Congress Aims to Fund Domestic Technology Businesses

March 18, 2022

Last week, just days ahead of the March 11 funding deadline, President Biden signed into law a $1.5 trillion Omnibus budget, the Consolidated Appropriations Act of 2022, to fund federal agencies for the rest of the year. Included in the budget were significant increases in funding for most research-driven agencies, including a $2.3 billion increase in funding for the National Institutes of Health (NIH), as well as a separate $1 billion to the new Advanced Research Projects Agency-Health (ARPA-H). The bill also includes increases for the NIH’s Clinical and Translational Science Awards program ($606.7 million, an increase of $19.8 million) and the Institutional Development Award program ($410.4 million, an increase of $13.3 million), among other additions.

Lawmakers indicated their general support for the National Science Foundation’s (NSF) new Technology, Innovation and Partnerships (TIP) Directorate, but they declined to specifically allocate a portion of the  $250 million increase in research funding for NSF. The Department of Energy (DOE) Office of Clean Energy Demonstrations was provided $20 million, which adds to the $21.5 billion allocated in the fall of 2021 for hydrogen, advanced nuclear reactors and other advanced energy technologies.

In total, funds appropriated to research and development increased by approximately $11.3 billion over 2021 levels and now total $169 billion. As a result, funding for Basic Research and Applied Research, a significant priority of the Biden Administration, saw relatively equivalent increases with $2.4 billion and $2 billion, respectively. Development funding saw a nearly 10% increase, to $6.4 billion, in an effort to advance systematic work to potentially produce and improve new products and processes, such as through Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs.

Additional spaces to watch in the coming weeks and months will be the fate of the latest iteration of the America COMPETES Act of 2022 (H.R.4521, the “COMPETES Act”), passed by the House of Representatives in February and currently pending in the Senate and, of particular strategic interest to U.S. industry, the $110 Billion United States Innovation and Competition Act (S.1260, “USICA”) passed in the Senate last June. Legislation within each bill aims to advance American businesses. If they become law, both bills will provide American businesses with access to even more research and development funding and resources to regain standing in the global economic field.

Semiconductor Industry Wins Big

Beyond the critical increases in federal scientific R&D funding provided for in the Omnibus Bill, both the COMPETES Act and USICA pick up on long-standing legislative priorities to fund the semiconductor industry. Both bills contain $52 billion in new funding for the CHIPS Act (short for the Creating Helpful Incentives to Produce Semiconductors for America Act), which was approved in January 2021 as part of the National Defense Authorization Act but was without funding. CHIPS programs focus on incentives and research funds specific to chip manufacturing—an ever-growing priority as supply shortages worsen, and the U.S. continues to rely on oversea fabrication. Also funded would be a new National Advanced Packaging Manufacturing Program led by the National Institute for Standards and Technology, which would “strengthen semiconductor advanced test, assembly, and packaging capability in the domestic ecosystem.”

As KJK previously noted, Intel has committed to making an impact in central Ohio. Intel’s proposed $20 billion Ohio MegaFab investment will consist of two manufacturing facilities. Intel CEO Pat Gelsinger recently stated the company plans to expand the MegaFab until it reaches a total of eight facilities with investment of $100 billion. According to JobsOhio, the state’s unique private economic development corporation, the implementation of the CHIPS Act could result in three new FAB facilities, with tens of billions of dollars in new investment and tens of thousands of new jobs. As a further byproduct, many supply chain businesses would likely be drawn to the project as well. The implementation of the CHIPS Act could result in three new FAB facilities, with tens of billions of dollars in new investment and tens of thousands of new jobs. As a further byproduct, many supply chain businesses would likely be drawn to the project as well.

Enhancing the American Supply Chain

As supply chains tightened over the past three years, businesses saw a steep increase in costs related to products with semiconductors and microchip processors, leading to significant shortages of components for the products. As expected, consumers, in most instances, bore the increased costs as businesses were impacted by the scarcity of components.

In addition to research and development for semiconductor manufacturing, with the CHIPS Act, the Senate aims to appropriate approximately $1.5 billion to key supply chain areas, such as wireless supply chain innovation. The legislation would establish a new office at the Department of Commerce to monitor, analyze and support the resilience of our supply chains and domestic manufacturing, including through authorization of new grants, loans and loan guarantees. It would further support domestic manufacturing by expanding the very successful Manufacturing Extension Partnership (MEP) program and Manufacturing USA Institutes. The legislation would also fund apprenticeships and reauthorize important workforce programs, including the registered Trade Adjustment Assistance program, which reverted to more restrictive eligibility criteria in July 2021 and will terminate on July 1, 2022 without new legislation.

Made in America: Other Industries and Initiatives

In addition to addressing foreign relations, such as imports and security and other essential topics, the currently-proposed COMPETES Act would require the federal government to undertake significant new efforts related to cybersecurity, defense procurements and combatting inflation while modifying the Department of Homeland Security’s activities, including requiring domestic sources for certain strategic procurements. The COMPETES Act also follows the USICA’s proposed apportionments to domestic technology initiatives, such as the $24 billion to private businesses and $2 billion to the Department of Defense.

As Congress aims to advance American businesses, KJK is uniquely positioned to assist your established company, start-up company or technological research program in obtaining funding. If you have any questions, please feel free to contact Ted Theofrastous (TCT@kjk.com; 216.736.7290) or Kyle Stroup (KDS@kjk.com; 216.736.7231).