Complete 2012 forensic audit documents - Kansas Bioscience ...

State University the proposed grant and look forward to helping fund this important and
innovative effort.”
On August 7, 2009, KSU was awarded an initial NSF grant of $588,886 as part of a five-year
grant of approximately $3.2 million. On August 14, 2009, David Vranicar notified KSU that
“After careful review of the above referenced proposal and your request for funding, the Kansas
Bioscience Authority has decided that we are not in a position to fund your proposal at this
time.…Our decision on this project is primarily due to the fact that the proposal doesn’t fit well
with our commercialization investment priorities for the current fiscal year as defined by our
Board of Directors. In addition, the NAICS code for this project is not within the statutorilydefined
set of bioscience codes eligible for investment by KBA.”
On February 11, 2010, KSU submitted a letter describing proposed modifications to their
application to emphasize commercialization efforts by the doctoral students and support to
KSU’s industrial partners. On March 23, 2010, Tom Thornton responded, “We appreciate your
efforts to augment the commercialization activities in this program. After thoughtful
consideration, we must reiterate our original decision that this project does not meet our current
investment priorities and, thus, is not something for which KBA can provide matching funds.”
The letter goes on to discuss that KBA’s investment priorities center on programs and
investments that lead to the expansion of the state’s research enterprise and the direct
commercialization of the products of that research, and that the BOD has elected not to consider
graduate training, education and workforce development programs. Thornton also discussed that
KBA’s projected transfers from the State of Kansas had been reduced, resulting in the need for
KBA to tighten its investment focus. Thornton stated, “Simply put, with reduced funding, it will
be difficult to continue our pace of investment in Eminent Scholar and Rising Star programs, the
Kansas Bioscience Centers of Innovation, the cancer fighting cures initiative, and efforts to
maximize the economic impact of the NBAF, let alone to consider investments outside these
priorities.” Please refer to Exhibit 2.
BKD discussed with David Vranicar the impression that over time, KBA had focused its
investment dollars on specific areas, notably those described in Thornton’s March 23, 2010 letter
to KSU, rather than addressing all the areas of investment that could be construed to be
allowable under KEGA. Mr. Vranicar stated that KEGA sets out the mission of KBA and
describes various statutory programs that are to be available through KBA; however, the BOD
and management strategically determine KBA’s investment focus based on the goal of
leveraging the strengths in Kansas’ bioscience community and research universities. Vranicar
indicated that KBA’s investment focus is determined yearly and published in its Annual
Operation Plan (“AOP”), and that it is the AOP that guides KBA’s investment priorities.
In addition, Vranicar stated that the perceived viability of a funding opportunity is a significant
consideration as to whether the investment opportunity is accepted by KBA. An investment that
fits the current strategic focus for investments, but is not likely to succeed for a variety of
reasons, will not be funded. Vranicar stated that while KBA could not guarantee that every
opportunity it invests in will be successful, the staff have a duty to try to ensure that the
investment opportunities that are presented to the Investment Committee and the BOD have the
ability to be successful.
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