Government stories appearing in 2004-5  

You could be appointed an immigration cop.  Businesses battle immigration reform. Business interests are lining up against a proposed crackdown illegal immigration and companies that hire undocumented aliens. Congress is considering a program that would require employers to check social security or alien identification numbers against a government database, to stop hires of illegals using fake id's. But business lobbyists say they don't have much faith the government can make that plan work efficiently, the bizjournals Washington Bureau reports. Some business groups have also opposed the bill because they fear a crackdown will make it more difficult for them to fill their labor needs.  [Biz Journals, Dec 16, 2005]

SBA published its "final" STTR Policy Directive which tells the agencies the rules for running their STTR programs.  Proposers and contractors don't need it, but sometimes knowledge of the rules will help convince an agency not to act too arbitrarily. Remember that most of the people making the selection decisions have never read the directive and never will.  http://www.smartpdf.com/register/2005/Dec/16/74926A.pdf Gilman Louie resigned as head of In-Q-Tel to start another VC fund.

It's Never Enough.  Defense and space projects account for most increases in the $135 B federal research and development budget next year, worrying scientists who fear that after years of growth the nation is beginning to skimp on technology that fuels marketplace innovation. [Andrew Bridges, AP, Jan 1] Research money is like free medical care, infinite demand. Insert more money, get more PhDs who want even more money so all can play. Not to worry, though, the people getting the money will spin tales of benefits for the economy.

Taking Public Money? The debate about how secrecy in the venture capital world has broken out again, ... [the Ohio Bureau of Workers' Compensation] is apparently planning to release the valuations of companies that these firms have invested in. If you're a company taking money from one of the institutions listed at the bottom of this post, you might want to sit up and take note. [Silicon Beat.com, Dec 19, 05]

The long money DOD SBIR is now collecting Phase 1 proposals.  But you get NO advantage in being early. Just don't be late (after Jan 12) for which your proposal would suffer the ultimate penalty - trashed before reading.

If you're lucky (good) enough to get a DOD Phase II SBIR (hey, they have to pass out all that money to somebody), all the components now have Phase II enhancement which matches third party money up to a modest amount.  Terms vary on money and its source.  They have now all come round to what SDIO started in 1991 and soon expanded into a free-swinging, way flexible, matching investment scheme for technologies with wagerable potential for future customers. Unfortunately, the likely outcome of this enhancement program with emphasis on government program match will be to further concentrate SBIR money in the companies that do government R&D.

The SBIR Network  http://www.sbir.net/ moved to Boulder City NV overlooking Boulder Dam and the shrinking Lake Mead.  As a measure of SBIR's philosophy it says We will maintain an office in Annapolis, Maryland in order to stay close to the US Government customer base in the Washington, DC area. 

Utah's governor wants $62M mostly to build new labs at the two big state universities under the Utah Science, Technology and Research (USTAR) Initiative. [SSTI, Dec 12] Which raises a question: who should build new university labs?  NSF, federal political science (pork projects), state government, private money? If something is worth doing, is it government 's role do it? And is basic research in Utah likely to produce enough Utah economic activity to justify the investment? Will top scientists flock to a state under a large religious influence just to enjoy new labs? 

If one incubator, why not two?  Troy NY wants to copy the RPI incubator by opening another. This time one nanotech company and $5M are ready to create an incubator in the middle of the city's Russell Sage College (for women).  The 35-employee company Evident Technologies started life in an Albany incubator, moved to RPI's incubator, and now will move again. [story from Troy Record, Dec 9] Evident has had at least two recent DOD Phase 1 SBIRs.

Ran into SBIR's daddy - Roland Tibbetts - at a luncheon affair. He looks ten years younger than the last time I saw him. [Dec05]

Michigan embarked on a Capital Investment Program to provide up to $114 M  for capital investments in qualified equity, mezzanine, and venture capital funds that will create or retain jobs in Michigan companies. [SSTI, Dec 5] 

The Greenwoods report a hint that DOD will end the SBIR pre-solicitation contact opportunity because DOD topic authors/TPOCs are apparently being inundated with silly schmoozing.  The policy intended to replace hours of proposal reviewing and debriefing with minutes of clarification. The first thought of a bureau does not go to making life easy for the small company world; nor do the agencies see the small high tech community as the customer even though that is the only intelligent interpretation of the existence of the program.  The agencies don't need the SBIR law and the small business community is kidding itself that they get more or better business than they would without the law. I see only two benefits of the law: 1) really small companies with no knowledge of the agency get their proposals seriously read, and 2) Phase 2 winners get a sole source justification for follow-on government business so they acquire a good reputation and be more competitive in crowding out the really small newcomers. All the rest of the arguments by the SBIR advocates ignore the raw facts of federal agency operations. The Greenwoods have two excellent suggestions: keep your call short and don't do a sales pitch. Think of your elevator message, not briefing them into submission.

VC, Hero, Devil? Today's [Dec 6] Wall Street Journal carries a fascinating front page story by Bernard Wysocki of a pseudo-VC at NIH. http://online.wsj.com/article/SB113383825463714813.html?mod=home_page_one_us  Dr. Fauci is drawing his share of controversy. Some entrepreneurs who haven't been showered with money talk of a "Fauci Club" of favored companies. Others say he is overstepping his bounds by funding rival entities and pitting them against each other for government contracts. In one case, the NIH gave materials from a supplier of one company to help jump-start research at a rival. One of his biggest bets -- on a next-generation anthrax vaccine -- has yet to pay off. The most fundamental question is whether the government and Dr. Fauci should be trying to influence what drugs and vaccines the marketplace produces He uses competition, funding grants large enough to do the job, and a sense of mission to hunt for vaccines, a product shunned by Big Pharma as having too much risk and too little profit. It is in many ways an SBIR-like program with real money and real objective.  He seeks to place bets on multiple companies in the hopes of hitting the jackpot and to dole out the NIH's money in multiple rounds, using milestones to gauge progress. And just like in SBIR, the companies who don't win awards fight to undermine the award giver. Every SBIR-crat should understand Fauci's ideas and be required to defend not adopting such approaches to developing products and processes with potential. 

Panel (of Nobel laureates and high-tech CEOs) Calls for More Science Funding to Preserve U.S. Prestige. Once again.  But The panel's sweeping recommendations may face a tough reception. The congressional Government Accountability Office reported last week that little is known about the effectiveness of current federal scholarship programs totaling $2.8 billion. And some science education experts worry that the higher education recommendations could create a glut of scientists ... Still, Senator Lamar Alexander (R-TN), who had called for the panel, says its proposals could garner support from many lawmakers who are concerned about U.S. jobs. [Science, Oct 21]  A typically unasked question: How much should the taxpayer pay per job created in jobs programs? Do science education subsidies differ from farm subsidies? And where is the money for every worthwhile program to come from? Scientists are like much of the public - acting like government money comes from a deity that ignores economics. The R&D base for SBIR is likely to copy last year when the political horse trading of appropriations is done.

The politics of jobs  (not the actual wages, just the talk) is of course misplaced for political simplicity. The real objective is standard of living which is too hard to quantify for politicians' speeches. A two-earner household making $70,000 from one job has a higher standard than one making $80,000 from two full time jobs. Which reminds one of the politician who complained publicly that half his constituents were below the median wage.

New York's Center for Economic Growth http://www.ceg.org/  claimed a $67M economic impact. And The second oldest incubator devoted to homeland security businesses is joining six other similar incubators to create the Technology Acceleration for National Security Network. The Watervliet Innovation Center, located in the Watervliet Arsenal, the nation's oldest cannon factory is allying with San Antonio, Anniston, Colorado Springs, Harrisonburg, Annapolis, and Atlanta incubators.

Shortchanged Science. Even if NASA finds the money and the will to do the research needed to protect the human travelers, the agency’s history offers little reason for confidence. Larry Young, MIT bioengineer, longtime NASA adviser, and one-time payload specialist astronaut in  training, has this to say about those prospects: “NASA always uses research as justification for its large manned missions, but once they are under way the engineering, political, and fiscal factors take over and the science constituency is often cast aside.” [Editorial, Science, Nov 25] Of course, AAAS is an advocacy group for unlimited science money with no interest in sharing the sacrifice that will be needed to get the federal finances into sanity range.

the Government may use the item to reverse engineer its design or may provide it to a competitor to do the same. Night Vision Corp discovered to its horror that the Phase III preferences to the Phase  II awardee in the SBIR law are advisory only. The AF took the delivered prototype goggles developed by NVC into a competitive procurement for production goggles won by the Phase 2 sub-contractor.  The judge struck down all NVC's arguments about "the AF owes us". Perhaps a better procurement lawyer would have told NVC that the government has no legal or moral  duty to give Phase III to the Phase II contractor and is free to conduct an open competitive procurement.  The SBIR advocates are of course apoplectic.  The whole story by SBIR Gateway http://www.zyn.com/sbir/articles/nvc-case.htm. The basic rule is still that when you take the government's money, the government can do what it pleases with your technology for government purposes.

The latest political bone thrown to the SBIR advocates is a proposed Commercialization Pilot Program whereby the DOD would push Phase II projects into mainline Phase III procurements.  The results would be reported to Congress with metrics that specifically include number of small businesses assisted and number of inventions commercialized. In other words, bean counting political numbers with no emphasis on total return. No matter, the advocates will settle for any bone thrown and then start a campaign for the next bone. Read the amendment http://www.nsba.biz/docs/finals1042amendment.pdf.

Why agencies don't like open calls for innovation.   "According to the United States Patent Office website, Boris Volfson has recently patented a "Space vehicle propelled by the pressure of inflationary vacuum state", which is essentially an anti-gravity propulsion device.  Ah well, every government innovation manager has to deal regularly with proposed proofs that physics is wrong. 

Science, as the explanation of natural phenomena, won in Pennsylvania when the town voters threw out the supernatural school board. In Kansas, though, the state Board of Education still thinks that science includes "non-natural explanations."

Create a National Institute of Science and Engineering, like the National Institutes of Health (NIH). Funding for the NIH has quadrupled since the 1980s, from $7B to $28B. "That's why we lead in pharmaceuticals and medical technology." Funding for science has been stagnant—about $5 billion—during that period. "I'd quadruple it and concentrate on nanotechnology, broadband and energy."  Thus spoke Rahm Emmanuel, House Democrat from Chicago (and former high Clinton White Houser), on new ideas for Democrats. Unfortunately for such ideas, everybody's got one that requires big money to a pet project, multiplied by 535 Congresscritters and a big boots Executivecritter. The bill would be astronomical while at least half of them want to cut the tax revenue that would pay for it. Also unfortunately, politicians have only one effective tool for what they see as problems - money. The combination of the blunt money tool and the pork barrel attitude is what led to mediocrities like SBIR which has still to show any net economic gain to anyone except the recipients of the handouts.  For more Emmanuel ideas for Democrats, read Joe Klein's Time piece.  http://www.time.com/time/columnist/klein/article/0,9565,1129493,00.html

Want an edge with MDA SBIR? Locate in Huntsville, AL. The latest list of Phase 2 winners has 22 from Huntsville area, 25 from Massachusetts, and 40 from California. Why?  Government R&D service firms, sometimes called Beltway Bandits, cluster around the flagpole where schmoozing the funding source is easier.  Do the Huntsville bureaucrats have a regional bias? Does Huntsville have as large and good an innovation base as Route 128? Will a likely move of a larger portion of MDA management to Huntsville raise the disproportionate percentage even higher.  

Innovation declined. NIST does not accept  electronic submission of proposals.  The NIST solicitation is posted on FedBizOpps at www.fbo.gov/spg/DOC/NIST/AcAsD/NIST%2D06%2DSBIR/listing.html and additional information is available on the NIST SBIR web site at www.nist.gov/sbir The topics are the typical stuff written by narrow experts, not a call for high impact innovation by entrepreneurs who could put it into a marketplace. Perhaps the wannabe leader of national innovation needs a jolt of SBIR attitude and management instead of being a bureau playing safe.

Gotta spend, as if they had endless money. .a $30.5B energy and water bill that adds $740M to President Bush's budget ...Office of Science within the Department of Energy would receive $3.63B , $170M more than the president's request. Offsetting cuts are made in fossil-energy research and nuclear-waste disposal [David Rogers,Wall Street Journal, Nov 8] Good news for SBIR junkies anyway.

Politics before honor. The U.S. State Department has barred a Cuban scientist who helped develop a low-cost vaccine for children from attending a San Jose Tech Museum of Innovation ceremony honoring technological achievement. [San Jose Mercury. Nov 8]

The Greenwoods http://g-jgreenwood.home.att.net offer this SBIR proposal tip:  The idea in SBIR is to present your innovative idea in a very conventional way. Follow the writing instructions, fill in the boxes, just swallow your presentation imagination and do what they say.  Remember the golden rule: Who has the gold makes the rules.

Want to win Army Phase 2 SBIRs? Get a lot of prior SBIR experience. The Army 2005 Phase 2 list shows remarkable concentration in what is usually called "SBIR mills". Physical Optics 11 awards, Charles River Analytics 7, Coherent Technologies 4, Intelligent Automation 4, Luna Innovations 4, MER 4, of 265 awards including six Fast Tracks. Note that six Fast Tracks is only 3% and none went to any of the SBIR mills.  Those six companies  already had over 1200 DOD SBIRs. POC may be the SBIR consuming champion now that Foster-Miller has retired from the field. Only the SBA really knows and it does not publish such embarrassing figures as totals by company.

The political arm of the SBIR mills is having an half-day session today Nov 2 on Commercialization: An SBTC Briefing on New Developments in Phase III of the SBIR Program with emphasis on preventing contract bundling. SBTC's objective is to get more government money for Phase III contracts for companies who cannot make a commercial market of the government funded technology. 8:00 a.m.  First Amendment Room, National Press Club, 529 14th Street NW (13th Floor), Washington, D.C.

Senate Introduces Bill Creating VC Program to Stimulate Investment in Small Businesses  To stimulate equity investment in America's small businesses and create jobs, the U.S. Senate introduced last week the Small Business Investment and Growth Act of 2005. The legislation creates a new venture capital program within the SBIC program administered by the SBA, according to Senator Olympia Snowe (R-ME), co-sponsor of the bill, said in a press release that the legislation will ensure that entrepreneurs have access to venture capital and credit markets so they can continue to drive America's economic growth and job creation. She also noted that recent studies have shown the SBIC program provides essential equity capital to small businesses that would otherwise not be able to obtain financing on equivalent terms. ... Under the legislation, the SBA will receive a greater share of the profits of SBICs and its authority to declare that an SBIC has defaulted on its repayment obligations will be more clearly established. [SSTI, Nov 1]

Take the king's money, do the king's business. Now that several Silicon Valley start-ups have taken the money, they're having to pay the reaper. So a company like Dust Networks, which was based in liberal ol' Berkeley, takes $7M last year from In-Q-Tel and others to develop its wireless sensor networks, and this month announced they had a DARPA subcontract for the development of technologies for urban area military operations. [Silicon Beat, Oct 27]

When politicians dictate science, government becomes entangled in its own deceptions, and eventually the social order decays in a compost of lies. Society, having abandoned the scientific method, loses its empirical referent, and truth becomes relative.  [Bruce Sterling, Wired, Jun 04]

Want an SBIR job?  University of Missouri is looking for an SBIR Specialist  to help private sector and faculty grab SBIR money. Bonus qualification: access to VC people.  http://www.ssti.org/posting.htm

DATABASE: Follow the Money The U.S. government pumped more than $111 billion into research and development (R&D) in 2003 and an estimated $121 billion in 2004. Find out how much money each agency doles out, who gets it, and what they're spending it on at RaDiUS from the RAND Corp. Users previously had to pay to see the database, but RAND made it free earlier this year.  RaDiUS compiles all nonclassified federal R&D spending dating back to 1993. You can sift through more than 600,000 individual awards or organize them by agency, program, or project. At $59 billion, the Department of Defense was the largest funder in 2003, followed by the Department of Health and Human Services and NASA. Although access is free, you'll still have to apply for a "site license" and wait for a RAND employee to call with a username and password. Also note that the URL must include "https."  https://radius.rand.org

The Bush administration failed for the fifth year in a row to meet congressional goals for contracting with small- and minority-owned businesses, ... House Democrats said. The administration received a grade of "D" for attempts to contract with small, disadvantaged and women-owned businesses in 2004, according to a report released by Democrats on the House Small Business Committee. [Government Executive, Oct 20]

Griffin: Three NASA Decades a Mistake  Posted by David Appell at September 29, 2005 02:14 PM in Transportation.  NASA chief Michael Griffin has drunk the Bush Kool-Aid. This week he called the last three decades of NASA effort a "mistake": Asked Tuesday whether the shuttle had been a mistake, Griffin said, "My opinion is that it was.... It was a design which was extremely aggressive and just barely possible." Asked whether the space station had been a mistake, he said, "Had the decision been mine, we would not have built the space station we're building in the orbit we're building it in. Hindsight sure is a crystal clear 20-20, isn't it?  Griffin may actually be right--who really knows?--but how wise is it to say so--to disregard the collective work of most of the organization that you're now counting on? And there's more than a whiff of attitude here--sure, we got it wrong all these years, but don't worry, we have it all figured out now. That's more than a little condescending...when actually a lot of people think they don't have it all figured out now or if that $104B price tag to go to the Moon is really worth it. Before he dismisses the last 30 years of NASA effort, let's hear Griffin articulate a convincing scientific and technological reason why we're going back to the Moon--other than that our President says so. [MIT's Technology Review, Oct 3]

Stanford University's robotic "Stanley" won DARPA's $2M Grand Challenge by driving 210-km over the desert in seven hours, And unlike last year when no one got far from the starting line, four other vehicles also got there. One of four was a New Orleans insurance company with no prior experience in robotics. [Gray story from Wall Street Journal Oct 19 http://online.wsj.com/article/SB112968307191072658.html?mod=todays_us_marketplace.]  Economically, Stanford spent $500K while DARPA spent $22M out of its $3B budget for "best effort" grants and contracts that have the perverse incentive that winning cuts off the money.  Dylan Tweney [MIT Tech Review, Oct 18] suggests more such prize contests. It's not a new idea: the English Parliament offered £20,000 in the early 18th century [when the pound was the world's premier currency] for a sea clock. When an aggressive Yorkshire carpenter did it without any help from the scientific community, he took 50 years to collect the money as the appointed Longitude Board of "priests and professors" kept changing the rules. Dava Sobel’s book "Longitude" tells the story and Arnold Wesker's play is currently dramatizing the story in - where else - Greenwich, the home of longitude.

[NIST] is promised $844.5 million, nearly 60% more than the White House's request, and including $140M for ATP, which provides "seed financing" for the development of generic technologies.The White House has strongly objected to the Senate funding the ATP. But Republicans remain badly split, [David Rogers,Wall Street Journal, Sep 15]  Free-market government is like balanced budget - a pleasant abstraction. Katrina has restored caring to the Congressional agenda. Who will pay the bills? Isn't deficit finance one of the world's great inventions? A approval rating of 40% for a second term president emboldens Congress to protect itself. 

North Carolina invests in federal grant mining. It will reimburse an eligible business for up to half the costs of an SBIR/STTR Phase I proposal, max $3,000. One grant per year per company. Other states have tried such schemes in the interstate competition for free fed money. I have seen no statistics correlating the money so invested with rate of SBIR grants to the state. And certainly nothing on permanent jobs created after the SBIR money runs out. But then again, SBIR is run by the fed as a jobs program anyway for companies doing federal R&D. 

in interviews with more than a dozen current and former CIA officials, congressional aides, venture capitalists that have worked with it and executives who have benefited from it, no one disputed that what began as an experiment in transferring private-sector technology into the CIA is working as intended. The Army, NASA and other intelligence and defense agencies have, or are planning, their own "venture capital" efforts based on the In-Q-Tel model. "On a scale from one to 10, I would give it an 11," said A.B. "Buzzy" Krongard , the CIA's former No. 3 official and a former investment banker. "It's done so well even Congress is taking credit for it." [Terence O'Hara, Washington Post, Aug 15] Direct to Phase 2?  Why hassle with competition and with Phase 1 when you are the only company exploring the innovative concept? Get yourself a dish of pork. Renaissance Petroleum Technologies (Auburn, AL) got its Congressman to insert $250K in the big Energy bonanza bill to study "cold-cracking" of hydrocarbons. What is the process? The Congressman says he doesn't know either.

the House and the Senate remain far apart on funding levels for key R&D programs with little chance of resolving their differences before the October 1 start of FY 2006. Although funding for federal research would fall behind inflation in the House proposals, the Senate proposals would allow for significant increases in research spending. The Senate gains could be ephemeral, however, since the House is unlikely to accept the extra Senate dollars in final budget negotiations this fall.  http://www.aaas.org/spp/rd/upd805.htm

The report, Tapping America's Potential: The Education for Innovation Initiative, identifies several troubling indicators that the U.S. is losing its innovative edge. For example, the percentage of students planning to pursue engineering degrees declined by one-third between 1992-2002, and funding for basic research in the physical sciences as a percentage of the gross domestic product has declined by half since 1970. [SSTI, Aug 8]

Politicians Are Politicians.   The nonpartisan Citizens Against Government Waste says the number of projects has risen 873% since the GOP captured the House in 1994. Which is why SBIR lives on. 

the key finding:  A precedent-shattering proposal to give large venture capital firms greater access to the federal government's top research and development program (R&D) for small companies is opposed by 90% of the most affected R&D companies.  About the Survey The SBTC survey http://www.nsba.biz/content/874.shtml  was sent to a list of 535 SBIR award winners at NIH during the past two years ... Seventy companies, representing about 13% of the sample, responded to the survey.  So, the 90% who feed at the trough don't want any more competition than the 10% who actually would do something commercial. The issue is probably moot since the government shows little sign of favoring commercializing companies anyway, with or without VC partners of any size. Congress still has the decision choice of fostering national economic gain from SBIR by changing the rules about how commercial potential is evaluated and weighted. If it wants to continue funding life-style companies doing government work for temporary jobs, it can leave SBIR alone and blather about helping the small business engine of American innovation. Good politics, dead economics. 

About $3B in tax breaks would go for renewable energy source, mostly to subsidize wind energy. It is hard for non-nuclear renewable tax credits to go to anything other than wind. The other options all cost way too much. [futurepundit.com, Jul 28] Take money from the taxpayers, give it to wind farm builders, with a handy rake to the politicians making laws to re-distribute wealth. People doing R&D to make newer, more efficient, power sources get little from the energy bill which rewards existing businesses. Who in turn will reward the politicians with campaign contributions for re-election. 

From more than 600 entries statewide, judges have chosen five finalists for the first annual Minnesota Cup, a contest to encourage innovative business ideas:  Arcswitch of St. Paul, which devised a method of switching and attenuating fiber-optic signals; Consumable Media of Minneapolis, inventor of a self-destructing DVD that becomes unreadable after a few play;  ERBUS of Chanhassen, maker of a mobile emergency unit that supplies power, purified water and communications in disaster areas;  Type 1 Tools of Minneapolis, a maker of educational tools that help people with diabetes manage their diet and lifestyle; PICC STAT of Fridley, a provider of specialized catheter and intravenous services.The winner will receive a $25,000 prize and a package of professional services including legal, marketing and financial advice.The winner will be announced Sept. 8.  [John Reinan, Minneapolis Star Tribune, Aug 3]

Need a strategic plan beyond the next two SBIRs? Michigan State has a road show advertised with the usual hype. 

Army gags blog-o-soldier  .. Clark was charged with violating two rules that prohibit soldiers from releasing or "encouraging widespread publication" of classified or specific information about troop movement and location, soldiers who have been attacked or hit, and military strategy, ..  The military has not specified which portions of Clark's blog broke the rules and did not respond to requests for clarification about its policy on blogs maintained by personnel.... Clark's own site, which describes him as a kindergarten teacher and former Democratic candidate for Arizona governor, is now devoid of content, ... said: "He has been asked not to comment, and is doing so. Please understand that he is worried about folks back at home smearing his name. When he is done with active duty, the story will come out."  [Ann Broache, silicon.com, Aug 3] Even though the Army has been given more job than it has soldiers for, it shoots its own recruiting drives by suppressing the native liberty of its citizen soldiers that the National Command Authority has dragooned into its foreign adventures. There was a reason for a small standing Army as an foundational  national policy. 

Start-ups Pose Hurdles to University Tech Transfer   Efforts to transfer university inventions to the market continue to be a difficult proposition, with less than a third of disclosed inventions resulting in license. Start-ups garner only one in eight licenses.  In University Invention, Entrepreneurship, and Start-Ups, authors Celestine Chukumba and Richard Jensen develop and test a multi-stage game to examine the factors leading to university start-up formation. The economists posit that start-ups occur when development costs remain low due to venture capital contribution, inventor involvement and fewer opportunity costs than in an established firm. The model considers start-ups likely when the technology transfer office determines a high cost of finding a licensee. In these cases, the office shelves the disclosed inventions leaving inventors to pursue start-ups on their own.Using existing data and multivariate regression, the authors find:

Small Business Developing Long Distance Non-Lethals  DHS SBIR said it is seeking untethered electromuscular disruptor devices that are inexpensive, safe, lightweight and portable. Awards for stun gun technology have been granted to  Midé Technology Corporation, UHV Technologies, (SBIR big consumer) Physical Optics, and Intelligent Optical Systems .[National Defense, Aug 05]

Raising Science Walls. The paranoid, might-is-right, our-way-or-the-highway Bush administration wants ever more rules restricting foreign access to US science or US territory. One set of proposed rules would constrain interactions between US citizens and UNESCO that might well limit access to the international scientific and cultural body by US experts. The official line:  Advance consultation simply means that if UNESCO comes to us with a list of potential partners, we might offer additional names to help them broaden their horizons.  That is, we'll send you a politically safe house scientist.  Another set of rules published in the 12 July Federal Register www.access.gpo.gov/su_docs/fedreg/a050712c.html would wall off university labs from foreign nationals even in unclassified DOD research projects  [story by Yudhijit Bhattacharjee, Science, Jul 22]  In other paranoia news: Sinophobia, the usual Congressional suspects bemoaned Chinese bidding for US assets while their constituents buy Chinese made goods at Wal-Mart and pass energy give-away and deficit financing bills that do nothing to stem the flow of dollars into Chinese coffers that have to be used to buy something American. Part of that something is US companies.

GAO Punts Again.  Assessing the Performance of the SBIR Program Remains a Challenge, says GAO's most recent report on SBIR. GAO-05-861T, Observations on the Small Business Innovation Research Program.  http://www.gao.gov/atext/d05861t.txt  The report does re-hash that SBIR met its goals, which is no big deal since the goals were written so broadly and softly that merely pushing the money to qualified companies would have sufficed.  GAO treads lightly on SBIR because the story is politics, not economics nor efficiency. And Congress has passed up several chances to clarify the economic and efficiency goals in favor of mushy stories about small business in election years.  

Army SBIR Commercialization.  The Army eventually copied the SDIO idea of extending Phase 2 SBIRs when a third party would contribute matching funds. For the Army, like the Navy, commercialization means mostly more government money. The Army's list of Phase 2 extensions http://www.aro.army.mil/arowash/rt/sbir/sbir_phase_winners.htm  shows about 125 awards with $75M from partners. Of those totals 20 partners were private entities (mostly military contractors) for something under $5M. That's about 90% government commercialization which satisfies the official definition but provides little economic fuel for the national fire of competitive innovation. The Army's program description doesn't say when the matching started for the average of about 170 Phase 2s a year. If the base is, say, five years, then about 15% of Phase 2s find matching funds and an Army interest in continuing the work. That's not a high rate considering that the Army generally funds projects of immediate interest and expected value to the Army. And $5M private funding after $900M of development work is of no consequence to US economic strength.

War Is Good Business.  Sellers of armor have been in demand like in no other war as troops in Iraq motor around in a hornet's nest. The conventional scenario of peaceful civil restoration after a decisive victory didn't come true as the war planners dreamed. And while those war planners try to recover, they order up as much armor as the system can supply and the in-country mechanics can attach to people and vehicles. Which is why Ceradyne made a pile last quarter and why the stock is 15 times what it was six months before the war started. Ceradyne is a 300-employee size company with five Phase 2 SBIRs 1999-2002.

New England Sliding. Down from second to third place in the VC volume derby on a 35% drop for the second quarter. New York and SoCal moving up. [story by Robert Weisman, Boston Globe, Jul 26]  My guess why? The residue of the computer industry that formed around DEC, and that blossomed into optical info tech, has lost the critical element of a large high tech industry like HP and Apple in Silicon Valley. Not that NYC has such things, but NYC is still the home of $$$$$ in fortunes not made in info tech. Defense companies like Raytheon do not indulge in the bleeding edge technology and are not a continuous source of high tech startups with market driven technology. Biotech is fun, and a possible future winner, but VCs have been disappointed to find how long it takes to make profits from biotech. 

$18B over two decades and $2B more of SBIR this year, says Ann Eskesen. That's a ton of taxpayers' money that warrants an accounting of at least how it did something markedly better than what would have happened if the program had never been invented. Paying for a bunch of jobs is mere welfare. One way to force serious accounting is to shift at least a portion of SBIR from autopilot to annual appropriation where it has to compete with other government demands for money.

How's the rest of SBA Performing?  (Note that SBA shouldn't get the blame for SBIR mediocrity since it makes no funding decisions.)  OMB's rating system for government programs - PART Program Assessment Rating Tool http://www.whitehouse.gov/omb/part/index.html - recently rated several SBA programs: Business Information Centers results not demonstrated, SB Development Centers moderately effective, 7(a)Guaranteed Loans adequate, SB Investment Companies adequate.

Minneapolis got bids in the $15-30M range for making a municipal wireless network for residents, visitors, businesses and employees in late 2007. [Steve Alexander, Minneapolis Star Tribune, Jul 27] The public wireless revolution means to break the stranglehold of monopolistic telcos who have no incentive to create competition for their existing huge capital base. Got a new technology? Think about the power of the losers.

The Pentagon is toying with the idea of gutting two AF pet rocks - the F-35 Joint Strike Fighter and the F/A-22 - as it adapts to the national command strategy of putting terror first. Not to worry, too many local jobs would be lost for the politicians to bite any such bullets.  They will come up with another version of "you cna have everything you want, and not have to pay for it."  Unfortunately, the very idea that 5000 guys in mountain caves can threaten the US national survival is equally daft, says David Rothkopf in his new book Running The World: the Inside Story of the National Security Council and the Architects of American Power . Rothkopf offers a scare story to those who think that the world's most powerful committee that works completely in secret provides corporate memory and stability to the shifting sands of Washington politics.

we turn our backs on a proud tradition of technology innovation Vint Cerf complains [Wall Street Journal, Jul 27] of shrinkage in government R&D funding.  The U.S. is already lagging behind in R&D funding. Our total national spending on R&D is 2.7% of our GDP, and now ranks sixth in the world, in relative terms, behind Israel (4.4%), Sweden (3.8%), Finland (3.4%), Japan (3.0%) and Iceland (2.9%). The federal government's share of total national R&D spending has fallen from 66% in 1964 to 25%. Whether less government R&D is a blessing or a disaster depends on your view of where America's wealth comes from - a complex question not likely to be clarified by glib partisan-serving political debate. It's far to easy to reach for government spending as a remedy for a long range economic dilemma.

instantgames writes "According to a working paper of the National Bureau of Economic Research, rapid development of a science and technology base by populous Asian countries soon may threaten the economic position of the United States. Not only is the U.S. losing ground in high technology exports, but its very capacity to develop new technologies is declining rapidly with respect to the rest of the world. According to Richard Freeman, the paper's author, the sheer population of Asian countries may allow them to train more scientists and engineers than the U.S. while devoting a smaller share of their economy to science and technology." From the article: "The phenomenal growth of China's industrial base has been widely publicized, but Freeman focuses on what is perhaps the more important long-term indicator of a nation's prosperity - its re-investment in science and technology education. "  [slashdot.org, Jul 26]

Incubators Make Press for Politicians. The Appalachian Regional Commission "invested" $35M in an  Entrepreneurship Initiative from which it has made 108 grants totalling $17M for business incubation projects. A recent report says that 1,300 businesses have "graduated" and that they helped create 38000 jobs. But only 28%  of the respondents considered themselves financially self-sufficient , 20% rely on external contracts and operations-based revenues , and the balance of 52% rely on subsidization that averages 53% of these incubators' budgets.  The report also sheds light on other key issues: 30% have too little leasable space available to support the overall cost of services and facilities; 57% charge below-market rental rates; two-thirds of the incubators require tenants to graduate/exit after a predetermined time limit is reached; and 54% offer no placement or relocation assistance to graduating tenants. The one measure of economic success says that the program has led to the creation of 24,500 new jobs by companies that either have graduated from the incubators or are still residing .   A Survey of Business Incubators in Appalachia is available at: http://www.arc.gov/index.do?nodeId=2880  [SSTI, Jul 25]  On balance, the politicians took credit for contributing taxpayers' money to pay people to invent jobs most of which would have no future when the subsidy stopped. Just like SBIR whose champions laud the jobs "created", which is baloney since every small business job in SBIR was shifted from other small businesses. [The percent of DOD business going to small companies has not substantially changed over SBIR's life.]

If you're an SBIR company looking for a partner with an eye on the future try one of the MAGNIFICENT SEVEN companies that  invest in the future, have healthy ROE with market cap over $500 million, and stock over $5, and invest more than average in R&D:  Affymetrix, Biosite Diagnostics; Dassault Systemes;  Energy Conversion Devices ; Kos Pharmaceuticals; Maxim Integrated Products; Silicon Image.  [Michael Kaye,Business Week, Jul 22]  If you're an SBIR company just looking for government R&D work, there are lots more government agencies looking for you that looking for serious innovators.

Oregon has a new scheme for technology investment  in university commercialization - state tax credit for investors - that will flow jobs and millions in state tax revenue.  Eventually. One home-cooking catch:  grant applicants must remain within the state for at least five years following receipt of the grant, or repay the grant plus interest   Universities that license the inventions are required to return 20 percent of the royalty and licensing fees to the state treasury until the tax credit is recaptured. [SSTI, Jul 18]

NASA says it will fund 300 Phase 1 SBIRs from its current solicitation that closes in Sept.. Max amount $70K which will probably close to the average award since in government a ceiling becomes a floor. When the agency signals no flexibility, proposers go for the most possible money with earnest pleadings how $70K is barely enough. And the political advocates of SBIR, who represent mostly the SBIR mills, holler that award amounts should be vastly increased. Their pleadings never discuss the effect of more for some at the expense of having fewer awards to new and untried companies. 

Instead of grants, how about prizes? Frank Wolf (R-Virginia) suggests that NSF institute prizes for the best research in various fields. Think of the taxpayer money and the trees saved by not administering grants and contracts. DARPA's doing it with desert robot vehicles. NASA has prizes: for getting oxygen from moon rocks , tether strength, and for beaming power. 

Invent a Plant. On the site of a former hat factory in Danbury, a stand of genetically altered cottonwood trees suck mercury from the contaminated soil.  in California, transgenic Indian mustard plants soak up dangerously high selenium deposits caused by irrigation. ... After several years of growth, the trees will be cut down and incinerated. ... Applied PhytoGenetics Inc., the biotechnology company that Meagher [the Danbury tree guy] helped to launch, has planted its modified trees at a polluted site in Alabama   [AP, Jul 4] Which will merely move the mercury from Danbury's ground to the air. Think of a way to capture the mercury and hold it in a safe place, or better still, recycle it for whatever industrial processes use it at a cost less than mining it. The basic problem is conservation of elements which don't transform into any other element outside nuclear reactions.  

No fury like a department scorned. The military adopted the QRS-11 gyrochip, originally conceived of as a commercial product, for use in a missile system primarily because the technology was so affordable.  Good news and bad: DOD adopts a commercial item and then declares it military critical technology that requires a license to export. When Boeing sold 737s to China with the gyro installed, the State Department objected but the White House OK'ed the deal,  Now State wants to sue Boeing for dissing it after getting a legal opinion that State had no legal jurisdiction. [story from Seattle Times, July 6] 

So slow and arduous that it's too soon to judge whether DOD's Technology Transition programs are doing any good, says GAO's review. Then again, there's no technology pull quite like a hot war. . In the absence of Afghanistan and Iraq in the last three years, the process would no doubt have been so even slower and arduouser. The GAO report focused on military transition for which it recommends more metrics. 

SSTI says it has a compilation of the FY 2003 SBIR proposal and award statistics by state, tech-based economic development programs - specifically SBIR assistance and outreach efforts - now have the requisite data to evaluate conversion trends for most agencies during the four-year period 2001-2004.  That's good political stuff but no useful measure for any future proposer. It is more a measure of how well the agencies clarify what they are looking for. A low hit rate means a fuzzy agency message. 

The Spindle City is home to more than 100 mills. In their heyday, the mills employed more than 30,000 locals and led the textile industry in the early 1900s until the Great Depression left the mills vacant and ravaged the city’s main source of income. Now, a century later, it plans to re-emerge as a hotbed of - you guessed it - biotech. Just like seemingly thousands of other US cities. What does Fall River MA have as a competitive advantage? A world class university or two, a world class industrial company or two in biology, a mobile pool of specialized technical workers???? “Everyone and their grandma want this industry,” said Tanya Shnaydman, an industry development analyst for the Massachusetts Biotechnology Council. [story by Patricia Resende, Mass High Tech, Jun 27]

The Center for Democracy and Technology has created an online database of Congressional Research Service reports that anyone with an Internet connection can now tap free of charge.

The Iowa Way to Treat You (if we treat you, which we may not do at all). $500 million over 10 years to support tech-based economic development and other economic development initiatives with the Grow Iowa Values Fund. Universities will receive $5 million per year for capacity-building infrastructure in areas related to technology commercialization, entrepreneurship and business growth, and $7 million will support community college training and retraining programs.  We shall see if the legislature can keep putting up $50M a year with few hard results to sell at election and budget times. [Iowa commentary by Meredith Wilson in the delightful Music Man]

Texas sees the accountability problem as In addition to the $100 million for ETF, the legislature also approved $180 million to replenish the governor's Enterprise Fund, which has been criticized for its lack of accountability and structure. [SSTI, Jun 13]  But then Texas 20th century prosperity was built on the accounting shenanigans of the oil discovery and extraction industry. 

NASA's Dream Machine. When you have $4 million for a space mission that would cost NASA more like $60 million, ... hire some of the underemployed, bargain-basement Russians; use castoffs. For your rocket, you try an old ICBM; then you cross your fingers. ... If all goes as planned, that ICBM will blast out of a Russian nuclear sub deep in the Barents Sea on Tuesday with a payload out of science fiction: a solar sail called Cosmos 1. [Sharon Begley, WSJ, Jun 17] Good stolid NASA, an expensive agency in a rich society. Doing things the NASA way means solid reliability from conservative engineering and multiple redundancy which won't work if the object is a commercial venture of any kind. Actually, NASA has an eight year old  small scale alternative called NASA Institute for Advanced Concepts where the technology exploration decisions are made outside NASA but with a little NASA money. With an SBIR structure of Phase 1 and Phase 2 it explores ideas too wild for the NASA-crats. The latest crop funded 12 Phase 1s with titles like Lorentz-Actuated Orbits: Electrodynamic Propulsion without a Tether. What the website does not seem to address is the classic SBIR problem: how will technical success move forward into real life? Phase III and beyond. The seven person rotating term science council has a former director of BMDO and is chaired by a science fiction museum curator. 

About 90 Washington area companies showed up at an SBA hearing to plead for a favorable SBA definition of small business. The VC supported companies also came to argue that VC control does not automatically make them big businesses as envisioned by the SBIR program. Existing SBIR beneficiaries want to exclude competition from real innovators. It's controversial because America's business size not only spans the entire spectrum from one to hundreds of thousands, many company's size change over a relatively wide range as business fluctuates. Business employment has also become less well defined as more work is outsourced both domestically and internationally and businesses reduce their supply of health and pension benefits. The usual argument ensued and the question will ultimately be settled by the Congress as the political matter it is. 

unless one is willing to assume large spillovers, the inclusion of R&D in macroeconomic models will have little effect on economic forecasts or policy simulations.  The Congressional Budget Office finds that the benefits of adding R&D to macroeconomic models probably do not exceed the costs of doing so. Note that they do not argue with the idea that R&D feeds productivity, only that the data are too diffuse and uncertain to be useful in projecting future economic growth.  

Hide It in "National Security". The controversy dates to 1997, when the Pentagon conducted what it said was a successful test of an infrared missile sensor over the Pacific Ocean. A team including Lincoln Lab scientists later evaluated the results and deemed them ''basically sound."  But [Theodore] Postol, known for work exposing problems with the Army's claims about the Patriot missile during the Persian Gulf War, did an analysis and concluded the tests were so flawed that the Lincoln Lab scientists could not have believed the data they evaluated were valid. Government reports later said important elements of the test failed, but they did not address Postol's allegations. In early 2003, MIT concluded that a full investigation of Postol's allegations was warranted. But then the Missile Defense Agency classified all the information relating to the allegations -- including MIT's own initial inquiry -- and refused to grant ''need to know" status to MIT investigators, even those with the appropriate security clearance.  [Marcella Bombardieri, Boston Globe, Jun 18]  If three prominent independent scientists and MIT cannot find a truth, think what a small SBIR company couldn't do if and when a dispute arises about data that could be embarrassing. Picture the FBI knocking on (or knocking down) your door and walking off with what you think are your data. Want an investigation? By whom?  The king's lawyers investigating the king's men doing the king's business?  Oh yes, remember that SBIR money is free. 

A Prime Bright Spot. Boeing, Raytheon, Lockheed, and ATK all made speech about how their DOD prime companies have discovered SBIR although they say they are still new to it. The most enthusiastic talk came from Raytheon Missile Systems Division who describes itself as a high tech company. ATK should have the best inside advice on how SBIR works because the company includes Mission Research which was an SBIR mill. In principle, SBIR might benefit most if DOD and the primes cooperated on managing SBIR since the primes will be doing most of the buying of the technology the small companies have to offer. The Army does NOT buy what it thinks are the best (or most politically favored) fourth tier components and then hand them over to Raytheon to insert in missiles being developed. That would be the ticket to absolve Raytheon of responsibility for system reliability. But cooperation is easier said than done in a competitive procurement environment where Raytheon competes with Boeing and others for DOD business. The names of the company speakers:  Boeing - Richard Hendel; Raytheon - John Waszczak; ATK - Earle Rudolph; Lockheed - Mario Ramirez. 

OnPoint Technologies, joined by Intel Capital and existing angels, put at least $9M (says LA Times, Oct 25, 04) into Zinc Matrix Power for portable rechargeable alkaline zinc based batteries. OnPoint is the Army's In-Q-Tel (why should CIA get all the press?) as a VC with Army funds in an experiment. The Army says it is limiting its two year old experiment to soldier portable power. But if the scheme proves a better source of new technology than its conventional R&D or its bureaucratic SBIR, maybe the Army will expand the experiment. The arrangement has tentacles in that the Army contracted MILCOM Technologies to manage OnPoint with an initial endowment of $25M.  OnPoint's website shows Army investments in A123 Systems, PowerGenix Systems , UltraCell , POWERPRECISE Solutions (now under contract to deliver 10,000 battery packs), and Integrated Fuel Cell Technologies. An Army spokesman this week said there was only currently only one active investment. Matt Marshall in the San Jose Mercury News Jun 10 reports that OnPoint participated in a venture in Nanosolarwhich includes a Japanese corporate investor).  None of the companies show up in the Army's list of SBIRs which suggests either (or both) the Army SBIR isn't venture oriented or the VC's don't think like the Army.  The Army predictably had a lot of conventional objections to a VC project. But not all private sector actors think it is a good idea that government wallow into private equity, e.g.  Barry Ashby - Washington Editor of Industrial Heating  Meanwhile, the Navy seems to be still studying the matter as directed by Congress when in 2002 it authorized the Army's project. 

A bright SBIR spot appeared at the NAS hoedown this week. Richard McNamara, the big boss of the $6B a year Navy submarine development and procurement told how he has come to believe in SBIR as a source of new solutions to his old problems.  Not for him the lemonade approach to SBIR. An opportunity, not a tax. He claims 15 great companies in his stable on whom he has showered most of $860M in Phase 3 awards, a number than will probably cross the $1B mark this year. Don't use SBIR to solve today's problems, use it solve tomorrow's problems, he says. He even likes SBIR so much that he goes hunting Phase 1s in other agencies to adopt as potential solutions for his problems. Thus can an agency to go directly to Phase 2. Although McNamara's approach is ultimately selfish, and does little for national economic gain (since no more money gets spent or invested than would have been spent anyway), it at least gets a few new companies into Pentagon procurement and introduces the prime contractors and their suppliers to competition of ideas, one of the SBIR law's stated objectives. A smart company would respond to such success by pushing more such business into that division; not so a Navy that believes in "fair" allocation of SBIR funding. 

Showing the richest in a country says little about the average condition. And showing the "best practices" of SBIR in the agencies also says little about measures like ROI or a net gain over not having the program at all.  The ongoing study mandated by the 2000 re-authorization has had two day-long conferences where the "best practices" are showcased. The second conference by and at the NAS on June 14 showcased Phase III. It was a typical bureau show that emphasized process rather than accounting. NAS does have a ticklish problem in being required to "evaluate" SBIR without endangering the political environment that wants a favorable report so that the handout to small business can continue. Nevertheless, there were some interesting bureau approaches that could foretell a better SBIR at least for those companies who do stuff that only a government could love. 

If Only We Had More Money.  Officials at the Department of Energy are testing the waters for what some are calling a "Manhattan Project" for solar energy. Despite decades of progress in solar cells and rising gas prices, electricity produced by the devices still costs up to 10 times as much as that produced by fossil fuels. DOE currently spends $10 - $15 M a year on basic solar energy research, such as efforts to discover novel semiconductors that harvest sunlight more efficiently. If DOE officials get the go-ahead from congressional appropriators, that figure could rise as high as $50 M a year,  [Science, Jun 3]  And who will print the new money? Hey, every government official has a great vision for what could be done with more money. 

The reason outsourcing has become such a hot political issue is that all those skilled workers have suddenly found out that being educated and skilled in the global economy is no protection if someone can do your job for $10 an hour while you require $80.  [Tom Friedman, New York Times] By the way, the same economics rules R&D. Private R&D sponsors have the option of seeking the most efficient source, and any marked improvements in foreign R&D efficiency should create a drop in private domestic funding and the great jobs that go with it. Those firms and individuals relying of government funding will be temporarily insulated from the winds of change, but the competition will increase for that honey pot as more R&D do-ers hit the bread line. And the more the government continues funding incremental and purely military or space technology, the less spillover of government R&D into the competitive marketplace of American goods and services. 

Bleeding Money.  Surgeon Steven Gould has spent the last quarter of a century developing a blood substitute that might be as safe and effective as O negative, the universal donor type. Chances are he'll never find out because he can never seem to get enough human subjects to prove a clinical benefit. Northfield Laboratories, the company he cofounded in 1985, has posted $140M in cumulative losses without selling a drop of the stuff. Where did he get the money? From investors who believed that approval from the FDA was just around the corner. [Evan Hessel, Forbes, Jun 6,05]  After an Army grant in 1979 (pre-SBIR), DOD abandoned it in 1984 in favor of a big firm's ideas on artificial blood. The trouble is that clinical trials don't prove any advantage that doesn't harm too many subjects. The military still wants long shelf life blood that would get the wounded from the battle to a sophisticated hospital. 

A New Critical Criterion.   SBA has floated a proposal to modify the SBIR Policy Directive to require each agency to give priority in the SBIR program to manufacturing-related R&D. The public can comment on RIN 3245-AF21 at The Federal eRulemaking portal: http://www.regulations.gov or by e-mail at technology@sba.gov. IF the mission agencies take the idea seriously (they can find a way not to if they choose), more topics would have real commercial potential. Full info, which applies to agencies,  in Federal Register. 

Let Slip the Dogs of Science. President Bush, the darling of the dark-side conservatives, condemns science that creates clones. This time Korean science. He also promises to veto (it would be his first) a Republican bill that lets slip the dogs of US stem-cell science. The  majority of the Congress doesn't want to be accused of losing US science on a cutting edge issue to foreign competitors, while the members representing the minority hyper-religious Bible belt have to sound like 19th century opponents of Darwin. The ugly fact of globalization is that they cannot have their religious purity and maintain the US lead in the sciences. What can be done will be done, if not here, then elsewhere. 

If Goliath  Didn't Have It, We Don't Need It Either. From satellites and destroyers to infantry cannons and armored vehicles, the House committee opted for established programs over riskier, high-tech initiatives championed by the Pentagon. Some of the largest cuts are aimed at the Army's Future Combat System, ... also sharply curtailed the Air Force's two highest-priority satellite-development programs, cutting roughly half of the combined $1.1B request and requiring a whole new plan for both. [Andy Pasztor, Wall Street Journal, May 19] No women near combat neither. The same conservative Republicans, who now want to kill the time-tested filibuster that served them so well when they were called conservative Democrats, want an Army of men with swords and shields (or at least no newer equipment than they already have).  

$1M for Innovation Talk.  Representative Frank Wolf (R-VA), chair of an appropriations panel on several science agencies, appropriated $1M for a conference - the Innovation Summit - on what ails US innovation and technical competitiveness.  Stand by for blather. 

Space superiority ... is our destiny, ... our vision for the future,  sayeth the Air Force in its umpteenth try to weaponize space.  With no Russians to counter with weaponization of their own, the USAF wants to establish a dominance. US policy has been that our doing it would unleash another ugly expensive arms race with unknown consequences. But then, the people who gave us Iraq have a way with friendly assumptions. Nor is the USAF responsible for the national financial sanity. 

Hush Puppies and Venture Dreams.  The Southern Growth Policies Board cooked up a a multi-state task force - VentureSouth - to attract more VC money to Dixie. Just as soon as they stop fighting the Civil War and the lights of bio-science. They cannot have a religion-dominated system and get moneyed people to believe it is a stable economic environment conducive to science-based business. Why would a bio-investor role dice with unpredictable laws? Why would world-class scientists live in a place where religion trumps science? For information on who's in and how to join 

This change, while occasionally discomforting, is very healthy, said DARPA's Director as he explained a shift from computing research to other areas while NOT reducing the total university research funding as he claims that basic research funding has more than tripled, from $55M in 1999 to $170M in 2005. But David Patterson, president of the Association for Computing Machinery, counters that DARPA has essentially pulled out of funding long-term computing research at US universities, leaving a significant gap in the federal research portfolio that no other agency has yet stepped forward to fill. [facts and quotes from MIT Tech Review, May 16] A rational government observer could note that government programs should only be funding R&D where there is market failure such as research too risky for private sources. But the huge rewards to info-tech in the past two decades suggests that private firms like Microsoft have stepped up to basic research in computing. 

Cut Everything and Nothing. "If we're seeing DARPA move away from basic, long-term research, then that creates a void. We've got to have someone fill that void,"  said Rep. Sherwood Boehlert ... "Had DARPA done this during the Vietnam War, I don't know if we'd have an Internet," said Patterson. As always, Congress is for cutting the budget as long as no program suffers. Today May 12, the House Science Committee is to hold a hearing to ponder whether NSF should fill the hole left by DARPA's shift to more applied work. 

SBA Takes to the Streets with a series of public hearings in June across the country on small business size standards. Seattle to LA via Portland ME. Pre-register in advance with SBA for your turn to speak, only pray make it more than a simple plea for a monopoly on a political handout. Congress, if it has any economic brain, is torn between plain pandering and an economy slowly leaking jobs to lower cost and technically competitive foreign entrepots. 

An SBIR Blog. The Zyn SBIR Gateway  will be opening the SBIR BLOG in late May for Questions & Answers on items of interest to the SBIR/STTR community. Users will be allowed to post questions and comments. Ann Eskesen's SBIR blog "I Have an SBIR Question" of a decade ago will now be tried by a new player. Blogs are vogue talk shops with no editor to enforce consistency and fact. 

If you ever wonder how so many SBIR companies win lots of awards over a long time when it is absurd to presume that they could be that fertile with really innovative ideas. They got to be SBIR mills for a reason.  "you don't go to Brussels looking for money for your research. You go there to help the European Commission solve a problem that they have identified." It's not enough, say, to show that you're an expert in detecting low-level toxic compounds in water, McCarthy explains; you have to know the politics, economics, and business of water quality and show how your research will result in the prototype of a new sensor that Europe needs to clean up its water. [Martin Enserink, Science, Apr 15] 

TOPEKA, KS. Alarmed by proposals to change how evolution is taught, scientists and teachers are mobilizing to fight back, asserting that educational standards are being threatened by what they consider a stealth campaign to return creationism to public schools. [Peter Slevin, Washington Post, May 5] Will they also have "intelligent" chemical reactions and orbital mechanics? If such states want high tech growth, why do they think that high value scientists would locate in such an anti-intellectual climate?

Oklahoma, North Dakota, Ohio, Rhode Island are four among the fifty who try to create good jobs by directly investing (spending) in R&D and centers of excellence and the like. [SSTI, May 2]  If they all do it, none will increase its competitive advantage and the only winners are the consultants. They might all take a national perspective and provide for the basics that make good business climates - secular education, secure communities, honest taxes, etc.  The states can learn from the experience of SBIR that government direct investment in technology produces jobs that last only as long as the government handout. If it were otherwise, SBIR would be pushing a report that great economic gains resulted from spending a billion a year.  

Don't Cut My Department. Part of the problem, [SECENERGY Bodman] said has been a decade-long slump in funding for the Energy Department's Office of Science, which finances the work of 18,000 researchers at government, university and industrial labs each year. This year the Bush administration recommended that the office's funding be cut to $3.46 billion from $3.6 billion. Mr. Bodman, a former professor of chemical engineering at the Massachusetts Institute of Technology, said he understands the budget required "tough choices," but he thinks the issue should be re-examined. [John Filaka, Wall Street Journal, May 2]  Maybe the professor and science lover doesn't quite get what the establishment wants from Energy: more control over fuels extraction, less inconvenient competition from abroad, lower taxes, less government (except for tax breaks). 

What are Your Odds? Hard to tell since it depends mostly on where you stand in competition with other companies in your field who also propose SBIR.  The very best companies don't need government handouts and the ensuing entanglements with federal practices.  Although proposal stats won't help you know, For FY04, SSTI has aggregated Phase I award, proposal and award-to-proposal conversion percentages for all 50 states and the District of Columbia for 10 of the 11 participating agencies. (The Commerce Department's National Oceanic and Atmospheric Administration refused to provide proposal statistics.) The table is available at: http://www.ssti.org/Digest/Tables/042505t.htm  Such stats are useful for political and bureaucratic purposes only. 

After gobbling up 57% of government R&D in 2005, DOD may well get yet more in 2006. Homeland Security will get as much as it can absorb but focused on fixes next week. MIT Tech Review furnishes some stats: R&D spending will be about 2.6% of GDP; high tech exports will be 32% of all manufactured exports; 25% of the US will have cable TV; half the country uses the Internet and have mobile phones. 

A half-century ago, we could count on the private sector to finance crown jewels like Bell Labs and do a great deal of the basic research that made America the world’s leader. No more. To be sure, Silicon Valley still steps up to the plate, and our pharmaceutical industry does nearly all the cutting-edge drug research for the world. But much of the information-technology and drug research has been heavily subsidized by the federal government. And other heavy-handed government policies may drain pharmaceutical company revenues enough to cut their research and development.  The foolish fiscal policies that keep big entitlements off the table, won’t consider revenues along with spending, and have turned the one-sixth of the budget that is discretionary into a vicious, zero-sum game, are truly eating our seed corn in this critical area. Somebody needs to get the White House to wake up, and Congress to understand what it is mindlessly doing.  [Norman J. Ornstein, AEI, Apr 20] It's a man-bites-dog story when AEI advocates more government spending on other than defense.  

If it's good for me, it must be good for the nation?  Do tax credits pave the way for more investment in R&D and equity investments in new enterprises? Or, do they reward companies and venture capitalists for investments they would have made anyway?   For tax credits, say SBIR.

Everybody's got a great federal budget idea: cut somebody else. Former SECDEF Bill Perry and DEPSECDEF John Deutch want to protect DOD early technology funding. So they say in a New York Times op-ed piece Apr 13. Their problem is that the green eye-shaders want to see concrete measures of effectiveness and correlation between funding and results, which is not reasonable for early funding.  Ya just gotta have faith that such work will invent the future! How much is enough? No one knows, but more is usually better in the right hands (which is another question about DOD's management of early technology). 

some hospitals are now pushing to cut costs in an unusual way ... gain-sharing, a practice that permits hospitals to financially reward doctors who collaborate in efforts to lower costs. As part of these efforts, some hospitals are trying to limit the number of medical devices they use for certain procedures ... Despite concern about collusion, HHS has OK'd Four of the agreements cover devices used in cardiac surgery and in catheterization labs, including popular implantable defibrillators, pacemakers, vascular closure devices and heart stents  [Janet Moore, Minneapolis Star Tribune, Apr 4] There never was a free lunch: lower health costs mean lower sales of medical gadgets, and then less R&D money floating around for new procedures and gizmos. 

Why so much coastal SBIR?   a preliminary list of the universities receiving the most patents in 2004. The top three are the University of California, 424 patents; the California Institute of Technology, 135 patents, and the Massachusetts Institute of Technology, 132 patents.  [Minneapolis Star Tribune, Apr 4]  The kind of people who do competitive innovation cluster around, and become part of, centers of excellence. And as long as SBIR is merit-based, whatever the criteria (scientific or sci-commerce combined) the government will find companies in these centers to have the best ideas, the best people, and the best links to whatever tools they need.  If the flyover states want a bigger share of the pie, they will have to convince their senators to convert SBIR to yet another pork-barrel.

The government will pretend to be vitally interested in Beyond Phase II: Ready for Transition,  by sponsoring an invitation-only conference in San Diego, July 11-14  of  scientists, engineers, and technology decision makers.   Info http://conference.brtrc.com/sbirconf05. The core problem is that the mission agencies that control 75% of SBIR money won't tilt their funding to market potential projects.  They prefer to spend their money on their work and then blame the company for lack of commercialization. Such conferences are little more than theater to show Congress some defensible activity in lieu of accountability and economic performance measures.  But then, living in Washington gives one a jaded view of political theater. 

Relevance, Home Cooking, and Secrecy, Again. [DARPA] which has long underwritten open-ended "blue sky" research by the nation's best computer scientists - is sharply cutting such spending at universities, researchers say, in favor of financing more classified work and narrowly defined projects that promise a more immediate payoff. ... Many grants also limit the use of graduate students to those who hold American citizenship, a rule that hits hard in computer science, where many researchers are foreign. ... [Director Tether]  testifying that secrecy had become more essential for a significant part of the agency's work. [John Markoff, NY Times, Apr 2] Relevance goes in cycles in DOD; attempts at secrecy for unclassified research  usually lose when Freedom of Information is invoked. 

NASA's New Chief. Mike Griffin had his hands on SBIR and on VC money before he finally ended up with nomination for NASA Director. At SDIO he did not micromanage SBIR from his technology chief spot; he let Dwight Duston and me interpret the law and devise the investment strategy. Although in those days it was a lot easier for SDI managers to ignore SBIR: the take was only 1.25%, everybody in SDI had plenty of money for their pet rocks, and the SDI Director Jim Abrahamson believed that spin off was part of SDI's political attraction. Although he left for greener pastures before the investment starting paying off in the early 90s, he should get some substantial credit. As president of In-Q-Tel recently he saw how hard it is to push new technology onto a conservative bureau (CIA) even when the bureau provided the investment money. I wonder how the bureau would have responded if every branch chief had some shares of the stock in the companies where the technology worked as intended. He will have his hands full trying to get to space beyond orbit when the nation cannot even afford its normal government programs at a tax level the populace will support. 
The general keeps tripping over the welcome mat in his office on his way to review the new technology. Or so it seems every time a missile defense test fails to get started because some "low tech" piece malfunctions. Now the AF general appoints a Navy admiral to overcome Murphy's law and to ride herd on test prep. Says the general, "The hard things about missile defense we are accomplishing, The easy things are what we're having trouble with." . Rear Adm. Kathleen Paige formerly led a Navy ship-based anti-ballistic missile system that knocked down five out of six. Maybe she's luckier than AF generals. Unfortunately, the failure of the low-tech stuff prevents learning much about the high-tech stuff which should be much more likely to fail under stress. [facts from Bradley Graham, Washington Post, Mar 11] Meanwhile the White House must be fuming, "Can't anyone over there count down?" as its wager looks sick that it could install the untested system and bet on pre-planned product improvements to make a political showpiece into a reliable defense. 
 

USAF apparently ended its internal struggle by releasing the frozen $175M of SBIR money  When questioned by SBIR Gateway, the Air Force offered no reason for withholding half the SBIR funding. Let's guess a turf battle. SBIR is one program where the agencies get no sympathy from their Congressional oversight committees since the funding is a matter of politics, not policy. 

Big thinkers of Minnesota, ... The governor wants to know if you're cooking up the next Medtronic. Gov.Pawlenty announced the first annual Minnesota Cup, a competition for breakthrough business ideas. Sponsored by the University of Minnesota and backed by a roster of business leaders, the contest will award $25,000 in seed money plus free professional services to the idea judged most original and commercially viable. ... open to all Minnesotans -- students, tinkerers, small-business owners and corporate cubicle-dwellers. Applications will be accepted online through May 6 at breakthroughideas.umn.edu.   [John Reinan, Minneapolis Star Tribune, Mar 10] That's the sort of thing that SBIR might have become if the innovation-phobic agencies had not been kept from degrading it into mostly routine R&D support work. 

DOD Can Move Fast.  could DARPA's famous brainiacs concoct an inexpensive system to spot incoming bullets instantly and pinpoint where they came from? If the system saved just one life, it would be worth it, ... In 60 days? And deliver 50 working units?  .. BBN and DARPA inked a rush contract on Nov 17 and 40 units were delivered to Iraq in early March. First use uncovered the usual glitches from real world conditions, a redesign, and new Boomerangs on the way in January.  [story by John Carey, Business Week, Feb 14]  The bureaucracy of contracting applies only when the department can afford to wait until a proper contract is agreed. When bullets are flying, speed trumps formality. 

Paranoia. And we would have gotten away with it too, if it hadn't been for you meddling VCs... Of the more than 20 amicus briefs filed in support of peer-to-peer software vendors facing a U.S. Supreme Court showdown with the movie industry later this month, there are quite a few that stand out, but this was the one that really caught my eye. Penned by the National Venture Capital Association, it really cuts to the quick of the whole sordid debacle and shows the entertainment industry's suit for what it really is: an effort to hamstring innovation. "Grokster and StreamCast are just stalking horses for the real targets of the motion picture studios and the recording companies," the association explained in its brief. "They want to force fundamental, and hugely expensive, changes in the software and hardware that constitutes the Internet, by imposing an obligation on providers to design and engineer their systems to block unauthorized file sharing. Such an open-ended standard of liability would be a proverbial Pandora's box." Amen. [Siliconvalley.com, Mar 2]

Bullets and Bombs.  Federal tech spending is soaring, but military and Homeland Security projects are still taking up much of the money — bad news for some tech firms. Projects that can have a short-term impact on anti-terrorism efforts or the war in Iraq are taking precedence over more traditional initiatives, such as e-government and infrastructure upgrades, some tech executives say. “The spending is focused on bullets and bombs,” says Tim Wudi, chief marketing officer for security firm Saflink.  [Michelle Kessler, USA Today, Feb 28] Not surprising that a free-market authoritarian government favors spending on "national security". 

Another Arrow Thru George's Valentine.  MDA said that since there was no trouble with the fuel injection, the failure of the car to start was no cause for alarm. Preliminary indications pointed to a problem with the missile's ground support equipment, rather than the missile itself, which was good news for the program, said Rick Lehner, another spokesman for the agency. "There is no indication that there is anything wrong with the actual interceptor," said Lehner. MDA's boss also noted that even though four of nine tests failed,  the system could offer some limited capability to protect against a ballistic missile attack.  And maybe the North Korean claim to nuclear warheads well matches the US maybe ability to knock down a maybe North Korean missile.  Perchance we will never find out the whole truth. 

For those interested in technology-based economic development, you'll be hard-pressed to find any good news in the President's Budget Request for FY 2006 unless, that is, you're hoping to go to Mars or heavily involved in homeland security.... What is striking about this year's budget request, though, are two general themes: 1) cutting community and economic development spending, and 2) the lack of any type of strategic response toward building tech-based economies across the United States. [SSTI, Feb 14] It's not surprising that a business-supported president disdains federal spending for private economic development. And the idea that direct government support will make better companies has a lot of support from companies and state governments who get the money. And since politicians are not good at solutions other than handing out money, guess what they favor as policy. And since the politicians don't pay the money, they only spend it, they have little incentive to say no. 

Start-ups as Job Engines. Just not US jobs. Nearly 40% of start-ups in a new USA TODAY study employ engineers, marketers, analysts and others in jobs created in India and other nations. Russell Hancock, CEO of an influential group charting Silicon Valley's future, called the findings “amazing.” The study found that many U.S. start-ups, speeding the pace of globalization, now bypass the USA for nations where customers and cheap labor are plentiful. [USA Today, Feb 11]  Which provides another opening for SBIR advocates to bar VC ownership for beneficiaries since VCs are actively sending start-up jobs overseas.  Which is normal since VCs are not government, they are enterprises for profit. Better an economically mediocre company paying for temporary American jobs than an efficient job creator making jobs elsewhere? A short sighted view worthy of 18th century mercantilists.  

Air Force Budget Games. The AF has cast SBIR winners into limbo by withholding the money allocated to SBIR  Which probably means that a bright bureaucrat has decided that regular AF stuff is more important than SBIR and should therefore get funded before SBIR. All the agencies feel that way but still have to do SBIR in the legally mandated amounts. That bureaucrat will soon be hearing from AF General Counsel that SBIR funding is MANDATORY. Maybe some of the MDA anti-SBIR crowd has shifted to the AF. Patience, Congress will not allow the diversion of political pork into mainline programs. 

New NSF Web Site Address for "an attractive new look".  www.nsf.gov/eng/sbir/.

In-Q-Tel (the CIA's venture arm) romances Cambrios, which hopes to use biology to create new manufacturing processes for things like liquid crystal displaysand finding inexpensive ways to manufacture Radio Frequency Identification (RFID) tags. [Silicon Beat]

“As Republicans, we used to ridicule Democrats for spending. But now we're in power, and we've perfected the practice,” says Rep. Jeff Flake, R-Ariz., a critic of congressional spending practices. Today, Bush will propose cutting or eliminating more than 150 programs, including the Advanced Technology Program. Brian Riedl, a federal budget analyst at the conservative Heritage Foundation, calls it a “corporate-welfare handout.” Riedl notes that the technology program was created in 1989, when the United States was worried that advancing Japanese technology would relegate the U.S. economy to second-class status. So the government decided to follow the Japanese model and increased its support for private corporate research. Since its creation, Riedl says, the technology program has cost U.S. taxpayers more than $2 billion. More than 40% of the money has gone to Fortune 500 companies such as IBM, General Electric and General Motors. Riedl says they could have afforded to finance the projects themselves. David Peyton, director of technology for the National Association of Manufacturers, cites several high-tech products created with the help of ATP funding, such as the world's first digital mammography machine and the world's first laser-guided boring machine used to make engines. He says much of the research might not pan out, so it wouldn't be funded without federal help.  [USA Today, Feb 7]

Death and Resurrection. Bush is again proposing to kill ATP. Congressional Republicans, for all their blather about the wonders of private markets, haven't the nerve to carry out the execution. In part because most budget analysts say that such moves cost more politically that they help with the giant deficit problem. Taxes, public pensions, and Medicare are the deficit game, and the shrink-government game. 

Bush also wants to kill FAST which hands a little money to SBIR have-not states to pretend they are serious players in new technology. The Senate dynamics will probably rescue it. 

In the area of missile defense, the 2006 spending blueprint includes a $1B reduction from previously projected funding levels, to $8.8B , and envisions comparable cuts in following years. Admiral Robert Willard, a senior Pentagon planner, said the missile-defense cuts reflect elimination of "some of the optional" technologies. [WSJ, Feb 8]

Keep Those Dixie Toys. The Bushies' sine qua non base, the Dixie states, don't like