SB1688

SECTION 1. The legislature finds that small business dual use technology companies in Hawaii are vital to a diversified, new economy for our State. These enterprises seek to advance innovative concepts and new approaches to technology while fully leveraging existing facilities and infrastructure in Hawaii. Small, innovative high technology companies are providing critical new technology for the United States Department of Defense and are creating sustainable job growth in living wage jobs in Hawaii. Poised at the earliest stages of product development, small business dual use companies need public financial support to move their concepts to the next level on the road to commercial success. Supplemental funding from the State of Hawaii would accelerate vital technology development and commercialization. In addition, this funding would sustain company infrastructure development, and foster additional employment opportunities for talented Hawaii scientists and engineers, while reducing risk of failure or the need to move these promising companies to the mainland in order to seek other funding opportunities.

The legislature further finds that the Hawaii Technology Development Venture and the National Defense Center of Excellence for Research in Ocean Sciences are programs that utilize the capabilities of Hawaii-based small businesses in performing high technology research and development related to current and future United States Departments of the Navy and of Defense programs. Both of these programs solicit proposals through annual competitive solicitations and all proposals are evaluated by an expert panel for technical merit, innovation, and value according to criteria published in the solicitations.

The purpose of this Act is to establish a supplemental grant program of $10,000,000 for follow-on research and development project funding for Hawaii-based small businesses that received federal funding in fiscal year 2007 through the Hawaii Technology Development Venture or the National Defense Center of Excellence for Research in Ocean Sciences.

SECTION 2. (a) Notwithstanding the requirements of chapter 42F, Hawaii Revised Statutes, there is established in the department of business, economic development, and tourism a research and development follow-on funding grant program for Hawaii-based small businesses that received federal funding in fiscal year 2007 through the Hawaii Technology Development Venture or the National Defense Center of Excellence for Research in Ocean Sciences.

The purpose of these grants shall be to:

(1) Provide accelerated economic development in the fields of science and engineering of defense related dual use technology by providing follow-on funding to successful research and development projects;

(2) Provide capital to sustain high growth new venture company infrastructure development to assist the enterprise toward commercial success;

(3) Promote high quality, high income job opportunities for Hawaii's residents and graduates of Hawaii's educational institutions;

(4) Reverse the brain drain by allowing talented scientists and engineers to return home to living wage jobs in Hawaii; and

(5) Keep the high technology companies in Hawaii by limiting the need to seek out-of-state venture capital, which dilutes local ownership.

(b) The department shall administer the research and development grants program, with the assistance of the Hawaii Technology Development Venture and the National Defense Center of Excellence for Research in Ocean Sciences, which shall provide funded projects with technical and business support.

(1) Show satisfactory performance in any projects funded in fiscal year 2007 through the Hawaii Technology Development Venture or the National Defense Center of Excellence for Research in Ocean Sciences;

(2) Submit proposals to the Hawaii Technology Development Venture or the National Defense Center of Excellence for Research in Ocean Sciences for follow-on funding in accordance with existing federal requirements;

(3) Submit a budget based on a cost plus fee basis with the fee or profit not to exceed seven per cent;

(4) Submit reporting of project progress in accordance with existing Hawaii Technology Development Venture or National Defense Center of Excellence for Research in Ocean Sciences requirements; and

(5) Cap fund administration costs at three per cent of the supplemental fund grant.

(d) Funds shall be allocated between the Hawaii Technology Development Venture and National Defense Center of Excellence for Research in Ocean Sciences based of the percentage of dollars the organizations funded to companies in fiscal year 2007.

(e) The department shall submit a report to the legislature no later than twenty days prior to the regular session of 2008, and annually thereafter until all grant moneys have been expended, on the activities and expenditures of the grant program.

SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $10,000,000, or so much thereof as may be necessary for fiscal year 2007-2008, for a research and development follow-on funding grant program for Hawaii-based small businesses that received federal funding in fiscal year 2007 through the Hawaii Technology Development Venture or the National Defense Center of Excellence for Research in Ocean Sciences.

The sum appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.

SECTION 4. This Act shall take effect on July 1, 2007.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	1688
TWENTY-FOURTH LEGISLATURE, 2007
STATE OF HAWAII