Joint Center for Aerospace Technology Innovation Sunset Review

JCATI is meeting legislative intent to pursue university-industry research, enhance the education of students, and work with Washington's aerospace firms

The Legislature created the Joint Center for Aerospace Technology Innovation (JCATI) in 2012 to increase collaboration between the aerospace industry and Washington's public universities. JCATI was tasked with achieving three goals:

1. Pursue joint university-industry research in new technologies relevant to aerospace.
2. Enhance the education of students through industry-focused research.
3. Work directly with small, medium, and large❶ Small firms have less than 500 employees.
   ❷ Medium firms have between 500 and 1,500 employees.
   ❸ Large firms have over 1,500 employees. Washington-based aerospace firms to identify research and technology needs.

JCATI is housed at the University of Washington, overseen by a 9-person, governor-appointed board of directors, and supported by a program manager and part-time executive director.

Between fiscal years 2013 to 2019, JCATI awarded 109 research grants and hosted annual aerospace symposiums

The Legislature appropriated $3 million to JCATI in each biennium since 2012. JCATI used these funds to provide research grants and host annual aerospace symposiums.

JCATI has awarded a total of $9 million in research grants. The awards have supported:

• 109 research projects. Individual grant awards have ranged between $41,000 and $127,000. Research topics include aircraft systems, biofuels, composites, fluids and structures, manufacturing processes, space systems, and unmanned aerial vehicles. A full list of grants is in Appendix A.
• 65 professors, 226 undergraduate, and 166 graduate students from the University of Washington, Washington State University, Western Washington University, and Central Washington University.

Fifty aerospace firms with a presence in Washington have partnered with JCATI. These include small, medium, and large firms. An additional 14 firms located outside of Washington have also contributed to the research.

In addition to awarding grants, JCATI hosts annual symposiums that provide opportunities for professors, students, and aerospace professionals to network, share information on JCATI-funded research projects, and listen to speakers discussing industry trends and future research needs.

The grant application and selection process ensures joint university-industry participation in research

JCATI grants are designed to foster university-industry collaboration. A professor from a four-year public university in Washington initiates the application process by submitting a research proposal to the JCATI Board. Each proposal must include a letter from a Washington-based aerospace firm that specifies in-kind or cash contributions to support the research.

The proposals must include a plan to transfer the results of the research to the participating firm. Each JCATI grant provides one year of funding. Professors reapply each year if a project requires multiple years of funding.

Exhibit 1.1: Grant application and selection process involves professors, industry partners, external reviewers, and board

Source: JLARC staff depiction of grant process.

JCATI enhances educational opportunities for students

Undergraduate and graduate students participate in the vast majority of JCATI-funded research projects. Many projects include multiple students. Six projects to date did not directly include undergraduate or graduate students, but the project team included post-doctoral researchers.

In addition to their work on industry-focused research projects, students are also expected to present the results of their research at JCATI's annual aerospace symposium.

JCATI works directly with small, medium, and large aerospace firms in Washington

Firms of all sizes have participated in JCATI-funded research. JCATI uses the U.S. Small Business Administration definitions of business sizes to identify small, medium, and large firms that have an office or facility located in Washington:

• Small firms have less than 500 employees.
• Medium firms have between 500 and 1,500 employees.
• Large firms have over 1,500 employees.

To date, all of JCATI's research awards have involved one or more firms located in Washington. The full list of participating firms is in Appendix A.

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JCATI is operating in an efficient and economical manner

JCATI spends an average of 86% of its budget on grant awards

Since 2012, JCATI has received $3 million per biennium in state appropriations. This is the program's only source of funding for administration and grant awards. From fiscal years 2013 through 2019, JCATI has spent an average of 86% of its funds directly on research grant awards. The other 14% paid for staff salaries and benefits, the annual aerospace symposium, facilities, and other contract work.

JCATI has 1.2 full-time employees, including a full-time program manager and a part-time executive director.

JCATI's board and staff review and oversee grant expenditures

JCATI is governed by a 9-member, governor-appointed board of directors. Per statute, board membership includes a nonvoting chair and 8 voting members who represent small, medium, and large aerospace firms, labor, aerospace industry associations, and higher education.

JCATI's board and staff review and oversee grant expenditures throughout the award cycle.

During the application and selection process:

• JCATI's request for proposals (RFP) specify the type of research that the program will fund and how those funds can be spent.
• Professors must provide an itemized budget, which is reviewed by a university representative and the JCATI program manager.
• To reduce the administrative burden on grant applicant and recipients, JCATI models the grant process after the National Science Foundation (NSF). This is an established program familiar to many professors and grant managers.
• External reviewers score the applications. The scoring criteria aligns with legislative intent and assesses the feasibility of the project with respect to time and budget.
• The JCATI Board makes final funding decisions. They discuss whether applications meet legislative intent to fund university-industry research, enhance the education of students, and advance Washington's aerospace industry.

After the awards are granted:

• Professors are required to submit a final report detailing the results of the project, including the student and firm involvement.
• Research results for all projects are presented at an annual JCATI symposium, which provides a level of accountability that the project will be completed on time and as proposed.
• The JCATI program manager continues to follow-up with professors to track whether students are involved in the aerospace industry after the JCATI project ends, if research led to technology transfer to the industry, and whether research led to other funding opportunities. JCATI describes these metrics in biennial reports to the Legislature.

Aerospace firms make in-kind or cash contributions to support research projects

To qualify for a JCATI grant, a professor from a public university in Washington must partner with at least one Washington aerospace firm that has identified a research need. Grant proposals are assessed by the amount a firm contributes to a project, as well as other factors. Firm contributions may include cash or in-kind donations, such as consulting hours, facility access, research materials and equipment, and testing services.

Exhibit 2.2: Aerospace firms must contribute to JCATI-funded research projects

*In-kind contributions reported as of August 2019.

Source: JCATI performance measurement reports, JCATI staff, and JLARC staff analysis of project proposals.

JCATI grants are worth more than face value to professors because universities waive indirect costs and graduate student tuition

JCATI maintains a cost sharing agreement with universities that prohibits using grant funds to pay for indirect costs or graduate student tuition. As a result, JCATI grants are worth more than their face value to the professors leading the projects.

Exhibit 2.3 shows that JCATI grant awards totaling $2,423,000 for fiscal years 2017-18 are actually worth $4,069,000 when waived costs are considered. For fiscal years 2017 and 2018, JCATI estimates that the total amount of waived costs and fees for its grant awards was $1,646,000. While this waiver is a benefit to the professors, university grant administrators report that the universities still incur these costs and absorb them within their own budgets.

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Unlike other major grant programs, JCATI is specifically focused on research that supports Washington's aerospace industry

JCATI is unique compared to three federal grant programs that fund aerospace research

JLARC staff compared JCATI grants to three federal grant programs run by the National Science Foundation (NSF), Department of Defense (DoD), and Small Business Technology Transfer (STTR). University professors and grant managers in Washington commonly cited these three programs as sources of funding for aerospace research.

• NSF: A federal agency created to advance the nation's health, prosperity, and welfare by supporting research and education in all fields of science and engineering.
• DoD: A federal agency that manages the military forces needed to protect national security interests. Several agencies under the DoD offer grants for research, including the Defense Advanced Research Projects Agency (DARPA) and Office of Naval Research (ONR).
• STTR: A federal program that is focused on expanding public/private sector partnerships by requiring small businesses to formally collaborate with research institutions in order to receive federal grant funds. The main goal of the program is to bridge the gap between basic science research and the commercialization of resulting innovations.

JCATI is unique when compared to these three federal programs. It is the only one that requires:

• Professors from a Washington four-year, public higher education institution.
• At least one industry partner with a presence in Washington.
• Projects must have a benefit and impact in Washington.

JCATI also differs from these programs in its exclusive focus on aerospace research and its requirement to enhance the education of university students.

Exhibit 3.1: JCATI is unique in its focus on supporting Washington's aerospace industry and university students

Source: JLARC staff comparison of state and federal grant programs.

JLARC staff did not find similar programs in other states

JLARC staff worked with the National Council of State Legislatures (NCSL) to review other states' aerospace research programs. NCSL did not identify any other state programs similar to JCATI. In 2017, California's legislature introduced a proposal to fund a similar research program, but no program has been established yet.

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The Legislature should continue the JCATI program because it is meeting legislative intent

The Sunset Act directs JLARC to consider four questions

The 2012 legislation that created JCATI (SB 5982) included a sunset clause. Programs included within the Sunset Act (RCW 43.131) will terminate on a specified date without further legislative action. In the year prior to termination, JLARC staff are required to conduct a performance audit of the program to answer the following four questions:

1. Has JCATI complied with legislative intent?

   Yes. The JCATI Board and program staff have developed the program around its three legislative goals: to pursue university-industry research, enhance the education of students, and work with Washington's aerospace firms. JCATI has made funding decisions to advance these goals.

2. Does JCATI provide for efficient and economical management of research grants?

   Yes. JCATI spends an average of 86% of its budget directly on aerospace grants. The rest is used to pay for staff salaries and benefits, the annual aerospace symposium, facilities, and other contract work.
   
   To reduce the administrative burden on grant applicants and recipients, JCATI follows the National Science Foundation grant procedures. These are well established and familiar to many university researchers and grant managers.

3. Has JCATI achieved expected performance measures?

   Yes. JCATI has three performance measures that it annually tracks and reports to JLARC:

   1. Number of small, medium and large firms participating in projects. 64 firms have participated in JCATI-funded projects. Fifty firms had a presence in Washington and all projects had at least one Washington firm partner. The majority of firms are classified as small, with less than 500 employees.
   2. Number of students involved in projects. 226 undergraduate and 166 graduate students from University of Washington, Washington State University, Western Washington University, and Central Washington University have participated in JCATI-funded projects.
   3. Amount of in-kind contributions. Firms have contributed the equivalent of $7 million in the form of cash, consultation, materials, facility space, and testing to the projects.

4. Is JCATI duplicative of activities by another entity?

   No. While there are other grant programs that fund research at four-year institutions, those programs are not specifically focused on Washington's aerospace industry, oriented towards enhancing the education of students, and require a university-industry partnership.