SSTI Digest

The Pittsburgh Technology Council's State of the Industry Report shows the region's technology sector, while continuing its growth, has become a significant driver of southwestern Pennsylvania's overall economy. 



Conducted by Carnegie Mellon University's Center for Economic Development, the report measures the six-county Metropolitan Statistical Area that encompasses Allegheny, Beaver, Butler, Fayette, Washington and Westmoreland counties. The report also includes separate data for the entire 13-county southwestern Pennsylvania region. 



Examining the economic impact that has been created by the region's core technology clusters – information technology, biomedical and biotechnology, advanced manufacturing, advanced materials, and environmental technology – the report assesses the overall sector, considering indicators such as venture capital investment and research and development activities. 



Key findings in the report include: 

The Army Research Office (ARO) recently created an initiative – a University Affiliated Research Center (UARC) to be known as the Institute for Soldier Nanotechnologies – to develop nanometer-scale science and technology solutions for soldiers. 



Through competition for the center, ARO will award a single non-fee-bearing contract at an estimated base cost of $50 million. The contract, to be presented during the third quarter FY 2002 with an initial performance period of five years, will include provisions for task orders for additional effort estimated to reach $20 million over the five-year term. The contract also will have a ceiling of $125 million to allow for capitalizing on opportunities which may result. 



A single university will host the UARC, which will emphasize revolutionary materials research toward an advanced uniform and protective ensemble concept. The center, in turn, will work closely with industry, the Army's Natick Soldier Center, the Army Research Laboratory and other Army Research Development and Engineering Centers pursuing the Army's goals. 



The objective of the program is to enable a revolutionary advance in soldier survivability through the development of novel materials for integration into the Objective Force Warrior system. Research, therefore, will integrate such functionalities as multithreat protection against ballistics, sensory attack, chemical and biological agents, climate control, biomedical monitoring, and load management. 



Effective research solutions will be compatible with complicating factors, including soldier mission requirements, limited energy resources, communications needs, and rugged insensitivity or adaptive responsivity to extremes of temperature, humidity, storage, damage, and soilage. 



Proposals, which may be submitted by degree-granting universities in the U.S., are due by 2:00 p.m. ET on January 3, 2002. The broad agency announcement for this program is located at the ARO website: http://www.aro.army.mil/soldiernano/ 

Meeting Challenges in the New Economy, recently released by the Oklahoma Center for the Advancement of Science and Technology (OCAST), presents a comprehensive look at Oklahoma's position in science and technology. 



In the report, an advisory team of 14 individuals suggests future initiatives and action in areas critical for Oklahoma's progress in economic growth. Longitudinal databases are used to provide insight and monitor progress in the areas, which are arranged in the following categories: Funding In-Flows, Human Resources, Capital Investment and Business Assistance, and the Technology Intensive Business Base. 



The team selected three areas of emphasis under most categories and compared Oklahoma's national ranking in 1997 (most current data available) with the rank they believe needs to be attained by 2005. Among the team's projections, some admittedly generous in likelihood, are the following: 

Venture capital invested during the past three decades created 7.6 million U.S. jobs and more than $1.3 trillion in revenue as of the end of 2000, according to an economic impact study released Monday by the National Venture Capital Association (NVCA). 



The research shows that $273.3 billion of venture capital created companies were responsible for 5.9 percent of the nation's jobs and 13.1 percent of the U.S. Gross Domestic Product in 2000. Venture investment most frequently led to job and revenue creation in the computer, consumer, and medical health sectors, followed by the communications, industrial energy, electronics and biotech. 



The new figures are substantially higher than preliminary numbers released this past Spring (see the May 4, 2001 issue of the Digest ) as they include not only independent venture-backed enterprises but also those venture-backed companies that have been acquired. 



The NVCA also released data that details venture-backed job and revenue creation by state. Topping both lists are California, Texas, Pennsylvania, Massachusetts, New York, and Washington. 



The study shows there was an unprecedented geographical diversification of venture capital during the past five years. While states such as California, Massachusetts and New York have consistently been national hotbeds

for venture investing, other states showed considerable growth and promise, including Maryland, Minnesota, Georgia, Oregon and Colorado. 



More information, including the state-by-state statistics, is available at: http://www.nvca.org/ 

A national conference since 1997, the RuralTeleCongress (RTC) has transformed into a national organization devoted to rural telecommunications. RTC, which held its inaugural session October 14-16 at the Aspen Institute in Colorado, has launched a redesigned website as part of its transformation. 



RTC is expected to serve five functions: an educator, convener, facilitator, and discussion forum; a catalyst for rural-based research; a disseminator of information; a way to dispel rural stereotypes; and an instrument for sharing and leveraging limited resources. 



The purpose of RTC is to be a convener of rural interests in rural telecommunications policy and its implications for rural consumers, with participants including citizens, small businesses, practitioners, industry representatives, federal and state and regulatory bodies, and representatives from other organizations. 



RTC's redesigned website will allow new members to register online and, supporting the creation of state chapters, will encourage the sustainability of seven areas of interest within each state and nationally. Initially, RTC will focus on seven areas related to rural telecommunications: 

Jefferson County, Missouri 

Its first economic growth strategy in more than a decade, the Jefferson County Economic Development Corp. has issued a plan aimed at attracting new businesses while supporting existing ones, an article in the St. Louis Post-Dispatch reported. The nonprofit's plan suggests acquiring land for industry and commercial development by working with farmland owners and getting municipal governments to delineate rural parcels. Among the programs detailed by the plan are a nonprofit business incubator which would offer low rent to start-up companies and a loan program for the companies. Much of the plan is geared to assist area small businesses, but it also would market the county's strengths, including its river and interstate access, to businesses across the U.S. The Economic Development Corporation presently is seeking grants to secure funding for the plan. 



Los Angeles, California 

An area in South Los Angeles devastated by riots in 1992 has been replaced by a 54,000-square-foot business incubator and technology center capable of holding 30 start-up companies, according to the Los Angeles Times. The FAME Renaissance Center, with high-speed Internet connections, video conferencing facilities and a 700-seat auditorium for community meetings and business seminars, will offer loans of $1,000 to $500,000 and up to $1 million through a venture capital fund. The creation of the center began in 1997, when FAME Renaissance received a $300,000 grant from the city's Community Development Department to purchase a 90-year-old building that once was a telephone switching station for Pacific Bell. The building subsequently was renovated with $6 million in state and federal grants and contributions. A waiting list of 100 companies exists. 



Newport, Rhode Island 

The state's first Academy of Information Technology – a four-year educational program meant to expose high school students to new technologies and prepare them for high-tech jobs – recently was introduced by the Rhode Island Technology Council (RITEC) at the Newport Area Career and Technical Center at Rogers High School. Students at the academy, the Providence Journal-Bulletin reported, will receive four years of training in high-tech skills and will be placed in internships with area high-tech businesses. Currently, 27 students are enrolled in the academy, where courses including web page design and multimedia skills training are based on a curriculum set by the National Academy Foundation (NAF), a nonprofit organization. RITEC and NAF expect to sign up to three new schools for the 2002-2003 school year. 



West Virginia  

Being encouraged by Sen. Jay Rockefeller in 2000 to increase funding for entrepreneurial development, business leaders will propose an advocacy group instead of a venture capital company, according to the Sunday Gazette Mail. The group will consist of existing venture capitalists and others wishing to help state business owners needing money for new ideas. Although mining and manufacturing traditionally have supported West Virginia's economy, the group serves to give the state a much-needed boost. The West Virginia Venture Connection is being considered as a name for the group.

Public corporations headquartered in the U.S. almost doubled the growth rate of their investment in R&D in 2000, according to new data from the advance estimates of annual U.S. corporate R&D released this week by the Commerce Department’s Office of Technology Policy.



According to the report, R&D investment in 2000 rose sharply by 9.3 percent in inflation-adjusted terms, increasing from $145.6 billion in 1999 to an estimated $162.7 billion in 2000. The increase reverses a five-year trend of slowing annual percentage increases in corporate R&D investment and approaches the high of a 10.2 percent annual increase set in 1995.



Among the report’s highlights:

With the announcement of the first 30 grants under the Federal and State Technology Partnership (FAST) less than two weeks old (see the October 5 issue of the Digest), the new federal program supporting state efforts to encourage small business technology development and commercialization is in danger of being cancelled.



The House version of the Commerce-Justice-State (CJS) appropriations bill covering the Small Business Administration FY 2002 budget (H.R. 2500) provides no funds to continue FAST or the Rural Outreach Program (ROP) that focuses on underperforming states in SBIR awards.



The Senate version of the appropriations bill (S. 1215) fully funded the President's budget request for the two programs – $3.5 million for FAST and $1.5 million for ROP – which were continuation levels for the programs. The events and aftermath of September 11, however, are causing Congress to identify as much new money as possible for State and Justice Department priorities.



FAST and ROP proponents in the Senate concede that, without some support from the House leadership or conferees, it is very possible that FAST and ROP could be eliminated from the FY 2002 budget during the CJS appropriations conference. House conferees have not been assigned yet, but key figures in the FAST/ROP battle may include Rep. Frank Wolf (R-VA), chair of the House CJS Appropriations Subcommittee, and Rep. Don Manzullo (R-IL), House Small Business Committee chair.



Other members of the House CJS Appropriations subcommittee who may be able to shed some light on the issue include for the Republicans: Harold Rogers, Kentucky; Jim Kolbe, Arizona; Charles H. Taylor, North Carolina; Ralph Regula, Ohio; Tom Latham, Iowa; Dan Miller, Florida and David Vitter, Louisiana. Democrats members include: José E. Serrano, New York; Alan B. Mollohan, West Virginia; Lucille Roybal-Allard, California; Robert E. (Bud) Cramer, Jr., Alabama; and Patrick J. Kennedy, Rhode Island.



STTR Reauthorized

Chris Busch has alerted SSTI to President Bush signing the reauthorization of the Small Business Technology Transfer (STTR) program (H.R. 1860). The law:

"If technology is at the core of the Innovation Economy, then investment in research and development is one of the principal drivers in the creation of that technology."



The sentence, lifted from the new Massachusetts Technology Collaborative (MTC) report, Maintaining the Innovation Edge: The Case for Creating a Massachusetts Science and Technology Strategy, is valid for the entire country but rings especially true for the Commonwealth, a perennial leader in R&D investment and innovation. Past MTC research reveals innovation is at heart of nine key industry clusters in the Commonwealth. In fact, 25 percent of the state's total employment is tied directly to technological innovation.



Written by MTC Director of Federal Programs Bob Kispert, Maintaining the Innovation Edge scrutinizes R&D funding in the state over the past decade and unveils some unsettling trends for the future growth and stability of the Massachusetts economy:

After nearly ten years as the head of America's space program, NASA's longest-serving Administrator, Daniel S. Goldin, has announced his resignation, effective November 17, 2001. He also announced he has accepted an interim position as a Senior Fellow for the Council on Competitiveness in Washington D.C., as he transitions into the private sector.



Goldin was appointed NASA Administrator April 1, 1992, by President George H.W. Bush. While no replacement has been selected, Goldin says he will work with the Administration before he leaves office to identify an interim Acting Administrator.



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If one were asked to identify localized examples of the economic spectacle that was the late 1990s, the metro region of Austin, Texas would be on most short lists. A recently completed economic development plan from the tech-soaked Austin suburb of Round Rock, however, reflects the fundamental upheaval or disruption that characterizes the economies of many regions of the country.



Round Rock has grown quickly, doubling in population during the last decade to become the second largest city in the Austin-San Marcos metro area. It is experiencing for the first time, like many other cities emerging in a decade marked by rapid urban sprawl, the challenges of a recession.



With 62,000 well-educated and well-paid residents, Round Rock appears in many ways to fit the model of any affluent "bedroom" suburbs across the country. A look at the city's tax receipts, however, reveals a community more similar to the "company towns" of mining, logging and other natural resource exploitative economies: one business contributes half of the city's annual sales tax receipts of $31.7 million. That company, Dell Computers, is based in Round Rock and, through a unique arrangement, gives the city 2 percent of the sales tax generated from every Dell computer system sold in the state.



Perhaps not surprisingly, a significant focus of The Round Rock Target Industry and Marketing Strategic Plan calls for diversification in high-tech sectors or local clusters currently weak but with potential to grow: telecommunications, software/multimedia/data, business and professional services, and to a lesser degree, retail and health services. The plan encourages the community as it diversifies its tax and employment base to build upon the strength of the existing computer equipment and electronics firms in town.



As competition for new business grows among neighboring communities, the plan advises Round Rock leaders to develop the economic development strategies already established in many older cities: encouraging and assisting local entrepreneurship; marketing/branding the community; developing a business recruitment, relocation and expansion program; implementing beautification/landscaping programs; and updating the city's incentive package.



The 182-page plan can be downloaded from http://www.angeloueconomics.com/roundrock/

Richard Bendis, president and chief executive officer of the Kansas Technology Enterprise Corporation (KTEC), has accepted an offer to lead the newly created Innovation Philadelphia Corporation. Mr. Bendis has been involved with KTEC since the organization was created in 1987. He was appointed to the KTEC board of directors by the Governor and served as the board’s first chairman. Mr. Bendis served as interim president in 1994 before being named president in 1995.



The decision to leave was tough, Mr. Bendis said, but the Philadelphia job appeals to his entrepreneurial spirit. “I’ll be starting with a blank sheet of paper to build an entity that can help make the Philadelphia region a more vibrant participant in the New Economy.”



According to an Oct. 17 article in the Philadelphia Inquirer, the Innovation Philadelphia Corporation will create local companies to commercialize technology developed at the University of Pennsylvania and other area institutions. The city provided $2.5 million in first-year seed funding to get the corporation started.



At KTEC, Mr. Bendis was instrumental in the formation several affiliated seed capital funds across the state, and has been a tireless advocate for state efforts to stimulate greater access to seed and venture capital for small technology companies in Kansas. He also implemented Return on Public Investment criteria for all KTEC programs so that returns from successful client companies are re-invested to help new clients. During his’ tenure, KTEC has built an equity portfolio of 73 companies and has established royalty agreements with almost 150 companies.



A strong advocate nationally and internationally for state efforts in technology-based economic development, Mr. Bendis is a member of SSTI's Board of Directors and has served as chair of the Federal Business Investment Committee on the Science and Technology Council of the States. The committee's work under Mr. Bendis's leadership was instrumental in the design and creation of the new Federal and State Technology Partnership (FAST) administered by the SBA (see related story in this issue).



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