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 user 2007-09-14 at 11:08:00 am Views: 45
  • #18753

    HP Rides The Innovation Wave In Washington
    D.C. -Last week, Hewlett-Packard savored some legislative good news
    when President Bush signed a bill boosting federal subsidies for
    research and education in science and math. The Palo Alto, Calif.,
    computer giant, which in 2006 spent $3.6 billion on research and
    development, has been one of the louder voices calling for the U.S.
    government to step up its role in fostering tech innovation.”We’re very
    pleased with the commitment to put more money into research and to
    contribute math and science scholarship,” says Gary Fazzino, Hewlett
    Packard’s vice president for government and public affairs. “These are
    victories.”Now, Fazzino and HP’s six-person government affairs outpost
    in Washington hope that momentum on innovation will carry along two
    other top priorities: patent reform and an extension of the research
    and development tax credit. While both items enjoy decent support
    inside the Beltway, they’ll need tending to, given the prospect of a
    hectic autumn on Capitol Hill.

    “There could be a number of landmines along the way,” says David Isaacs, who runs HP’s public policy efforts in Washington.
    a tech outfit, HP is relatively well-equipped to handle political
    landmines. The registered lobbyists in its Washington policy office
    complement a battery of outside lobbying and PR firms. According to the
    Center for Responsive Politics, HP’s political action committee (PAC)
    contributed $254,050 during the 2006 federal election cycle, a number
    bested only by Microsoft , Intel and Siebel Systems now a unit of
    Oracle  among tech-industry PACs. Some 60% of HP’s PAC dollars went to
    Republican candidates.Leading the charge from Palo Alto is Fazzino, who
    first joined HP 30 years ago. Beyond holding a bevy of state- and
    federal-level tech policy jobs, Fazzino’s been a pol himself. He served
    five terms on Palo Alto’s City Council and twice as its mayor.Over the
    years, Fazzino has seen HP sharpen its elbows in the political arena.
    When he started, he says, the company tended toward an academic
    approach, crafting big-picture white papers and relying on trade
    associations to do political work.

    These days, HP is more
    hands-on politically. The company, also one of the biggest U.S.
    government contractors, regularly sends its brass to Washington to do
    advocacy. It has also developed an internal, voluntary “government
    affairs network” that invites employees to contact elected officials
    about issues important to HP.”Now that we are clearly a consumer
    company, our executives are far more engaged on government affairs and
    the political process than they were 20 years ago,” says Fazzino.
    “We’re much more focused on issues that have a direct impact on the
    bottom line.”One item with bottom-line impact is the research and
    development tax credit, a law that’s been extended 12 times since its
    enactment in 1981. In 2006, the R&D credit knocked a percentage
    point off HP’s 35% statutory federal income tax rate (with other
    adjustments, HP’s effective tax rate came to 13.8% for the year).While
    it has occasionally been allowed to lapse during its 26-year history,
    the R&D credit has no shortage of proponents. In signing the math
    and science bill last week, President Bush called for making the
    measure permanent, a goal shared by HP and others throughout the
    business community.Still, HP doesn’t expect an easy layup here. Why?
    “The R&D tax credit is deemed to be a cost,” explains David Isaacs,
    “and under the pay-go rules of the Democratic congress, there needs to
    be a pay-for, either a tax increase or a spending reduction of
    commensurate size.”Patent reform is another priority on which HP,
    holder of 30,000 patents, is bullish. Isaacs notes that the topic is
    part of House Speaker Nancy Pelosi’s “innovation agenda,” a package of
    proposals on which Fazzino gave his input as it was being crafted.As
    detailed here, bills to overhaul patent system have made it out of
    House and Senate Judiciary committees. Isaacs and Fazzino expect patent
    legislation will make it to the House floor in September. “The Senate
    is a much more challenging situation,” says Isaacs. “We’re looking
    forward to getting it done in ’07.”