Regional Innovation Clusters:

A New Paradigm for Federal Economic

Development Policy?
The View from the Field

Phillip A. Singerman, Ph.D

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 Phillip Singerman – Professional Profile
• 30 years economic development experience at local, state, and
federal levels, and in the private sector
• US Assistant Secretary of Commerce for Economic
Development, 1995-1999
• Founding CEO of Maryland Technology Development
Corporation, and Philadelphia Ben Franklin Technology Center
(rated #1 and #3 by Entrepreneur Magazine for seed funding)
• Managing Director of Toucan Capital, a $130 million private
venture capital firm
• Consultant to local governments, economic development
organizations, and universities on federal funding strategies
• Board of Directors, State Science & Technology Institute
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 B&D Consulting
• B&D Consulting is a national advisory and advocacy firm with a focus on
interdisciplinary services for growth sectors of the U.S. economy. Located
in Washington, DC, B&D Consulting professionals have served private and
public sector clients across the country since 1986.

• B&D Consulting is a division of Baker & Daniels LLP, a full-service law firm
with more than 370 lawyers and consulting professionals serving clients in
regional, national and international business and litigation matters from
offices in Indiana, Chicago, Washington, D.C. and Beijing.

• B&D Consulting’s 50 professionals have expertise in energy and

environment, health and life sciences, insurance and financial
services, and local government.

• B&D Consulting’s Public Sector Group develops federal funding strategies

for economic development organizations, colleges and universities, local
governments, and non-profit associations.

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 Overview: Regional Innovation Clusters
• “Regional innovation clusters” have been adopted by the Obama
Administration as a key organizing principle of federal economic
policy -
• Concept brings together 3 economic development concepts
– Regional approaches to bridge the disjuncture between political
jurisdictions and economic regions
– Science and technology as drivers of innovation
– Industry clusters offer competitive advantage
• Administration has implemented this approach in 2010
– White House led inter-agency working groups
– Establishment of Office of Innovation and Entrepreneurship in
Commerce Department and appointment of high level Advisory
Council
– Funding notices for programs by DoE, SBA, EDA, NSF, USDA, DOC
– Authorization language in America “Competes” legislation
– Funding proposed in FY 2011 budget
• “Cluster approach” encourages coordination of federal agency
solicitations to optimize use of constrained federal funds.
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 Regional Innovation Clusters: Definition
• “Regional Innovation (or industry) clusters are geographic
concentrations of interconnected businesses, suppliers,
service providers, coordinating intermediaries and
associated institutions like universities or community
colleges.
By facilitating such dynamics as market pooling, supplier
specializing, and knowledge spillovers, industry clusters
benefit all sorts of firms and regions by enhancing the local
and innovative potential, encompassing entrepreneurship
and ultimately promoting growth, productivity, wages, and
jobs.”
- “The New Cluster Moment”
Mark Muro, Bruce Katz
Brookings, (September 21, 2010)
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Federal Innovation and Entrepreneurship
Policy
Policy Documents
• “Science & Tech Policies for FY 2011 Budget”
(8/4/09)
• “Developing Effective Place Based Policies in the FY
2011 Budget” (8/11/09)
• “A Strategy for American Innovation: Driving Toward
Sustainable Growth & Quality Jobs” (9/09)
• “Office of Innovation and Entrepreneurship, U.S.
Department of Commerce” (9/24/09)
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Science & Tech Policies For FY 2011 Budget
(8/4/09)
Four Practical Challenges:
• Applying science and technology strategies to drive economic recovery
• Promoting innovative energy technologies
• Applying biomedical science and information technologies
• Assuring technologies needed to protect troops, citizens and national
interests
Four Cross Cutting Areas:
• Increasing productivity of our research institutions
• Strengthening STEM education
• Improving and protecting our information, commercialization and
transportation infrastructure
• Enhancing our capabilities in space
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 Developing Effective Place Based Policies
in FY 2011 Budget (8/11/09)
• To Heads of Executive Departments and Agencies
• From OMB Director, Domestic Policy Council, Office of Urban
Affairs, Natural Economic Council
• Objective is to advance Administration’s policy priorities by
improving existing place based strategies or adopting
strategies where there is significant potential for impact on a
problem.
• Agency requested to identify the top 3-5 programs or
initiatives and describe
– Outcomes
– Indicators
– Options for improving coordination and effectiveness
– Knowledge-building strategies 8
 A Strategy for American Innovation :
Driving Toward Sustainable Growth and
Quality Jobs (9/09)
• National Economic Council and Office of Science & Technology
• Builds on $100 billion of Recovery Act Funds
• Supports need for “National Innovation Strategy”
Invest in Building Blocks of American Innovation
• Restore American leadership in fundamental research
• Educate the next generation onto 21st century knowledge and
skill
• Build leading physical infrastructure
• Develop an advanced informational technology ecosystem

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 A Strategy for American Innovation :
Driving Toward Sustainable Growth and
Quality Jobs – Selected Detail
Restore American Leadership in Fundamental Research
• $18.3 billion research funding
• Double the R&D budget of NSF, DOE-Office of Science, NIST
• Invest 3% of GDP on R&D
• Make the R&D tax credit permanent
Encourage High Growth and Innovation Entrepreneurship
• Increase access to capital for new businesses
– Reduce SBA fees, increase guarantee levels
– SBIC Program
• Provide training and mentoring to entrepreneurs
– SBA district offices

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 A Strategy for American Innovation :
Driving Toward Sustainable Growth and
Quality Jobs – Selected Detail
Encourage High Growth and Innovation Entrepreneurship
• Create competitive communities by promoting regional innovation clusters
thru EDA budget (proposed, FY 10)
– $50 million for regional planning and matching grants
– $50 million for national network of business incubators
• Stimulate entrepreneurship through increased access to government offices
• Protect small business from unfair business practices

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 Policy Analysis Reports
• The Competitive Advantage of Nations, Michael Porter
(New York Free Press, 1990)
• “Clusters and Competitiveness: A New Federal Role for
Stimulating Regional Economies,” Karen Mills1, Elizabeth
Reynolds, Andrew Reamer(Brookings Institution, 2009)
1 SBA Administrator

• “The Geography of Innovation – The Federal Government

and the Growth of Regional Innovation Clusters,” Jonathan
Sallet2, Ed Paisley, Justin R. Masterman (Science Progress,
2009)
2 Former US Commerce Policy Director under President
Clinton, active on Commerce Transition Team
• “The New ‘Cluster Moment:’ How Regional Innovation
Clusters Can Foster the Next Economy,” Mark Muro and
Bruce Katz3 (Brookings Institution, September 2010)
3 Former HUD Chief of Staff under President Clinton, active
on HUD Transition Team 12
 Federal Regional Innovation Cluster
Programs - 2010
• DoE – Energy Efficient Building Systems –
Regional Innovation Clusters
• SBA – Innovative Economies Initiative
• EDA – I6 Challenge
• USDA – Rural Business Opportunity Grants
• NIST – Manufacturing Extension Partnerships
• NSF – Partnerships for Innovation
• EDA – Space Coast Regional Innovation Cluster

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Energy Efficient Building Systems - Regional
Innovation Cluster Initiative (E-RIC)
• Joint Funding Opportunity Announcement (five year program)
– Department of Energy $22 million/yr (with 4 additional yrs at $25)
– Economic Development Administration $5 million
– NIST/Manufacturing Extension Partnership $500k (with 2 additional years)
– SBA/Small Business Development Center $300k (with 3 additional years)
– Support from DoL, DEd, NSF

• One proposal, separate applications, individual agency eligibility

requirements, national review
• Application Deadline: May 6, 2010
• Page limit: 350 pages

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Energy Efficient Building Systems - Regional
Innovation Cluster Initiative (E-RIC), cont.
• Explicit set of application criteria
– Collaborative regional innovation
– Public/private partnerships
– National strategic priorities
– Global competitiveness
– Environmentally sustainable development
– Economic distressed and underserved communities
• 11 Proposals received

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DoE Award – Greater Philadelphia Innovation
Cluster for Energy Efficient Buildings
• Announced August 2010
• $130 million 5-year award
• National R&D Consortium led by Penn State
– Largest federal award ever won by PSU
• Located at Philadelphia Navy Yard
– “Clean Energy” campus
– Navy Yard was “closed” in 1990’s
• R&D component linked to proposals to the EDA, SBA, &
NIST-MEP
• DoE science mission tied to economic development
goals

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 SBA – Innovative Economies Initiative

• Goal: Support development and growth of small

business
– create jobs, compete on a national and global scale,
attract further business investment
– $600,000/yr Regional Innovation Clusters, Advanced
Defense Technologies (173 Proposals)

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 SBA – Innovative Economies Initiative
– Awards announced, September 20,2010
• Agriculture Innovative Cluster (Monterey, CA)
• Carolinas’ Nuclear Cluster (NC, SC)
• Connecticut Hydrogen Fuel Cell Coalition (New England)
• Enterprise for Innovative Geospatial Solutions (MS, LA)
• Illinois Smart Grid Regional Innovation Cluster (IL)
• Northeast Ohio Flexible Electronics (OH)
• Upper Michigan Green Aviation Coalition (MI)
• Defense Alliance of Minnesota (MN, ND, SD, WI)
• VonBraun Center for Science and Innovation (Huntsville,
AL)
• Advanced Defense Cluster (San Diego, CA)
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 EDA - I6 Challenge:
Innovative ideas to drive technology commercialization and
entrepreneurship

• Reflects Administration’s interest in “prizes” as a

stimulus to innovation (e.g., “X Prize”)
• Joint funding opportunity
– $12 million competition administered by EDA in partnership with NIH
and NSF
– At least one winning team in each of EDA’s six regions, up to a total of
$1 million per region
– NSF and NIH will award total of $6 million in supplemental funding to
current Phase II SBIR grantees associated with or partnering with
teams
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 I6 Challenge Awards
- Announced September 23, 2010

• Global Center for Medical Innovation (Southeast)

– Medical Devices
• New Mexico Technology Venture Corporation (Southwest)
– SBIR Commercialization
• University of Akron Research Foundation (Midwest)
– Polymer Science
• St Louis Area Universities and Local Economic Development
Organizations (Central Plains)
– Bioscience
• Innovation Works and Carnegie Mellon University (Northeast)
– Tech commercialization
• Oregon Transitional Research and Drug Development Institute
(Northwest)
– Commercialization of various clusters

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 NSF – Partnerships for Innovation

• Goal: Support for innovation capacity to sustain,

dynamic interactive knowledge-enhancing
partnership groups composed of academic
researchers and small businesses (new element)
– Only academic institutions may apply
– $7 million total - $600,000 per award
– Oct 1: Letter of Intent (required)
– Dec 4: Proposal Deadline
• Program has been in existence for 10 years

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 NSF – Partnerships for Innovation

• Response to LOI by NSF Program Manager

• Purpose: “Put the US back on its economic feet”
• A very “distinctive” call
• Not basic research, not commercialization
• “Research and Building of Innovation Capacity”
• Close interaction between academic researchers
and small businesses

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 Phillip Singerman
Senior Vice President
phillip.singerman@bakerd.com
202.589.2849

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