Regional Technology and Innovation Hubs: An Overview and Issues for Congress

Regional Technology and Innovation Hubs: An Overview and Issues for Congress

INSIGHTi

Regional Technology and Innovation Hubs:
An Overview and Issues for Congress
May 10, 2022
Congress is considering the establishment of a new regional technology and innovation hub program in
U.S. competition legislation. The House and Senate are reconciling H.R. 4521, the America COMPETES
Act of 2022, as agreed to by the House on February 4, 2022, with the version as agreed to by the Senate
on March 28, 2022. The Senate substituted the text of H.R. 4521 with S. 1260, the United States
Competitiveness and Innovation Act.
Both bills would establish a competitive award program to plan for or implement regional consortia in an
effort to advance innovation and technology-based economic development. This Insight provides a brief
overview of regional innovation and technology-based economic development; describes key features of
the proposed program—including differences in the House and Senate bills; and highlights potential
considerations for Congress.
Background
For decades state, local, and regional stakeholders have pursued cross-sector, multidisciplinary
approaches to economic development by facilitating industry clusters. Industry clusters are often defined
as geographic concentrations of interconnected companies and institutions in a specific field that may
both cooperate and compete. According to some practitioners and researchers, business clusters are
advantageous for companies as they offer opportunities to leverage talent, infrastructure, supply chains,
and other spillover effects.
Congress has supported policies to prepare regions for expanded technology-based economic
development through several programs, including the Economic Development Administration’s (EDA’s)
Build to Scale, University Centers, and STEM Talent Challenge programs and the Small Business
Administration’s (SBA’s) Regional Innovation Clusters program, among others.
Recent executive branch actions also indicate support for regional innovation efforts. In March 2021, the
Biden Administration proposed a regional innovation hubs initiative in the American Jobs Plan.
Additionally, in July 2021, the EDA allocated $1 billion of supplemental funding for economic recovery
activities to the Build Back Better Regional Challenge, a new grant initiative to support new or existing
regional growth clusters.
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Recently, researchers have proposed expanding federal economic development funding for technology
and innovation investments to rural, underserved, and disadvantaged communities outside of metropolitan
areas and existing growth centers. According to a 2019 report by the Brookings Institution and the
Information Technology and Innovation Foundation, “fully one-third of the nation’s innovation jobs now
reside in just 16 counties, and more than half are concentrated in 41 counties.” According to the National
Science Board, “Americans from every state must benefit from the progress of science and engineering
[S&E]…. Empowering American workers, entrepreneurs, and businesses will require strategically
building S&E capacity and infrastructure across the nation and actively seeding and nurturing innovation
clusters.”
Proposed Program
The regional technology and innovation hub program proposed in both the House (H.R. 4521) and Senate
(S. 1260) bills would fund two types of competitive awards: strategy development and strategy
implementation awards. Both bills would require that no fewer than 20 eligible consortia receive a
strategy development award.
A summary of key program features and select differences between the House and Senate versions are
highlighted below.
 Purpose: Both bills include similar statements of purpose for the program, and focus on
technology development, job creation, and expanding U.S. innovation capacity, with the House
bill emphasizing inclusive innovation.
 Program administration: The House bill would direct the Department of Commerce to
administer the program, while the Senate bill would require EDA to administer the
program in coordination with the National Institute of Standards and Technology.
 Technology focus areas: The Senate bill defines key technology focus areas for the technology
hubs (e.g., biotechnology and robotics); the House bill does not.
 Number of technology hub designations: The Senate bill does not specify the total
number of technology hub designations; however, it would require the Secretary of
Commerce to designate at least three hubs in each EDA region. The House bill would
require the designation of no fewer than 10 technology hubs.
 Geographic diversity: The bills specify different levels and types of geographic
diversity to consider. Both bills include provisions to facilitate geographic diversity in
innovation policy by “focusing on localities that are not leading technology centers,” and
by requiring that a portion of eligible consortia designated as technology hubs serve
specific types of communities. The Senate bill, however, focuses on small and rural
communities while the House bill focuses on rural or underserved (e.g., minority)
communities.
 Funding: Both bills would authorize appropriations through FY2026. The House bill
would authorize $6.85 billion ($50 million for strategy development and $6.8 billion for
strategy implementation) while the Senate would authorize $10 billion ($575 million for
development and $9.425 billion for implementation).
 Use of funds and limit on award sizes: The bills identify similar activities for the use of
funds, including needs assessments and workforce development. The House bill would
limit the size of an initial strategy development award to $150 million and would prohibit
a single technology hub from receiving more than 15% of total strategy development
funding. The Senate would set a similar limit of 10%.

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Policy Considerations
Congress may consider the following as it reconciles the two bills in conference:
 With the potential expansion in budget and program scope, is EDA adequately staffed to
effectively implement the proposed program and coordinate interagency activities?
 What is the preferred allocation of funding for strategy development versus
implementation awards?
 Some suggest that a holistic approach, including funding for research and development
and workforce training may be needed to support the development of innovation hubs.
Both bills would allow the use of program funds for these types of activities and would
require coordination with other federal agencies and activities. However, coordination
alone may not be sufficient to ensure effective integration of public and private sector
resources and expertise. What additional investments, if any, are needed to support job
creation and broad-based economic growth?
 Successful innovation and technology-based economic development generally occur over
long time horizons. The proposed program appears to serve as an initial investment in
launching regional technology hubs. What federal funds or resources, if any, should the
regional technology hubs have access to in the long-term?

Author Information

Julie M. Lawhorn
Marcy E. Gallo
Analyst in Economic Development Policy
Analyst in Science and Technology Policy

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff
to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of
Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of
information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role.
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