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Dec 1, 2011

Senate Moves Toward SBIR Reauthorization for Eight Years

  • The U.S. Senate expects to approve, by week’s end, an eight-year reauthorization of the Small Business Innovation Research (SBIR) program. It would end a three-year stalemate over its funding. But it is not known if the House of Representatives will follow suit and pass it or continue to press for its own version.

    By a voice vote, Senators on Tuesday approved tacking the SBIR reauthorization Senate Amendment 1115 to the $662 billion National Defense Authorization Act (NDAA) for Fiscal Year 2012 (S. 1867), which authorizes defense spending priorities for the fiscal year that began October 1. The bill is expected to pass the full Senate by Friday before advancing to the House, which for months has considered its own SBIR reauthorization measure, with different language from the Senate’s version.

    “Someone had to move the ball down the field, and I think now we’re in the red zone,” Robert F. Weiss, chairman of the Save SBIR Coalition, told GEN. “We eagerly await the House’s response to see what changes they want to make that are generally in line with what has been proposed in the Senate.”

    He said SBIR has gained support in the House, in part through a letter signed by more than 20 representatives. But the House has pursued SBIR reauthorization through a separate bill (HR 1425), filed earlier this year and pending since then in the House Committee on Small Business.

    "We remain in negotiations with the Senate to come to a compromise on a long-term authorization that both bodies can support," Wendy Knox, a spokeswoman for the committee chaired by Rep. Sam Graves (R-MO), told GEN on Thursday. "The NDAA offers another way that a compromise might be executed."

    Said Weiss: “We’re keeping our fingers crossed that Congress does its job this time."

    Established in 1982 with its companion Small Business Technology Transfer (STTR), SBIR assists some 6,000 companies a year. Yet it subsisted on the same $2.2 billion annual budget it had when its authorization ended with the 2008 fiscal year, thanks to 13 stopgap continuing resolutions (CRs); the current CR expires December 16.

    SBIR requires federal agencies with extramural R&D budgets that exceed $100 million to set aside 2.5% of their R&D budget to the program. The Senate amendment would also raise the percentage that agencies would have to set aside for SBIR by an additional 0.1% each year from FY 2014 through FY 2023, when 3.5% would be required. HR 1425 maintained the current percentage.

    SBIR includes 11 Federal agencies, each setting its own program and funding guidelines. The House and Senate have agreed in the past on raising guidelines for the phase 1 maximum award to $150,000 and the phase 2 award to $1 million. The program includes a phase 3 commercialization stage, for which SBIR awards no funds.

    The amendment sets limits of 25% of SBIR funds from NIH, DOE, and NSF, and 15% for all other agencies, which that can be awarded to businesses majority-owned by investment companies. Those percentages are among key differences with HR 1425. The House would allow NIH and NSF as well as NASA and the energy department to award up to 45% of their SBIR funds to small businesses majority-owned by multiple venture capital firms, hedge funds, or private equity firms. All other federal agencies must set aside up to 35% of their funds to such businesses, according to the bill.

    At present, VC-backed companies can access SBIR funds as long as venture firms own up to 49% of a small business; majority VC-owned businesses are not considered small businesses, according to the US Small Business Administration.

    Another difference: The Senate amendment would not permit companies where more than half the investors are from overseas.


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