Why California Is Missing Out on a High-Tech Jackpot : Jobs: Defense-conversion money will soon be available for the most enterprising states, but our representatives are flunking the competitive test.

California is fighting an invisible but crucial war for its economic future in the halls of the federal bureaucracy. The spoils of battle are $472 million, to be awarded later this year by the Pentagon’s Advanced Research Projects Agency (ARPA) as part of the government’s defense-conversion effort. Yet, despite its latent technical, defense and political resources, California is increasingly unlikely to be among the big winners in the fierce national competition for funds.

Indeed, while Texas high-tech leaders boast that their coordinated lobbying effort, backed at every stage by their congressional and state leaders, will deliver as much as half of the advanced-research money to their state, California’s applicants have grown increasingly disheartened by their state’s fragmented, fractious strategy. As one California project director lamented, “They (ARPA) have simply decided to take the manure approach to our state--spread around a few $5-million grants to pacify the politicians and hope that something will eventually grow.”

The ARPA program is the first major post-Cold War test of California’s ability to compete for federal technology funds. Derived from pathbreaking legislation principally sponsored by Sen. Jeff Bingaman (D-N.M.), it is intended to redirect defense research and development toward commercial/military markets. Applicants are required to detail how their R&D; activities will create new products, jobs and globally competitive companies, in addition to meeting military needs, and to put up matching funds to demonstrate their commitment to commercialization.

While other states have carefully crafted their pursuit of the ARPA jackpot, California’s effort has limped along, beset by internal dissension, ill-coordinated political leadership and the complete absence of any grand strategy.

For starters, ARPA is not the right vehicle for financing high-tech transit development, the focus of much of California’s post-Cold War economic strategy. Its mandate is to stimulate commercial applications of military R&D.; Many Californians now suspect that the agency is far more attracted to whiz-bang computer and data-processing projects than developing electric vehicles, fuel cells, high-speed trains and transportation communication technologies. Almost from the start, powerful electronics consortia, such as Texas’ MCC or Sematech, have had a leg up on their transportation-minded California competitors.

California’s large congressional delegation has done little to induce ARPA to change its perspectives. Few representatives have held hearings or informally pressed the agency to look more favorably on the state’s transit projects. Despite the hugely disproportionate impact of defense cuts on California, no one has simply called for earmarking most of the ARPA money--$300 million to $350 million would be reasonable--for the state.

Further crippling California’s quest for ARPA resources is the inability of its political leaders to agree on a basic industrial policy. Democrats, including both Sens. Barbara Boxer and Dianne Feinstein, generally favor converting military technology to commercial uses; Republicans, including Gov. Pete Wilson, generally call for raising the defense budget to help California. The split has weakened the state’s ability to fight for ARPA and other technology funds.

Similarly, California’s representatives have been unable to agree on a list of projects to promote. Most congressional offices have apparently given up on trying to choose among the myriad applications that have flooded their desks, preferring to let ARPA shoulder this task. As a result, the state is generating conflicting, often duplicative proposals, with partners on one project preparing to submit competing bids involving the same technologies in other applications.

Again, politics hampers efforts to restrain such self-defeating behavior. At least three separate ARPA priority lists are reportedly in the works--one by Boxer’s staff, one by Wilson’s and one by state Sen. David A. Roberti. It’s highly unlikely that their project priorities will significantly overlap.

Finally, the state has been badly hurt by the Clinton Administration’s apparent unwillingness to reverse Washington’s anti-California posture. The sad fact is that less than a week after Bill Clinton played basketball in South-Central and got his LAX haircut, the only tangible result of his promise to “help California” was the addition of several more military bases, including the Long Beach Naval Shipyards, to the government’s potential closure list. Although the Department of Defense and ARPA are ultimately responsible to the President, Clinton has not shown the slightest inclination to use his authority on behalf of California.

Still, the state’s leaders can take several steps to ensure some success in the ARPA competition, as well as in future federal funding efforts:

* The California delegation must think strategically and put federal dollars in programs where the state’s applicants have the greatest chance of success. Rather than tuck scarce resources away in ARPA, it should work to release funds to the Federal Transit Agency and other programs where state and local entities have fared successfully.

* The state’s leadership must agree on how to prioritize and consistently evaluate competing federal applications. This means coming up with criteria for guiding industrial development and generating a single priority list.

* California’s representatives should unabashedly call for a fixed, large share of ARPA and other program resources as they become available. Toward this end, they should mobilize their political resources to ensure that ARPA and other federal program rules are implemented in ways that systematically benefit, not harm, California’s applicants.

* Stop playing politics with ARPA and other available federal funds. Leaders of other states long ago learned to go after any economic resources available for their constituents, even if some of them might oppose certain programs on ideological grounds. California’s capital, investment and industrial-development needs are too great to be held hostage to sectarian political advantage.

Depending on how its leadership reacts, the ARPA competition may prove to be California’s watershed, or its technology Waterloo. Little can be done about the Clinton Administration’s failure so far to support California. The rest of the state’s problems are its own to solve.