The U.S. Senate is considering legislation that could dramatically affect many small, technology-based companies. SBTC, the nation’s largest association of technology companies in diverse fields, is urging companies to contact their Senators about it.

A bill passed by the U.S. House of Representatives, bill number H.R. 5819, would make major changes in the Small Business Innovation Research (SBIR) Program. SBIR is the largest single sources of early-stage capital for R&D in the United States. The program also accounts for over half the R&D contracts that small companies win from the federal government. H.R. 5819 is now on a fast track in the Senate and would radically change SBIR if passed.

While SBTC favors the renewal of the SBIR Program, which will expire in September if Congress does not act, the bill that the House passed and the Senate is considering (H.R. 5819) to extend SBIR unravels many of the strengths and safeguards of the Program.

Instead of having to prove a scientific concept in a transparent and juried competition with other companies, as SBIR currently requires, the bill would let companies simply assert to agencies that the basic science had been proven. And once an agency accepted that assertion, a company would be eligible to secure a string of multi-million dollar contract awards. These multiple, “jumbo” awards would absorb huge portions of SBIR’s overall budget, thus preventing many other companies from obtaining SBIR awards.

In today’s SBIR Program, a company can only win one development contract award at a time, and each award is for a far smaller amount.

H.R. 5819 threatens the fundamental integrity of the SBIR Program. Millions of dollars would be wasted on projects without true scientific foundations. The bill would also turn SBIR into a lobbying exercise, in which the most deep-pocketed companies, with the most Washington lobbyists, would likely persuade agencies to grant them awards.Indeed, the winning companies wouldn’t even have to be small businesses any longer. H.R. 5819 would let venture capital companies that are large businesses by SBA standards, and that are owned by other companies, set up syndicates that control SBIR awardees. So money that was supposed to be going to small business would flow instead to large businesses.

These changes would deeply damage the most successful federal program for promoting technological innovation in the nation’s history – at just the moment when the U.S. economy is slowing and in need of a “jump start” from new technologies.

SBIR’s tiny percentage of federal R&D, 2.5 percent, has accounted for over 60,000 patents. The companies in the SBIR Program have been obtaining more patents per year than all U.S. universities combined for at least the past eight years. And SBIR has just been praised by the National Academy of Sciences for its effectiveness.

That’s why SBTC is urging all small technology-based companies to quickly contact their U.S. Senators. Tell your Senators to fix bill number H.R. 5819 before it passes the Senate.

Go to the SBTC website, www.sbtc.org, to find information on how you can contact your Senators. Please do it now. This bill is moving quickly.

Today, U.S. small businesses employ more scientists and engineers than all large American businesses, more than all American universities, and more than all of the federal government’s own scientific laboratories. Yet small companies receive only 4.3 percent of federal R&D dollars, while large companies, universities and federal labs get more than 90 percent.

The SBIR Program alone accounts for over half of the 4.3 percent that small companies get. Over time, H.R. 5819 would take away SBIR as a genuine, competitive small business R&D program. So most of the private sector’s scientists and engineers would be effectively excluded from R&D that’s designed to meet national needs like defense, homeland security, disease prevention, energy, and space exploration.  Our country can’t afford this.  

Act now to help stop it. For more information on SBIR Reauthorization please reference the following sources:
http://www.sbtc.org/docs/SBTC_letter_to_HSBC_on_SBIR_Reauthorization.pdf

http://www.sbtc.org/docs/NEIA-NSBA-SBANE-SBTC_02-01-08.pdf
http://www.sbtc.org/docs/MCSBE.pdf
http://www.sbtc.org/docs/Fortune_Small_Business_story.pdf