News

The governor's Centers of Excellence program redirects research funding to private sector

By Eric S. Peterson
Salt Lake City Weekly
March 27, 2008

Under Gov. Jon Huntsman Jr.’s tenure, the Centers of Excellence program goal has been to efficiently get high-tech research to the market, and in typical Utah fashion—on a budget.

“Some states have hundreds of millions of dollars to invest in research,” says Nicole Davis, director of the Centers of Excellence (COE) program. “We can’t compete like that—we can’t foot the bill, but what we can do is give incentives to the private sector.” COE historically had doled out grants to promising university research projects but will now give the money to private companies first, who will then invest the money into research centers of their choosing.

The new change is one advocates hope will ease the difficult passage of an inspired idea into an actual, useful product. Others fear the spirit of creative research could be stifled by the demands of the time-is-money business regimen.

COE has been around since 1986 and has helped facilitate many research product success stories, including Myriad Genetics Inc., a company funded from University of Utah research in 1991. Myriad now boasts more than 700 employees, averaging $58,000 per year in salaries. But looking back, the COE office found these success stories were unfortunately outnumbered by ones of promising research ventures that merely languished on a dusty lab basement shelf and never got to market.

“We did a 20-year history of the program and found that a handful of these companies did very well, averaging two or three hundred employees, but the rest tended to just get stuck with 10 employees or less,” Davis says. She says the problem was in getting the products from the lab to the market— what researchers and industry experts call “the valley of death.”

Companies who may have been hesitant to invest in high-risk research technology before will get matching funds this year from the COE’s $2.75 million fund, so long as the company helps contribute to Utah’s job growth. “We hope to give incentive to the business community to share in the risk, help defer costs and to take that technology off the shelf and put it to work,” Davis says.

Some, however, worry the funding change may take innovations off the shelf and put others back in their place. Brigham Young University’s Office of Research and Creative Activities previously had three COE-funded projects, but under the new system that money is up in the air until BYU can find a private-sector partner.

BYU wouldn’t comment on the details of its in-limbo funding, which had previously funded engineering, sound control and autonomous air vehicle research. In a written statement, spokesman Michael Smart responded to whether the school’s funding loss might be attributed to difficulties in finding an industry partner: “Apparently yes, the criteria now emphasize companies as partners. We are still exploring our options in this new funding environment.”

Davis, however, says that BYU’s projects are still in queue, and that the window has not closed on private-sector COE money. She also points out most institutions support the new changes.

“The response [has been] very positive,” Davis says. Professors who were successful under the old system know the challenges of raising money in the private sector, she says. “They’re the ones who will be able to get over the hump.”

“I think it’s great,” says Forrest Fackrell, vice president for business operations of Utah State University’s Research Foundation. “It forces the chicken out of the egg. With a quicker [product] to the market, the quicker Utah will be able to realize the job growth—and that better protects Utah’s market position. Keeps us as close to the front of the pack as we can be.”

USU’s research foundation, a separate business entity from the university, acknowledges it’s indebted to the campus’ Technology Commercialization Office, which has already helped to make inroads into private sector funding for research projects. Their success has helped to prosper USU’s Space Dynamics Laboratory, which designs state-of-the-art infrared sensor technology for space crafts and military use.

Another COE success story has been that of Glenn Prestwich, presidential professor of medicinal chemistry. He has overseen three COE projects that have resulted in a half-dozen companies since 1997. While Prestwich recognizes the potentials of the new system, he worries it might provide short-term gains in getting a project to market. With business dictating the direction of research, product diversity and innovation might suffer in the long term, he says.

“The way COE funded centers at universities in the previous style allowed for more potential products that could be licensed,” Prestwich says. “[Under the old system] when you are just working in a research lab, you’re not constrained to just watching your bottom line so as to get products out the door.”

He worries that anxiety about the bottom line could obscure other avenues of research. “Companies don’t have the luxury to diversify; they have to focus on the short term.”

Davis disagrees and says that most COEs focus only on nearly completed research. “We’re talking about licensing the outcome of their research,” she says, adding that by speeding up the development process, they will also end up freeing more time for researchers to explore other study interests.

Concerned that the constraints could hamper the companies’ creative freedom and crimp their long term growth, Prestwich remains optimistic.

“It’s an important innovation, the results of which remain to be seen. I hope it creates more companies. Whether it helps those companies survive … that’s another question.”

© 2008