Welcome to the May edition of A Capitol View
Implementation of the $52 billion CHIPS and Science Act is picking up speed this spring as the Biden administration rolls out more funding opportunities to invest in new research and manufacturing of semiconductors and other microelectronics.
The first of four solicitations under the Financial Assistance Program, which “makes up the bulk of the funding available,” is out and primarily focused on commercial facilities. Future solicitations for equipment and R&D facilities are expected to soon follow with a similar application process.
The Workforce and Education Fund, managed by the National Science Foundation, also has multiple solicitations worth a total of $150 million, “primarily targeted at Institutions of Higher Education with limited or no significant research capability.”
“There is a lot of movement in the world of CHIPS,” said SMI Director Aarzu Maknojia. “Interested entities should begin familiarizing themselves with the requirements and begin gathering materials in anticipation.”
Meanwhile, the Treasury Department is seeking comments from interested parties on the Advanced Manufacturing Tax Credit, an up to 25 percent write-off on qualified expenses.
What’s in a name? Notably, Treasury is also requesting comments on the appropriateness of its definition of “semiconductor” and asks whether the definition should be amended to include “semiconductive substances.”
For example, any company that primarily produces wafers (including polysilicon, silicon carbide, glass, etc.) is excluded from the definition and should take care to respond, Maknojia advises.
Hub-a-Hubba: The Biden administration has also outlined more detail on how it will allocate funding for the Tech Hubs Program, a $500 million pot of money set aside by the CHIPS Act.
In the first phase, the administration plans to designate “at least 20” Tech Hubs, according to “Funding opportunities to expand economic opportunity across America,” which was issued by the U.S. Economic Development Administration. In phase two, five proposals will be chosen for implementation.
The aim is to “strengthen U.S. national and economic security by developing clusters of businesses, communities, colleges, and universities, and workers focused on accelerating innovation and technology deployment throughout the country.”
Watchdogging: We also expect more aggressive Republican oversight of where all the CHIPS funding is going.
“Democrats have funneled an excessive amount of taxpayer dollars to advance their radical, progressive agenda and to benefit their political allies,” the leaders of the Energy and Commerce Committee wrote last month, vowing “a full, transparent, and regular accounting of the funds.”
Foreign links: Meanwhile, the National Institute of Standards and Technology at the Department of Commerce is seeking public comments by May 22 on a proposed rule to set “limitations and procedures for funding recipients to notify the Secretary of Commerce of any planned significant transactions that may be prohibited.”
BUDGET
DON’T RAISE THE ROOF YET: Time is running out before the U.S. hits the debt ceiling. But the partisan wrangling over how to avoid a government default has only begun.
The House narrowly passed the Limit, Save, Grow Act that would raise the debt ceiling by $1.5 trillion and also mandate $130 billion in spending cuts, locking discretionary spending in at the fiscal year 2022 levels.
It also calls for repealing energy tax credits and funding included in the Inflation Reduction Act; blocking student debt cancellation; and rescinding unused COVID relief funds, among other provisions.
The way ahead: This bill is dead-on-arrival in the Democratic-controlled Senate and is likely to see many changes before any final version emerges. The Biden administration also maintains it will not negotiate to raise the debt ceiling in tandem with spending cuts.
Meanwhile, Senate Appropriations Committee Chair and Ranking Member Sen. Patty Murray (D-WA) and Sen. Susan Collins (R-ME) said they plan to move ahead with appropriations bills amid the debt ceiling fight.
DEFENSE
‘IT’S NOT GONNA BE EASY’: The House GOP position on spending raises bipartisan concerns about the fate of the Pentagon budget. But hawks are expressing confidence that the Defense Department will be spared any cuts and even get a boost, as Biden has proposed.
“Defense spending is gonna go up,” Defense Appropriations Chair Ken Calvert (R-CA) predicted to POLITICO. “It’s just a matter of how much.”
House Appropriations Committee Chair Rep. Kay Granger (R-TX) also pledged that defense will be among her priorities, “while reducing overall spending.”
But the budget cutters are sure to complicate the overall annual appropriations process, Calvert acknowledged. “It’s not gonna be easy.”
In a recent hearing, the top Democrat on the House Armed Services Committee, Rep. Adam Smith (D-WA), described the GOP majority’s message on defense thus far as, “at the same time that we’re beating you up for not spending enough money [on defense], the House majority is passing a bill to cut the overall amount of money that we spend on the discretionary budget and you’re just supposed to somehow figure that out.”
For your radar: The House Appropriations Committee announced that it plans to tackle FY24 spending bills beginning the week of May 15. Subcommittees will mark up that week and the week of June 5, while full committees will mark up the weeks of May 22 and June 12.
Meanwhile, the HASC will take up the National Defense Authorization Act on May 23, while the Senate Armed Services Committee is eyeing a June markup for the defense policy bill.
SINKING FEELING: The Navy is out with a long-term shipbuilding plan, but it has already gone aground in Congress, which is upset that two of the three options fall far short of the goal of 355 ships, and none achieve the 31 amphibious vessels that are required by law.
“Everyone is avoiding the elephant in the room: there isn’t enough money to do everything,” said SMI Senior VP Jeremy Steslicki. “And that’s not just procurement. It’s operation and sustainment as well.”
“The domestic shipbuilding industrial base is also stressed as it is,” he added. “To build a bigger fleet, Congress will need to make even greater investments into the base in infrastructure, supplier development, and especially workforce training across all ship classes from subs to frigates.”
He predicts: “Look for Congress to include significant additional funding for these efforts in the FY 24 spending bill.” And some advice for across the Potomac: “The Navy should also stop sending choose-your-own-adventure shipbuilding plan options,” Steslicki said. “It only aggravates the Hill.”
What’s next: The Navy’s Battle Force Ship Assessment, which is scheduled to be completed in June, should more accurately reflect the administration’s plans.
LIFE SCIENCES
POSITIVE VIBES: SMI client MyndBlue has published new research that demonstrates how machine learning and AI could predict the evolution of major depressive order, in what could prove to be a major tool in treating mental illness.
“This new technology is a great example of how research can help both civilian and military populations that suffer from similar mental health issues,” said SMI VP Travis Taylor who helped secure government funding from the Defense Department for the effort. “The impact and utility of this research will provide new tools for managing both depression and post-traumatic stress disorder in civilians and warfighters.”
Tune in: Taylor will be speaking about how to engage with the federal government on May 18 during a webinar hosted by BioNORTHTEXAS Foundation.
NEW DISEASE FUNDING: The Pentagon’s Joint Warfighter Medical Research Program is out with a new solicitation for research on endemic and emerging infectious diseases; operational medicine and readiness; environmental medicine, and combat casualty care.
The maximum budget for will be $2.5 million non-clinical research awards and $3.5 million for clinical awards.
ENERGY AND ENVIRONMENT
TAILPIPE DREAMS: New proposed emissions regulations out of the EPA aim to accelerate the Biden Administration’s push for the widespread adoption of electric vehicles.
The rule changes, which address tailpipe emissions standards for light, medium, and heavy-duty vehicles, represent EPA’s stiffest mandates yet.
To meet its goals, EPA estimates EVs would need to make up 67 percent of all new vehicle sales in 2032—a more than ten-fold increase.
Sen. Joe Manchin (D-WV), who chairs the Energy and Natural Resources Committee, contends the rule violates supply chain provisions in the IRA and increases reliance on Chinese-sourced critical minerals. More progressive Democrats, like Sen. Tom Carper (DE), have come out in support of widespread EV adoption.
Have a comment? EPA is accepting public input on the new proposed rule until June 11.
CLEAN JOBS: The Department of Energy announced an $18 million competition under the Industrial Assessment Centers program to select five institutes of higher education to stand up regional centers of excellence for clean energy workforce development and industry-academia research collaboration.
DOE also announced a separate $54 million funding opportunity to expand its Industrial Assessment Centers program to community colleges, trade schools, and union training programs.
SMALL BUSINESS
NEW RULES: The Small Business Administration has issued guidance on the new benchmarks and performance standards recently enacted by Congress for the Small Business Innovation Research and Small Business Technology Transfer federal grant programs.
Some good news: Failure of “more experienced firms” to meet new performance standards means companies may not receive more than 20 total awards from each agency that participates in the programs for at least a year. But the new directive defines each military department as its own agency, rather than the Department of Defense, the largest user of the grants, as a single entity.
READING ROOM
Seven Critical Technologies for Winning the Next War, via the Center for Strategic and International Studies.
Interim Report of the Commission on Defense Innovation Adoption, via Atlantic Council.
CLIENTS IN THE NEWS
Sensor trial helps develop alert systems for airborne hazards, via UK Defence Science and Technology Laboratory.
Albany Engineered Composites wins Army hypersonics contract, via BusinessWire.
