Federal tech grant recipients sweat future amid ongoing uncertainty

Chaos and confusion reigned in states and localities this week after the Office of Management and Budget released a memo announcing that numerous federal grant programs would be frozen, pending a review of that spending.

A judge put a temporary hold on the spending freeze ahead of a full hearing next week, then OMB rescinded that memo, although White House Press Secretary Karoline Leavitt argued on X, formerly Twitter, that it does not rescind the funding freeze as President Donald Trump has already issued several executive orders to halt federal funding.

OMB identified numerous tech-related programs for examination to ensure they are “consistent with the President's policies and requirements,” including the Broadband Equity, Access and Deployment Program, the Digital Equity Competitive Grant Program, the State and Local Cybersecurity Grant Program and programs funded by the CHIPS and Science Act.

Leavitt told reporters at a press conference that the OMB memo “requires federal agencies to identify and review all federal financial assistance programs and supporting activities consistent with the president’s policies and requirements.”

If this opening gambit is anything to go by, the future of those programs could be under threat, and, were they to go away, it would undermine various efforts underway in states, cities and counties across the United States.

That includes BEAD, whose future is already in doubt given the new administration and some Congressional Republicans’ desire to revisit it. In a note for New Street Research, policy analyst Blair Levin said while a funding pause may be “relatively short,” there is “considerable uncertainty about the timing and constraints on future BEAD spending.”

Some grant recipients warned that cutting federal funds could dramatically undermine their missions, although they pledged to carry on their work. The CHIPS and Science Act, which passed in 2022 and looks to boost the nation’s semiconductor industry, designated 31 communities as tech and innovation hubs in 2023 through the Economic Development Administration at the Department of Commerce.

Those hubs serve as regional centers “primed for technological innovation and job creation,” EDA said at the time, and focus on specific areas of science and technology. Typically, they are supported by a consortia of public sector agencies, the private sector, academia, philanthropy and other organizations.

They receive federal funding to help with various projects and initiatives, including workforce development, research and technology production, with a view to strengthening the country’s economic competitiveness and national security while accelerating the growth of key industries.

One hub in south-central Missouri focuses on making that state a leader in producing various critical minerals, including nickel, cobalt and zinc, which are found in manufacturing and many electronics but are mined in parts of the world with less stringent safety standards that are more politically volatile.

EDA announced in January — just before former President Joe Biden left office — that the hub would receive a $29 million grant to build a test bed where researchers could study new ways to recycle critical minerals from mines, slag heaps and the black mass associated with battery recycling. It also partially funded a convening authority to provide governance over that test bed.

Kwame Awuah-Offei, the chair of the mining and explosives engineering department at the Missouri University of Science and Technology and the lead researcher at the tech hub, said federal funding for a test bed is necessary, as private funders would be unlikely to step in.

“It gives the businesses and entrepreneurs that want to develop technology around critical minerals a facility that is very expensive to build on your own, but now you can just pay a fee to use it rather than having to build the technology yourself to scale up your testing,” he said. “It’s the kind of facility that private sector money will probably not have paid for, because nobody pays to build a facility in the hope that startups will come to use it.”

Elsewhere, a tech hub in Western New York looks to boost the region’s semiconductor manufacturing and develop underserved communities. The hub has received grant funding of more than $40 million from EDA to “augment” the area’s efforts to develop the workers of tomorrow, said Tom Kucharski, CEO of the Invest Buffalo Niagara economic development authority.

“We're not dissimilar to a lot of regions in the country where that's key for these industries: They need to find the right people, whether they're properly trained, or they want to train them,” he said. “It's not just the high-end scientists and chemists. It's also people who can work with computers and robots.”

Both tech hubs are key components in helping their communities’ economic development, Awuah-Offei and Kucharski agreed, as they have seen populations shrink and jobs leave. Western New York is remaking itself after manufacturing and other legacy industries moved out of the area, while south-central Missouri trails much of the rest of the state in poverty level, employment and other economic metrics. “The opportunity to lift people out of poverty is real with this,” said Awuah-Offei.

For now, grantees are putting on a brave face amid the uncertainty and pledging to continue their work, regardless of how the federal winds blow.

“My own philosophy is we keep moving along, regardless of what we get or don't get, because the cluster is doing meaningful work,” said Awuah-Offei. “We have sat down with all the stakeholders and identified the barriers that we face. That makes it easy, in a way. This whole process helped us come together as a group, talk through our issues and say these are priorities.”

“If the money went away, we would have a little bit of a harder track to stay on and keep everybody in the boat, because we wouldn't have the necessary resources to really go at this hard. I think we will,” said Kucharski. “But obviously the federal grant helps us with some areas of need.”