I read this week the troubling account in the Washington Post of federal investigators looking into the use of earmarks by Rep. Peter J. Visclosky of Indiana and whether a senior member of his staff may have used promises of funding through these earmarks to get campaign contributions.The article relates how a number of small companies in the field of nanotechnology employed the lobbying firm K&L Gates and after they did so managed to get earmark funding for their businesses from Rep. Visclosky. Investigators will determine whether any of this was illegal, or not, or even occurred. But what is troubling to me about the story is that it seems that the only way that these small start-up companies can survive is to hire an influential lobbying firm like K&L Gates. One of K&L Gates’ small nanotech clients, Hycrete based in New Jersey, best describes this situation.
“Several firms said that signing K&L Gates helped them gain the access they had long been denied by federal agencies.
David Rosenberg, who founded Hycrete in New Jersey in 2005, said he hired K&L in August 2007 and has since paid the firm $190,000 to help obtain defense appropriations and other funds.
Rosenberg said he knocked on dozens of doors trying to get the Army Corps of Engineers to read data showing that his moisture-control additive would strengthen concrete structures. Success eluded him until K&L Gates made a presentation to Visclosky's staff last year.
Rosenberg said K&L encouraged him to donate to Visclosky -- "to build a relationship with a member of Congress." Last year, Visclosky requested a $2 million Army earmark to evaluate Hycrete's technology. The next month, Rosenberg and his colleagues donated $20,000 to Visclosky and the Democratic Congressional Campaign Committee.
"I'm a fan of earmarks," Rosenberg said. "None of that would have happened without this funding -- there was no light at the end of the tunnel."
This last quote is what bothers me the most about this story. It seems from this that small companies cannot get the financial assistance they need based on the merits of their business plan or technology, or lack thereof, but on how well connected their lobbyists are. And money that might actually be spent extending R&D an extra month or year goes to pay for some lobbyist fees and to have them take expensive dinners with congressmen. Of course, the flipside of this is that better companies with better technologies may not receive any support because they didn’t hire a lobbyist.
It's becoming increasing clear that the funding models that could work effectively for small companies that didn't require much time in product development (i.e. Internet companies) simply are not working for nanotech companies that require lengthy product development cycles taking seven to ten years. With this funding gap allowed to persist we will likely see more of this kind of questionable use of earmarks to get companies to "the light at the end of the tunnel".