HOLLINGS AND MCCAIN FIGHT AGAIN FOR ATP

Spring tradition in Washington has begun anew with Congress trying to reverse Presidential desire to scale back Advanced Technology Program (ATP). Under President Clinton and now with President Bush, Administration budgets have sought to redirect research funds to other efforts, and this year is no exception (CD Feb 5 p1). Members of Congress have past grant recipients in their districts, however, and previous authorizing committees and appropriators have worked together to save it. This year, the process began with Senate Commerce Committee grilling Commerce Dept. Deputy Secy. Samuel Bodman on Administration’s plan to limit funding for new ATP projects to less than $35 million in FY 2003.

Bodman said that between war on terrorism and focus on homeland security, tough budget choices had to be made, and scaling back ATP was one of them. Chmn. Hollings (D-S.C.) countered that space station was $90 billion over budget and farm bill would cost billions more, but with ATP “we have just a few million dollars.” Of $107.9 million proposed for FY 2003 for ATP, most would be for continuing obligations. Just under $35 million would be available for new grants, with same amount expected for FY 2004, at which point all existing obligations would be paid out, Bodman said.

Commerce Dept. earlier this year released blueprint for restructuring ATP, and many of its conclusions were faulted by members of committee. Hollings criticized proposal to allow universities to lead research grants and to reap intellectual property benefits from research: “Universities are famed for pork. That’s why universities weren’t in it. Now you want to put in pork.” However, other committee witnesses -- Va. Center for Innovative Technology head Anne Armstrong, Harvard U. Prof. Lewis Branscomb and GE Global Research Senior Vp Scott Donnelly -- backed proposals. Branscomb said Bayh-Dole Act of 1980 supported notion of universities’ reaping commercial benefits, position backed Mon. in speech to inventors by Senate Science Committee Chmn. Boehlert (R-N.Y.). President’s Council of Advisers on Science & Technology (PCAST) also supports those general goals, not surprising since nearly half of members are affiliated with universities.

Bush Administration also wants grant recipients to share their revenue with federal govt. in program called recoupment. Proposal would have companies provide federal govt. with 5% of their gross revenue up to 500% of size of grant. That requirement was abandoned several years ago, and Hollings said it was way to make “darned sure we penalize [technology] if it succeeds.” Armstrong and Donnelly said recoupment would be disincentive to attempt high-risk ventures, with Donnelly suggesting govt. should be “angel” investor, giving company flexibility, rather than venture capitalist seeking returns. He said recoupment could harm companies generating revenue but not profits. ATP grant officer told us recoupment would be difficult to administer and what was overlooked were indirect economic benefits that come from successful technologies, such as new jobs and lower prices for consumers. However, that grant officer’s boss, Bodman, defended recoupment Tues. “I don’t consider it a penalty,” he told Hollings.

Another Bush reform would have large companies receive grants only if paired with smaller companies. Donnelly said GE had received many ATP grants, most of them with a small company partner, which had helped both companies form better working relationships. But Committee’s ranking Republican McCain (Ariz.) singled out GE, asking Bodman why company with massive revenue needed federal money. When Bodman didn’t have direct answer, McCain told him not to keep trying: “You have no grounds on which to respond.” Bodman tried anyway, pointing out proposed requirement to pair large and small companies. McCain replied: “That’s a wonderful breakthrough.” Hollings then defended ATP on issue, saying large companies were driven by quarterly earnings and wouldn’t be likely to fund long-term research.

Bodman also defended proposed phaseout of Manufacturing Extension Program (MEP), run through National Institute of Standards & Technology (NIST). MEP would get $12.9 million in FY 2003 to cost-share technology centers, but he said Administration was reviving MEP’s original plan, “which called for the phase-out of federal monies to centers after 6 years of funding.” New funding would be for 2 centers less than 6 years old. McCain pointed out, however, that sunset on MEP was repealed in 1998. Hollings said MEP had helped small manufacturers stay competitive and create or maintain more than 25,000 jobs.

Hollings, who helped author original ATP program, let Bodman know that if Administration wanted to take on ATP it should expect fight. Bodman had told Hollings that today (Wed.) Federal Register would solicit applications for FY 2002 grants. Hollings said govt. already was halfway through FY 2002: “That’s one way to administer it.” He said better way would be to allow it to work rather than to try to hold back funding and phase out grants. But Bodman said several times that “we do believe in the ATP program.” In opening statement, he said “this has been a very effective program.” Hollings, while opposed to recoupment (he called the last attempt “counterproductive") also was bit conciliatory, saying he welcomed some of Commerce Dept.’s proposed changes in ATP and anticipated including some of them in his reauthorization bill for NIST later this year.