The reauthorization battle for the Small Business Innovation Research (SBIR) program has begun. A series of four reauthorization bills were introduced last week in the U.S. House of Representatives and quickly marked up and approved by the U.S. House Committee on Small Business Subcommittee on Contracting and Technology, in a hearing that lasted less than 20 minutes.

The full House Committee is expected to approve the four bills this week and ultimately transform it into a single piece of legislation, which is expected to closely resemble the NSBA-opposed SBIR Reauthorization legislation approved by the House of Representatives during the 110th Congress.

As currently constituted, the four House bills are as follows:

• The Rural Technology Development and Outreach Act (H. R. 2747), introduced by Rep. Deborah Halvorson (D-Ill.), which would authorize $10 million for state outreach for Fiscal Year (FY) 2010 and FY 2011. It also would support competitive two year matching grants up to $250,000, through a vehicle similar to the FAST program.


• The Commercializing Small Business Research and Development Act (H. R. 2769), introduced by Rep. Bobby Bright (D-Ala.), which would establish a program focus on the research and development (R&D) projects most likely to produce products or services for the marketplace or federal acquisition—with a special consideration for energy, rare-disease, and nanotechnology related research projects. The bill also would require each participating agency to establish a commercialization program—with an authorizing $27.5 million—aimed at helping SBIR companies reach Phase III of the program.


• The SBIR and STTR Enhancement Act (H. R. 2772), introduced by Aaron Schock (R-Ill.), which seeks to accomplish many aims. Most notably (and troublingly), it seeks to increase the program’s award sizes without a commiserate increase in SBIR’s overall allocation. Specifically, the bill would increase the award size limit for Phase I to $250,000 and Phase II to $2 million; while simultaneously encouraging the use of “fast track” awards, which are simultaneous Phase I and Phase II awards. It also may contain language aimed at allowing firms to entirely bypass the “proof of concept” Phase I competition. The bill also authorizes $27.5 million for agencies’ administrative and oversight costs. Furthermore, the bill requires the Administrator to annually submit a list of each SBIR recipient that had received in the preceding 5 fiscal years 15 or more Phase I awards and no Phase II awards. Agencies would then be required to work with these multiple Phase I award recipients on the development of performance measures.


• The Investing in Tomorrow's Technology Act (H. R. 2767), introduced by Rep. Sam Graves (R-Mo.), which is the venture-capital/biotechnology arm of the quartet. It would allow businesses majority owned by large venture capital (VC) firms to access SBIR (and other SBA programs), as long as one large VC firm did not own more than half the small business. In other words, a consortium or syndicate of large VC firms could own an SBIR-eligible business. Notably, the bill only extends the SBIR (and STTR) program to Sept. 30, 2011. In the past, the program mostly has been reauthorized in 8-year intervals in the past—and with good reason, given that this reauthorization effort has taken two years and counting. NSBA strongly opposes allowing VC-owned firms greater access to the SBIR program and the puny two-year reauthorization cycle.

U.S. Senate

A reauthorization bill has been introduced in the Senate too. The U.S. Senate Committee on Small Business and Entrepreneurship is expected to mark up the SBIR/STTR Reauthorization Act of 2009 (S. 1233) this week as well. This legislation largely is in keeping with the SBIR Reauthorization bill that NSBA and the Small Business Technology Council (SBTC) supported during the last Congress.

S. 1233 reauthorizes the program through 2023, increasing the program’s allocation by 0.1 percent per year (starting in 2011) until it reaches 3.5 percent in FY 2020 (and the STTR allocation to .4 percent for FY-2011; .5 percent for FY-2013; 0.6 percent for FY-2015). The bill also increases the award sizes for Phase I to $150,000 and Phase II to $1 million and precludes the granting of awards more than 50 percent above these recommended levels.

In terms of VC participation, the Senate bill contains a comprise provision that allows large VC owned firms to receive up to 18 percent of National Institutes of Health (NIH) SBIR award funding and 8 percent of the other ten participating agencies award funding.

The bill also would eliminate the U.S. Department of Defense’s Phase II “invitation” process, would reinstate the programs state and rural outreach programs, and increase technical assistance.

For more information on the latest developments with the reauthorization of SBIR, including how and when to contact your members of Congress, please continue to check the NSBA and SBTC websites.