apparently little support from the inside establishment (as small company innovations get little support and NO VC approach in DOD).  Perhaps an energetic force like Jeff Bond can get upper management attention to opportunities lost by the tyranny of requirements and mundane SBIR topics. 

Jeff Bond Acts Again. DOD announced that Jeff Bond as the "acting" SBIR poobah.  Unfortunately, Jeff's history of acting - deciding and taking complete responsibility for BMDO's SBIR - will be mostly wasted in that bureaucratic position. If the arrangement is made permanent - never a done deal - he will have a chance, although with little power, to improve the attitude of DOD's SBIR from a burden to an opportunity. At SDIO he funded projects where the company had decent prospects for new technology to attract third party funding for the long haul from idea to product. He even co-authored a report showing how much economic return could be gauged from BMDO's investments, a standard that DOD has rejected from the outset. Maybe he could start by resurrecting Fast Track reporting that disappeared in the dead of the night from DOD's website. His biggest challen