No. 40657 (New Rule): Rule R856-1. USTAR Technology Acceleration Program Grants

(New Rule)

DAR File No.: 40657
Filed: 08/11/2016 03:31:09 AM

RULE ANALYSIS

Purpose of the rule or reason for the change:

This rule is a direct result of S.B. 166 from the 2016 General Session) now codified in Title 63M, Chapter 2. Subsection 63M-2-503(2) requires USTAR to create rules governing all USTAR grant programs. These are the rules for one of USTAR's new grant programs, the USTAR Technology Acceleration Program (TAP) grants.

Summary of the rule or change:

This rule describes the eligibility, reporting, and other criteria required for an entity to receive a grant under Section 63M-2-503, including: 1) the form and process of submitting a grant application; 2) which entities are eligible to apply for a TAP grant; 3) specific categories of projects that are eligible for a TAP grant; 4) the criteria for awarding grants and determining grant amounts; and 5) the reporting requirements of grant recipients.

Statutory or constitutional authorization for this rule:

• Subsection 63M-2-302(h)

Anticipated cost or savings to:

the state budget:

None--Although this is a new program, its funded by appropriations that have already been allocated to USTAR for these purposes.

local governments:

None--Although this is a new program it is funded with the same appropriations that have already been allocated to USTAR for these purposes.

small businesses:

None--Although this is a new program it is funded with the same appropriations that have already been allocated to USTAR for these purposes.

persons other than small businesses, businesses, or local governmental entities:

None--Although this is a new program it is funded with the same appropriations that have already been allocated to USTAR for these purposes.

Compliance costs for affected persons:

If successful in winning a grant, companies will be required to report data for at least five years subsequent at approximately an hour/year of effort.

Comments by the department head on the fiscal impact the rule may have on businesses:

Any potential fiscal impacts on businesses would be limited to the time and materials spent to complete an application and will affect only those that choose to apply.

Ivy Estabrooke, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:

Science Technology and Research Governing Auth.
Administration
60 E NORTH TEMPLE 3RD FLR
SALT LAKE CITY, UT 84111

Direct questions regarding this rule to:

• Koa Perlac at the above address, by phone at 801-538-8622, by FAX at 801-538-8881, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

10/04/2016

This rule may become effective on:

10/18/2016

Authorized by:

Ivy Estabrooke, Executive Director

RULE TEXT

R856. Science Technology and Research Governing Authority (Utah), Administration.

R856-1. USTAR Technology Acceleration Program Grants.

R856-1-1. Authority.

(1) Subsection 63M-2-503(2) requires the USTAR governing authority to make rules for the eligibility, award process, and reporting criteria for each grant program administered by USTAR.

 

R856-1-2. Purpose and Goals.

(1) The USTAR Technology Acceleration Program provides grants and other support to assist the following:

(a) start-ups and early stage companies to accelerate the development of a new technology; and,

(b) later-stage companies to mature a new technology.

(2) The goals of the program are to:

(a) enhance the state's innovation system by supporting the development, retention, and attraction of science and technology companies in Utah; and,

(b) accelerate the growth of high-potential technology companies in the state leading to the creation of high-paying science and technology jobs in Utah.

 

R856-1-3. Definitions.

(1) "Applicant" means a company applying for a USTAR TAP Grant.

(2) "Awardee" means a company that has been awarded a TAP Grant.

(3) "Company" means a privately owned corporation, limited liability company, partnership, or other business entity or association and:

(a) does not include an individual, sole proprietorship, or higher-education institution; and,

(b) is represented by persons at least 18 years old.

(4) "Governing authority" means the Utah Science, Technology and Research governing authority.

(5) "TAP" means the USTAR Technology Acceleration Program, its activities and services.

(6) "TAP grant" means the competitive grant funding awarded and administered by USTAR under TAP.

(7) "Technology" includes applications of scientific research such as inventions, methods, processes, or other material, virtual, or intellectual property.

(8) "Technology Gap" means the disparity between a company's existing technology or technological capacity and what is needed to develop a commercial application for a product.

(9) "Technology Readiness Level" or "TRL" level means the method of estimating technology maturity used by the U.S. Department of Defense.

(10) "Targeted Industry Sector" means the Utah industry or industries designated as such by USTAR for purposes of eligibility for TAP grant funding as described in Subsection R856-1-4(2) below.

(11) "USTAR" means the Utah Science, Technology and Research Initiative.

 

R856-1-4. Eligibility Criteria.

(1) Company must be Utah-based.

(a) To be considered "Utah-based," a company must:

(i) be registered with the Utah Division of Corporations as an active, domestic, for-profit business entity, in good standing;

(ii) maintain its principal place of business in Utah; and,

(iii) not relocate the business or substantial portions of its employees, operations, or management outside of the State of Utah.

(b) If a company does not meet the criteria in Subsection R856-1-4 (1)(a) above, or if it cannot be reasonably determined whether the company meets the criteria, the governing authority, in its discretion and upon approval by a majority vote, may determine whether a company should be considered a Utah-based company for purposes of the TAP grant by weighing the following factors:

(i) relative size of the entity including the number of employees in Utah and the relative size of operations in the state;

(ii) whether the company is registered as a domestic, for-profit business entity in Utah and has a business license in the appropriate Utah city or county;

(iii) whether the company's principal place of business is Utah;

(iv) likelihood that the company will maintain a significant presence in the state of Utah; and,

(v) degree to which the company's activities and operations positively impact Utah's economy.

(2) Company must be developing a technology in a targeted industry sector.

(a) USTAR will identify the industry sector(s) eligible to receive a TAP grant in the TAP application materials.

(b) The USTAR governing authority will, according to its discretion and judgment, review and approve the targeted technology sectors to ensure they are strategically selected to align with USTAR's economic development objectives and maximize the potential benefit to the state

(i) In selecting industry sectors eligible to receive support from TAP, the governing authority may consider the following factors:

(A) statewide or regional importance of the industry to Utah's economy;

(B) relative size of the sector, its stability, and growth potential;

(C) characteristics of the state's existing workforce, including education and training;

(D) the current availability of other sources of funding or risk capital (public or private) for early-stage companies in the technology sector;

(E) the potential for the industry sector to develop new jobs and business opportunities in the state; and,

(F) Likelihood that research in this sector will result in creation of a company in Utah or IP transfer to an existing Utah company;

(3) The company must be developing a technology assessed to be between a TRL of 3-5.

 

R856-1-5. Application Form and Submission Guidelines.

(1) For each new round of grants, USTAR will provide a program announcement and make applications and instructions available on USTAR's website and in paper form upon request.

(2) The instructions will include the following:

(a) The procedure for submitting an application.

(b) Specific instructions for application content which will include:

(i) description of the company's technology and commercialization objectives;

(ii) list of technical milestones;

(iii) potential market;

(iv) potential economic impact on Utah economy; and,

(v) timeline for completion.

(c) Specific instructions for the required budget outline, including:

(i) total project cost;

(ii) a description of funds already secured for activities related to this project;

(iii) an itemized budget detailing planned use of grant funds; and,

(iv) breakdown of costs to complete each milestone.

(d) Description of the application evaluation process and scoring system.

(e) Instructions for reporting project results and completing annual follow-up surveys.

(3) Completed applications must be received on or before the specified deadline in the application instructions.

(4) All complete applications will be reviewed and awardees selected via the criteria and method outlined in Sections R856-1-6 and R856-1-7 herein.

 

R856-1-6. Application Review Procedure.

(1) Initial eligibility screening.

(a) USTAR will conduct an initial eligibility screening for each application to ensure:

(i) Completeness;

(ii) Verification of minimum eligibility requirements; and

(iii) Appropriateness of applicant's reported TRL assessment, proposed timelines, and budget.

(b) Any application that fails to meet the criteria in Rule 6 Section (2) will be rejected.

(2) Panel Review.

(a) Accepted applications will be reviewed by a panel of independent subject-matter experts ("expert panel") who will evaluate and score the applicant's proposed research project using the criteria in Section R856-1-7.

(i) Each expert panel will consist of at least two technical expert one business expert, and one investment expert.

(ii) Technical subject-matter experts will assess the scientific and technical merits of the proposal.

(iii) Business subject-matter experts will evaluate the business model, project cost, commercialization strategy, and potential economic impacts of the proposal

(iv) Investment experts will evaluate the proposal and provide feedback to USTAR.

(v) USTAR will have discretion to select the independent experts for the expert review panels and shall consider, as applicable:

(A) academic qualifications, including, for a technical subject-matter expert, whether the expert has a terminal degree in a relevant field;

(B) relevant work experience and practical training in the field;

(C) knowledge of the target industry sector in Utah;

(D) experience evaluating grant proposals;

(E) general investment experience; and,

(F) any other factors USTAR deems important.

(vi) USTAR will screen the experts for conflicts of interest before reviews are initiated.

(3) Governing authority review.

(a) A subcommittee of the governing authority will convene to review the expert panel's scores and develop recommendations.

(b) Recommendations from the subcommittee concerning which projects should be awarded a grant will be presented to the full governing authority for final approval.

 

R856-1-7. Application Evaluation Criteria.

(1) The panel of subject matter experts will use a scoring system to evaluate and rank grant applications and determine grant amounts.

(a) The scoring criteria will be made available during the application period.

(b) The scoring system will be designed to assess and compare each applicant across several categories, which may include:

(i) technical merit;

(ii) strength and maturity of company and management;

(iii) potential for economic impact, as measured by:

(A) job creation;

(B) product sales;

(C) potential revenue due to expansion of current business or development of new businesses; and/or

(D) projected time to revenue or job creation;

(iv) market need, technical and management experience and qualifications;

(v) reasonableness of cost proposal (i.e. size and allocation of budget is appropriate for the work proposed and matching funds available);

(vi) reasonableness of proposed milestones and timelines; and

(vii) any other factor indicative of applicant's ability to produce measurable and timely impacts on the state in areas related to the economic development performance metrics used to evaluate USTAR's activities.

(2) TAP Grants must be used to accelerate the development and commercialization of a technology and project proposals must identify specific technical milestones leading to the proposed outcome.

(3) Examples of acceptable milestones must be specific to the project may include:

(a) research and development activities;

(b) proof of concept;

(c) product validation; and,

(d) product development.

 

R856-1-8. Grant Amount, Award, and Required Agreement.

(1) USTAR will have the discretion to determine the maximum amount of funding that may be awarded for each round of TAP based on available funds and quality of applicant pool.

(2) USTAR reserves the right to award funding for any application in full or in part, to request additional information, or to reject any or all applications based on the eligibility and evaluation criteria set forth in these rules and according to the judgment and discretion of the governing authority.

(3) Upon award of the TAP grant, and prior to any disbursement of funds, Company must enter into a written agreement with USTAR governing the use of grant funding.

(4) Unless addressed in the terms and conditions of the written agreement between company and USTAR, the following provisions shall apply:

(a) company must remain a Utah-based company for at least five years from initial disbursement of TAP funding;

(b) company may not use TAP grant funding to provide a primary benefit to any state other than Utah; and,

(c) for all other eligibility requirements, company must maintain eligibility status for the TAP program until the project is complete, all milestones have been met, final dispersant of funding has been made, and first year reporting has been completed.

(5) A company that violates the requirements of Subsection R856-1-8(4) forfeits the grant funding and must repay all or a portion of funds received as part of the TAP grant.

 

R856-1-9. Contract Modifications.

(1) Company may request a modification to the terms of a TAP agreement.

(2) USTAR may deny a modification request for any reason.

(3) USTAR shall have discretion to agree to reasonable, nonsubstantive changes.

(a) Nonsubstantive changes may include the following:

(i) changes to timelines of less than one month if it is the first such modification;

(ii) corrections to clerical errors in the application materials;

(iii) technical changes to conditions that do not alter the budget, company's eligibility status, or violate any state or federal law;

(4) Substantive changes must be approved by the USTAR governing authority.

(5) All approved changes shall be made in writing and through an amendment modifying the terms of the grant agreement.

 

R856-1-10. Funding Distribution.

(1) Initial funding of no more than 50% of the total grant award will be provided within a reasonable time after a TAP grant is approved to allow company to meet initial milestones.

(2) Remaining grant funds will be disbursed upon successful completion of designated milestones.

(3) Specific funding details will be provided in the program announcement and in each TAP grant contract.

(4) Failure to successfully complete the milestones may result in a recapture of all or part of the grant funding and will be grounds to terminate the contract and any future funding.

 

R856-1-11. Milestones and Reporting.

(1) Companies are required to provide reporting as specified in Section 63M-2-703 for at least five (5) years following initial receipt of grant funds.

 

KEY: Utah Science Technology and Research (USTAR), Technology Accleration Program (TAP) grants, technology readiness level (TRL)

Date of Enactment or Last Substantive Amendment: 2016

Authorizing, and Implemented or Interpreted Law: 63M-2-302(h)

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