Another year, another threat to Advanced Technology Program

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WASHINGTON, Feb. 6, 2003 — A federal program that sprinkles money on emerging technology research, including nanotechnology, is poised to perish under President Bush’s proposed 2004 budget.

The budget terminates the Department of Commerce’s Advanced Technology Program, requesting only $27 million for the cost of shutting it down. Last year, the program’s budget was about $184 million.

“The administration believes that other federal R&D programs have a clearer federal role and are of higher priority,” the budget document states. “Large shares of ATP funding have gone to major corporations, and projects often have been similar to those being carried out by firms not receiving such subsidies.”

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Commerce Department spokesman Trevor Francis said the administration has “long looked at the ATP program as something that does not fit into our nation’s priorities.”

“We believe private industry can do a better job at funding emerging technologies than the federal government can,” he said. “At a time of war and fiscal restraint, it’s not keeping with our national priorities.”

The fate of the ATP now moves to the hands of Congress, where the program has powerful allies, particularly in the Senate.

Sen. Ernest Hollings, D-S.C., who wrote the legislation that helped start the ATP during the first Bush presidency, will fight to keep the program alive, said spokesman Andy Davis.

“It’s a program he’ll continue to advocate for, quite strenuously,” he said. “The whole purpose of the program was to create public-private partnerships to invest in cutting-edge research, the exact kind of research that now is on the chopping block for companies.”

Republicans have routinely denounced the ATP as “corporate welfare” for nearly 10 years, starting when Newt Gingrich became speaker of the House of Representatives in 1995. As President Clinton struggled annually to make the program bigger, House Republicans toiled to kill it. Every year, the program was saved in the Senate. With severe budget constraints and Republicans controlling Congress, this may be the program’s riskiest year ever.

Between 1990 and 2002, the program received 5,451 proposals and granted 642 research and development awards. It doled out $2 billion in awards, which were met with a nearly equal industry investment, at $1.9 billion.

Given its highly multidisciplinary nature, nanotechnology does not fall into a specific research category at the program, making it difficult to determine how many grants paid for nanotechnology research. In its last award announcement, in October, the agency pledged $101.6 million to 40 research projects, at least seven of which had a small tech component. That batch of awards contained more nanotechnology projects than ever, said an ATP official.

The program was conceived as a pseudo-VC firm for the federal government, focusing on emerging technologies that were too risky for private investors, but held great promise for commercialization and society. Applicants for ATP grants must show, in great detail, how their product will be commercialized and demonstrate the product’s benefits to society.

The ATP matters because “it’s one of the few programs that really tries to transition technology to the nonmilitary sector,” said Joe Lichtenhan, president of Hybrid Plastics, in Fountain Valley, Calif.

“The government’s role in transitioning technology into the marketplace is absolutely critical, they are one of the three pillars the technology economy stands upon. The other two are corporations and angel investors,” Lichtenhan said.

“Not to criticize the president, but if you are looking to bolster this economy, increasing funding to a program like ATP makes a lot of sense, rather than killing it.”

Lichtenhan’s company received a roughly $2 million grant in 1998 to help commercialize its POSS nanomaterials, which increase strength and heat resistance and retard flammability when combined with a variety of plastics and polymers. “We could not have done it without the ATP,” he said. “We talked with numerous VCs and corporations and there was way too much risk for them to get involved with it.”

Parkash Kunda, business development director for eSpin Technologies Inc., a Tennessee nanofiber manufacturing company, said he was “surprised” by the president’s call to eliminate the ATP. eSpin received an ATP grant in October that will “help us scale up our manufacturing process and scale up our production,” he said. “This will help us penetrate a lot of different markets, and make (the product) much more affordable for a lot of different markets.”

He said he finds the administration’s antipathy toward the ATP ironic, given the president’s State of the Union address in January. “He talked about fuel cell technology, and I can see the ATP funding research” in that area.


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