SBIR Renewal Moves Forward

March 26, 2008

Renewal of the Small Business Innovation Research (SBIR) Program, one of the most successful federally-sponsored R&D programs in U.S. history, took a step forward recently. A recent comprehensive National Academy of Sciences (NAS) study praised the SBIR program.

The SBIR program is currently up for renewal in Congress, and the congressional committees handling that task–-the House Small Business Committee–-recently held a hearing to focus on a draft renewal bill.

Hearing witnesses praised the bill for implementing several NAS recommendations: emphasizing technology commercialization, targeting promising technologies with multiple development awards, strengthening program oversight and evaluation, and refocusing program outreach efforts.

The bill, as currently drafted, does not balance two key goals of the Program’s renewal, however. The first goal—-endorsed by the NAS, Small Business Technology Council, (SBTC), and others—-is to increase award sizes, which have not been adjusted for inflation in more than 15 years. While the bill adopts the NAS recommendation of doubling them, it does not increase SBIR’s funding. Therefore, according to a conservative analysis by SBTC, the number of awards would be cut by about half.

This cut in awards, coupled with a controversial proposal to open the program up even further to large venture capital firms and universities, could spell trouble. The proposal, heavily advocated for by the Biotechnology Industry Organization and some in Congress, has been a focus of many of the House Small Business Committee hearings. NSBA, SBTC, the U.S. Small Business Administration, and many others strongly oppose the proposal as an unfair and unnecessary change that would significantly harm the SBIR program and its rightful focus on fostering small-business innovation.

NSBA and SBTC recommend that Congress follow the same pattern it did when award sizes were last increased, which is to increase SBIR’s overall funding to maintain a steady number of participants. That increase eventually led to the ringing endorsement of SBIR by the NAS, and will lead to strengthened U.S. international competitiveness.