RELATING TO THE HAWAII TECHNOLOGY DEVELOPMENT CORPORATION.

HB2545

HOUSE OF REPRESENTATIVES

H.B. NO.

2545

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

relating
to the hawaii technology development corporation
.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

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SECTION 1.
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The legislature finds that the Hawaii
technology development corporation is advancing economic diversification and
strengthening the innovation economy by supporting more than sixty-five small
businesses, catalyzing the creation of high-wage jobs, and fostering new
research and development in emerging sectors.
�

The legislature further finds that the small business innovation
research program has demonstrated measurable success, rising in national
ranking from ninth place in 2012 to 2014 to sixth place in 2022 to 2024 in the
country for small business innovation research funding per $1,000,000 gross
domestic product.
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This shows a
significant economic return on investment.
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In 2024, the twenty-seven Hawaii companies that received a total of
$2,500,000 in state funds leveraged approximately $33,000,000 in federal
awards.

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The legislature also finds that the
high cost of living in Hawaii necessitates the creation of higher-salary jobs
in fields such as artificial intelligence, computer software, biotechnology,
ocean science, renewable energy, nanotechnology, medical testing and devices,
aerospace, and defense.

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The legislature finds that states
underserved by venture
‑
capital markets, including Hawaii, benefit
disproportionately from the federal Small Business Innovation Research and
Small Business Technology Transfer programs, which help build regional
innovation ecosystems.
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A 2026 review by
the National Academies of Sciences, Engineering, and Medicine concluded that
these programs generate strong returns by enabling participating firms to
attract significant additional federal research and development funding, serving
as key entry points into the defense innovation ecosystem, and supporting
higher rates of patenting, follow
‑
on financing, and successful
technology transition
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particularly
for firms receiving multiple awards.
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The
review further found that companies receiving state matching support are more
likely to secure federal contracts, generate intellectual property, and
contribute to national security capabilities.

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The legislature notes that Hawaii's
strategic Indo
‑
Pacific location, together with the presence of
federal facilities, military installations, and research institutions, presents
exceptional opportunities for Hawaii
‑
based companies to
contribute to defense and dual
‑
use technology development.
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The federal competitive review process already
provides rigorous technical and business evaluation, and additional state
‑
level
review would impose unnecessary administrative burden and delay time
‑
sensitive
innovation.

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Accordingly, the purpose of this Act
is to promote economic diversification by:

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(1)
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Requiring the Hawaii technology development
corporation to establish the small business innovation research matching
program;

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(2)
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Requiring the Hawaii technology development
corporation to establish a science, technology, engineering, and mathematics
education outreach program in collaboration with the department of education;

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(3)
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Requiring the Hawaii technology development
corporation to develop an economic diversification strategic plan for the
State; and

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(4)
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Appropriating funds.

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SECTION 2.
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Chapter 206M, Hawaii Revised Statutes, is
amended by adding a new section to part I to be appropriately designated and to
read as follows:

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�206M-
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Small
business innovation research matching program.
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(a)
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There is established within the development
corporation the small business innovation research matching program to provide
matching grants to companies based in the State that have received federal
small business innovation research or small business technology transfer
awards.

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(b)
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Any
company with a principal place of business in the State that has received a
federal phase I or phase II small business innovation research and small
business technology transfer awards from any federal agency shall be eligible
for state matching funds under this section without additional state technical
or business review.
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Receipt of a federal
small business innovation research and small business technology transfer award
shall constitute sufficient evidence of technical and business merit.

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(c)
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New
small
business innovation research and small business technology transfer

participants and companies with demonstrated track records in the programs
shall be eligible for matching funds under this section.

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(d)
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State
matching funds shall equal fifty per cent of the federal small business
innovation research and small business technology transfer award amount.

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(e)
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Companies shall submit a simple application
to the corporation within ninety days of receiving a federal
small business innovation research and small
business technology transfer
award notification, including:

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(1)
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A copy of
federal award notice;

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(2)
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Documentation
of principal place of business operating in the State;

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(3)
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A brief
description of how state matching funds will be used to advance the project;
and

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(4)
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Acknowledgment
of annual reporting requirements.

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(f)
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The development corporation shall approve or
deny applications within thirty days of receipt.
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Companies meeting eligibility requirements in
subsection (b) shall be automatically approved unless insufficient funds
remain.

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(g)
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The development corporation shall establish
an annual application period for matching fund requests.
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If applications for matching funds exceed
available appropriations, the development corporation shall distribute funds as
follows:

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(1)
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All eligible
applications received within the application period shall be considered
together;

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(2)
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If total
requested matching funds exceed available funds, the corporation shall
distribute available funds on a pro-rata basis to all eligible applicants,
calculated proportionally based on each applicant's requested matching amount
relative to the total requested matching funds; and

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(3)
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Any funds
remaining unallocated at the end of the fiscal year may carry forward to the
next fiscal year, subject to any constitutional limitations and applicable
appropriation laws.

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(h)
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The development corporation shall establish a
science, technology, engineering, and mathematics education outreach program in
collaboration with the department of education to promote science, technology,
engineering, and mathematics education and career awareness.
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Under this program:

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(1)
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Each company
receiving matching funds pursuant to this section shall deliver a minimum of
two presentations to public school students within one year of receiving
matching funds;

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(2)
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Presentations
shall showcase innovation and technology development occurring in the State,
describe career pathways in science and technology fields, and encourage
students to pursue science, technology, engineering, and mathematics education
and careers; and

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(3)
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The development
corporation shall coordinate with the department of education to schedule
presentations and identify appropriate grade levels and schools, with priority
given to schools in underserved communities.

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(i)
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The development corporation shall track and
report annually to the legislature no later than twenty days prior to the
convening of each regular session on:

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(1)
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The total state
matching funds provided and total federal
small business innovation research and small business technology transfer

awards leveraged;

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(2)
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The number of
applications received, approved, and denied, including reasons for denial;

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(3)
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The average
time from application to approval;

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(4)
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Distribution of
awards by company;

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(5)
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Any instances
where insufficient funds required equitable distribution measures under
subsection (g);

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(6)
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Follow-on
federal research and development contracts and procurement awards received by
supported companies;

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(7)
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Number of phase
I to phase II transitions;

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(8)
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Patents filed
and awarded;

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(9)
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Private sector
investment attracted;

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(10)
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Jobs created
and retained in the State, including the number of jobs and salary ranges
reported in the following bands:

���������
(A)
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under
$50,000;

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(B)
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$50,000
to $79,999;

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(C)
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$80,000
to $99,999;

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(D)
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$100,000
to $124,999;

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(E)
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$125,000
to $149,999;

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(F)
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$150,000
to $199,999; and

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(G)
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$200,000
or more;

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(11)
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Technologies
transitioned into defense or commercial use;

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(12)
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Partnerships
established with defense prime contractors and federal facilities;

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(13)
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Geographic
distribution of supported companies across all counties;

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(14)
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Total payroll
dollars generated by supported companies in the State;

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(15)
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Company revenue
growth, including total annual revenues and percentage change from prior year;

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(16)
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Number of science,
technology, engineering, and mathematics education presentations delivered to
public school students pursuant to subsection (h), including the number of
schools reached, students engaged, and grade levels served;

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(17)
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Technology
sector and industry classification of supported companies; and

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(18)
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Return on
investment ratio, calculated as total federal funding secured per state dollar
invested.
"

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SECTION 3.
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(a)
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The
Hawaii technology development corporation shall develop an economic
diversification strategic plan for the State.
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The economic diversification strategic plan shall include:

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(1)
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Clear goals and
objectives;

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(2)
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Measurable
outcomes and performance indicators; and

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(3)
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Recommended
timelines and actions to strengthen emerging industries and high-wage job
sectors.

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(b)
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The Hawaii technology development corporation
shall submit the strategic plan and any proposed legislation to the legislature
no later than twenty days prior to the convening of the regular session of
2027.

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SECTION 4.
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There is appropriated out of the general
revenues of the State of Hawaii the sum of
$ or so much
thereof as may be necessary for fiscal year 2026-2027 for economic
diversification and defense ecosystem development pursuant to this Act, to be
allocated as follows:

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(1)
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$
for the Hawaii technology development corporation to develop an economic
diversification strategic plan pursuant to section 3 of this Act;

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(2)
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$
for the Hawaii small business innovation research matching program established
in section 2 of this Act;

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(3)
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$
for the manufacturing assistance program, to help Hawaii-based manufacturers
become globally competitive and support the scale-up and transition of
technologies developed under the federal
small business innovation research and small business technology transfer
programs
into production; and

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(4)
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$
for commercialization and technology transition support, including:

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(A)
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Accelerator and small business training
programs to help develop companies that are solving large-scale problems in the
community using innovative, advanced manufacturing, and technology-based
solutions;

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(B)
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Support for intellectual property protection,
market research, and business development activities identified by the National
Academies of Sciences, Engineering, and Medicine as critical success factors
for
small business innovation research
and small business technology transfer
commercialization;

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(C)
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Facilitation of partnerships between Hawaii
small business innovation research and small
business technology transfer
companies and defense prime contractors,
acquisition program offices, and research institutions to support technology
transition; and

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(D)
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Assistance in navigating federal procurement
processes and transitioning technologies into programs of record.

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The sum
appropriated shall be expended by the Hawaii technology development corporation
for the purposes of this Act.

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SECTION
5.
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New statutory material is
underscored.

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SECTION 6.
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This Act shall take effect on July 1, 2026.

INTRODUCED BY:

_____________________________

Report Title:

HTDC; Small
Business Innovation Research Matching Program; STEM Education Outreach Program;
Economic Diversification Strategic Plan; Appropriations

Description:

Requires
the Hawaii Technology Development Corporation to establish the Small Business
Innovation Research Matching Program.
�

Requires the Hawaii Technology Development Corporation, in collaboration
with the Department of Education, to establish a STEM education outreach
program.
�
Requires and appropriates funds
for the Hawaii Technology Development Corporation to develop an economic
diversification strategic plan.
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Appropriates funds for economic diversification and defense ecosystem development.

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not legislation or evidence of legislative intent.