SSTI Digest

In this week’s continuing coverage of gubernatorial addresses as they discuss the innovation economy, the following highlights have been selected from the State of the States or budget addresses given between Feb. 5 and Feb. 13, 2025, by the governors from Connecticut, Maryland, New Hampshire, and West Virginia. Information on previous 2025 State of the States and Budget addresses can be found here, here, and here.

Additional addresses and states will be covered in future Digest issues.

SSTI is following personnel and policy changes across the federal government that will likely affect programs of importance for innovation-driven businesses and for growing stronger regional innovation systems across the country. There have been several announcements in the past week alone, so this week’s federal news column is fairly lengthy.

Simultaneous with laying off thousands of Department of Agriculture (USDA) workers across rural America, Secretary Brooke Rollins sent a letter to the nation’s governors encouraging them to join the department’s new “laboratories of innovation” initiative to provide input into policy issues, including the USDA priorities to bring “more jobs and economic opportunity to rural communities and ensure that we equip and empower the next generation of American farmers.”

The Senate confirmed Howard Lutnick as the Secretary for the Department of Commerce on Tuesday, Feb. 18, by a vote of 51-45. Trade talks and tariff negotiations are expected to be top priorities for the secretary as the agency is expected to undergo several structural changes during the coming months. Current, estimates for employees at Commerce number around 50,000 people across a broad range of agencies, including the National Oceanic and Atmospheric Administration, which has been discussed in the media as a candidate for splitting up, relocation to another agency, and privatization.

Of priority for the TBED community within Commerce are the Economic Development Administration, the National Institute of Standards and Technology (which houses the Manufacturing Extension Partnership and federal tech transfer policy), the Minority Business Development Agency, the Bureau of Economic Analysis, the Census Bureau, the National Telecommunications and Information Administration, International Trade Administration, and the US Patent and Trademark Office.

Lutnick formerly was CEO of a Wall Street investment firm, Cantor Fitzgerald.

The National Science Foundation issued a brief statement to invited NSF Engines proposers last week indicating its decision to delay the Feb. 11 deadline for the current competition for Regional Innovation Engines to a new date yet to be determined. The explanation states, “NSF anticipates a revision to the NSF Regional Innovation Engines program solicitation (NSF-24-565). By NSF policy, if a solicitation is revised, the deadline will be extended, likely to a month from when the revised solicitation is published. We will notify you when we have more information, including a revised solicitation.”

As the federal R&D budget has grown, peer review committee compositions changed, and federal research awards have grown in size, the threshold to obtain the designation as a Carnegie R1 university of $50 million in total research spending to earn the designation was met by 42 additional universities for the first time, bringing the total to 187 nationwide. New designees include San Diego State University, an SSTI member, and Howard University, the only historically Black college or university yet to receive the R1 designation.

The National Science Foundation, on behalf of the White House Office of Science & Technology Policy (OSTP), is providing the opportunity for public input toward the development of a national Artificial Intelligence (AI) Action Plan, as directed by President Trump’s Executive Order 14179. The Request for Information (RFI) is extremely broad. It states only that responses, to be submitted by March 15, may address any relevant AI policy topic, including but not limited to:

•            hardware and chips,

•            data centers,

•            energy consumption and efficiency,

The Feb. 7, 2025, memo from the NIH Office of the Director (NOT-OD-25-068), now on hold because of two federal judge actions, announced the implementation of a flat 15% Facilities and Administrative fee (F&A) “across all NIH grants.” While the historic average F&A, or indirect cost rate, paid for by NIH is between 27 and 28%, the memo stated, the agency has previously allowed private small businesses without a negotiated F&A rate to charge up to 40% on their SBIR/STTR awards without further justification, drastically lowering their administrative burdens. Thus, a flat 15% fee on F&A if ever implemented would likely lead to some hardship for the small businesses.

NOTE: The nation’s community of technology-based economic development organizations has entered annual report season, and already we've seen several released from SSTI members. All document the impact TBED can have for advancing research, moving it to market, and helping businesses improve their profitability and competitiveness.

To help the TBED community in preparing their own annual report, SSTI is speaking with a few of our members to learn more about their evolving approaches for preparing their annual reports. This week, we share insights from our first conversation, based on an interview with Amanda Schroeder, senior vice president, external engagement for the Georgia Research Alliance (GRA).

In a recent executive order, The White House is calling for the federal government to establish a Sovereign Wealth Fund (SWF) that will "promote fiscal sustainability, lessen the burden of taxes on American families and small businesses, establish economic security for future generations, and promote United States economic and strategic leadership internationally.”

A Feb. 7 memo from the Office of the Director of the National Institutes of Health (NOT-OD-25-068) announced the decision to implement a flat 15% Facilities and Administrative fee (F&A), also known as an indirect cost rate, ”across all NIH grants.” Public statements from the Association of American Medical Colleges (AAMC), Association of American Universities (AAU), American Council on Education, (ACE) and Association of Public and Land-grant Universities (APLU), among others, outlined their objections to the move, highlighting the impact it would have on medical research.

Press coverage has focused on the impact on institutions of higher education, but it is important to note that SBIR grantees will be covered under this directive as well. The notice is contradictory, however, as to when the policy will go into effect for grantees that are not institutions of higher education.  

Answering the question of what impact a flat 15% F&A reimbursement rate would have on the nation’s SBIR startups requires real data. The data doesn’t currently exist that we are aware of. As a result, SSTI invites all SBA FAST recipients, state SBIR matching grant programs, life science-based innovation and commercialization offices, and other interested TBED initiatives to join us for a virtual meeting as we launch a ‘citizen-science based’ online record gathering initiative to help inform state and federal policymakers.  Register here.

SSTI university members will be invited to a zoom later this week. Academic parties interested in attending that call but are not members of SSTI currently may explore membership here.

President Trump’s nominee to become Secretary of Commerce, Howard Lutnick, cleared the Senate Committee on Commerce, Science and Transportation on Feb. 4 by a vote of 16 to 12. A floor vote is expected soon, possibly still this week. Among the agencies within the Commerce Department are two agencies that support core elements of regional innovation and technology-based economic development more broadly. The National Institutes of Standards and Technology (NIST) oversees the Manufacturing Extension Partnership and the Economic Development Administration, which is one of the largest federally supported of core TBED and economic development efforts around the country. Lutnick’s support of the CHIPS Act and sustaining the current structure of the National Oceanic and Atmospheric Administration (NOAA) remain unclear, according to Roll Call. Lutnick is currently CEO of Cantor Fitzgerald, a Wall Street financial services firm.