NSBA Urges Support of Senate SBIR Compromise

June 24, 2009

NSBA is calling on Congress to bring to an end the nearly decade-long battle over expanding the current level of participation by large venture capital (VC) firms in the Small Business Innovation Research (SBIR) Program. Last week, the Senate Committee on Small Business and Entrepreneurship voted to approve compromise language, the SBIR/STTR Reauthorization Act of 2009 (S. 1233), which is the first step toward a much needed reauthorization for the highly successful SBIR program.

Both NSBA and the Small Business Technology Council, a council of NSBA, believe the VC community already participates at a more than fair level in SBIR. However, both organizations have come together to support the Senate’s compromise as the best way to move forward on reauthorizing this critical program.

The Senate bill, offered by Sens. Mary Landrieu (D-La.), Olympia Snowe (R-Maine), and Jeanne Shaheen (D-N.H.), would reauthorize for 14 years the highly successful SBIR program with some notable updates: the allocation for the SBIR program would increase by 0.1 percent per year until 2020 (up to 3.5 percent); award limits would be increased to $150,000 for phase I and $1 million for phase II; and large VC-owned small businesses would be eligible for up to 18 percent of SBIR awards at the National Institutes of Health and up to eight percent at the other 10 agencies that participate in the SBIR program.

While not ideal—small businesses that are less than 50 percent-owned by large VC firms are currently allowed to participate in the SBIR program, and those that are more than 50 percent-owned by large VC firms are eligible to compete for the remaining 97.5 percent of federal R&D dollars—the Senate’s compromise language is the best way to move forward and end the stalemate that is threatening the SBIR program. The National Academy of Sciences has praised the program extensively, concluding that it is “sound in concept and effective in practice.” According to the Information Technology and Innovation Foundation, SBIR annually produces 20-25 percent of the nation’s most important technological innovations.

"The small-business community has spent untold hours fighting to protect the integrity and ongoing success of the SBIR program,” stated NSBA President Todd McCracken. “We stand behind the compromise achieved in the Senate bill and encourage every Senator and Member of the House to do so as well. It’s time to let SBIR companies get back to what they do best—innovation and job creation.”

On Monday, the Senate Committee on Small Business held a field hearing at which SBTC Executive Director, Jere Glover testified on the program. At issue was the fact that the National Institutes of Health was successful in getting all stimulus funding exempted from the SBIR set-aside. Unfortunately, the NIH witness that was called didn't show up to explain the situation. Glover also expounded on the hearing the need to reauthorize the SBIR program and expressed support from SBTC and NSBA on the Senate's language.

The House also is acting this week on SBIR legislation. The House Committee on Science and Technology is marking-up language today on the SBIR program, and the House Committee on Small Business recently announced their mark-up of SBIR legislation to take place on Thursday of this week, June 25. NSBA will continue to advocate on behalf of small business and will keep you updated.

Please take a few moments now to urge your lawmakers to support the Senate compromise.