RD135 - Center for Innovative Technology (CIT) Operating Plan Fiscal Year 2014


Executive Summary:
Fiscal Year 2014 Funding

Fiscal Year 2014 is budgeted to be the second highest year of mission related funding for CIT. Budgeted revenues of $14.5 million are approximately $500,000 less than the highest level of funding achieved by the organization since its founding. Considering the pipeline of contracting opportunities in development, there is a strong possibility that 2014 will produce record revenues for CIT. The 2014 revenue target of $14.5 million represents an 8% increase over the current 2013 revenue forecast.

Elevated funding for Fiscal Year 2014 is the result of the following key drivers:

• Seed funding for MACH37™, the Cyber Accelerator
• Sustained Commonwealth appropriations for the GAP Fund
• Federal grant revenue for broadband program funding
• New contract funding from the Department of Defense (DOD)

In addition to the funding CIT receives directly, CIT is designated as the fiscal agent for $4.8 million of funding for the Commonwealth Research Commercialization Fund (CRCF). The combined revenues of $14.5 million for CIT and $4.8 million for CRCF funding provide CIT with fund deployment capability of $19.3 million to facilitate technology programs for the Commonwealth in Fiscal Year 2014.

Fiscal Year 2014 Operating Plan

For Fiscal Year 2014, CIT’s mission will continue to be “accelerating the next generation of technology and technology companies” coupled with the objective to “achieve national recognition as the premier services provider engaged in technology company creation and company growth.”

To achieve these objectives, CIT will operate four service lines and create the new Cyber Accelerator each under the leadership of a senior executive. These service lines are:

Service Line: Research and Development
Responsible Executive: Nancy Vorona

Service Line: Entrepreneur
Responsible Executive: Thomas Weithman

Service Line: Connect
Responsible Executive: Paul McGowan

Service Line: Broadband
Responsible Executive: Karen Jackson

Service Line: MACH37™ Cyber Accelerator
Responsible Executive: Pete Jobse

In addition to the service lines above, the following corporate support functions are delivered under the leaders identified below:

Operating Area: Commonwealth Operations
Responsible Executive: Bob Stolle

Operating Area: Finance and Administration
Responsible Executive: Linda Gentry

Operating Area: Government and Public Relations
Responsible Executive: Hap Connors

Operating Area: Office of Chief Technology Officer
Responsible Executive: Dave Ihrie

The Fiscal Year 2014 CIT Operating Plan provides a complete description of the goals, objectives, plan of work, value proposition, program impact, and milestones for each service line. The following sections provide a summary of the Plan and funding by service line.

Research and Development Service Line

For Fiscal Year 2014, the Research and Development service line will execute the following programs:

1. Maintain the Commonwealth Research and Technology Roadmap.
2. Establish the Innovation & Entrepreneurship Measurement System.
3. Structure, administer, and audit $4.8 million of awards for the Commonwealth Research Commercialization Fund.
4. Operate the federally funded Mid-Atlantic Regional Association Coastal Ocean Observing System for high frequency radar-based oceanic research.
5. Complete the federally funded Mine Safety project for wireless environmental monitoring system for use in underground mines.

In addition to program operations, service line leadership will examine new opportunities identified by the other service lines. To execute these programs, the Research and Development service line will expend $508,115 as outlined in the funds usage chart shown on page 8 of the report.

Entrepreneur Service Line

For Fiscal Year 2014, the Entrepreneur service line will execute the following programs:

1. Operate CIT’s Federal Funding Assistance Program which helps Virginia companies secure SBIR/STTR funding and ensures that the Commonwealth preserves its top 5 national ranking for total SBIR/STTR awards.

2. Accelerate seed-stage funding for Virginia’s technology startup companies by operating the GAP Fund family of funds. Funding for Fiscal Year 2014 will allow the GAP Fund to place 18 investments and support second-round funding for existing high-growth portfolio companies.

3. Accelerate seed and growth funding for Virginia’s energy companies by operating the Commonwealth Energy Fund. Federal funding for this Fund will enable the creation or growth of four energy companies.

The combination of the GAP Fund and Commonwealth Energy Fund will produce a projected 20 to 30 investment transactions for Fiscal Year 2014.

The Entrepreneur service line will offer additional operational support, as required, for programs executed by other service lines, including the Commonwealth Research Commercialization Fund program and CIT’s newly-launched Cyber Accelerator.

In addition to program operations, service line leadership will implement a series of community outreach, advocacy and new business development issues consistent with maintaining and growing Virginia’s appropriation in support of these programs and to identify sources of new business consistent with its leadership in new company formation and funding. To execute these programs, the Entrepreneur service line will expend $10.3 million as outlined in the funds usage chart shown on page 8 of the report.

Connect Service Line

For Fiscal Year 2014, the Connect service line will execute the following programs:

1. Department of Defense program. This is a $1,148,811 program, $623,442 of which has been funded with the remainder (Phases 3 and 4) to be funded contingent on Phases 1 and 2.

2. Ongoing execution of the Virginia Regional Extension Center contract with the Virginia Health Quality Center to assist physicians with the implementation of electronic medical records and achievement of Meaningful Use. The Virginia target for implementation is 2,300 physicians.

To execute these programs, the Connect service line will expend $336,786 as outlined in the funds usage chart shown on page 8 of the report.

Broadband Service Line

For Fiscal Year 2014, the Broadband service line will execute the following programs:

1. Operate the Office of Telework Promotion and Broadband Assistance to encourage the usage of telework alternatives for public and private sector employees.

2. Execute programs to support the efforts of public and quasi-public bodies within the Commonwealth to enhance availability of and access to affordable broadband services throughout Virginia. These programs include:

a. Mapping and Planning programs to refine the Commonwealth’s broadband availability map and establish plans and an approach for adopting broadband applications and infrastructure.

b. Application development and deployment to stimulate usage and demand for broadband applications in areas including telemedicine and telework.

To execute these programs, the Broadband service line will expend $2.5 million as outlined in the funds usage chart shown on page 8 of the report.

MACH37™, Commonwealth Operations and Special Projects

Two special projects will be conducted in Fiscal Year 2014, the creation of the Cyber Accelerator, MACH37™, and the second year of assessment and program development to facilitate the Commonwealth’s modeling and simulation industry. Similar to last year, to ensure our programs are aligned with regional interests and the diversity of the Commonwealth’s technology industry, Bob Stolle will continue as Senior Vice President to coordinate all programs to ensure complete satisfaction with CIT’s services.

To execute these initiatives, CIT will expend $3.9 million as outlined in the funds usage chart shown on page 8 of the report.

Corporate Support Groups

In addition to the operating service lines, CIT is supported by the Finance and Administration (F&A) group under the leadership of the Chief Financial Officer (CFO), Linda Gentry. CIT’s F&A group is responsible for all financial, legal, and administrative functions of the corporation including the design and operation of a federal and state compliant financial management system.

The Chief Technology Officer (CTO), David Ihrie, provides leadership of the group responsible for technology vision, as well as information technology services. The goal of the CTO is to take a lead role in defining, promoting, and implementing forward-looking technology policies and processes that advance entrepreneurial activity and the assimilation of technology.

CIT is supported by the Government and Public Relations group under the leadership of Vice President Hap Connors. The Government and Public Relations group is responsible for state, federal, and public relations functions.

Operating Budget

The Fiscal Year 2014 budget, summarized below, reflects increased funding and the controlled use of net assets to achieve impact in all service lines. The projected year end net asset position of $1.4 million ensures our ability to bridge fiscal year commitments and manage operating adjustments throughout the year.

President and CEO’s Perspective

For Fiscal Year 2014, CIT is positioned to achieve the highest revenue in the history of the organization. The funding sources for seed-stage investment and research commercialization introduced in Fiscal Year 2012 continue to provide strong levels of funding for Fiscal Year 2014. For the past two years we have attributed higher funding to new emphasis on entrepreneurship and research commercialization, coupled with confidence in CIT’s ability to structure programs that secure significant private sector investment. We continue to earn the confidence necessary for appropriators and clients to increase their investment in CIT.

Even though we are positioned to achieve record revenue, we are investing significant leadership resources in examining strategic initiatives that are vital to the growth and continued high level of performance of the organization. During March and April, the leadership team analyzed 37 different initiatives for their relevance to current operations and future growth opportunities. Of the 37, five specific initiatives were identified as requiring higher levels of resource investment. Our challenge is to examine, predict, propose, and implement the next generation of solutions that ensure that CIT is nationally recognized as the premier services provider focused on technology company creation and company growth.

Fiscal Year 2014 holds significant opportunity and equally significant growth challenges for CIT. The entire team is energized for the challenge; we are focused on achieving both our Fiscal Year 2014 goals and designing our future value proposition and programs.