Why SBTC Prefers the Senate SBIR Bill The SBTC opposes the House
SBIR bill, which would radically alter the nature of the SBIR program. We instead support the Senate bill, which
would keep the program largely the same. Permitting VC firms to have more than 50 percent control of the
SBIR small companies completely changes the program. As it has stood for 26
years, the SBIR program was the only level playing field for the very smallest
companies. With 25-page limits on the proposals and a technology peer review it
permitted the small companies to compete. If the House Committee proposal is incorporated
in the SBIR program, the well-funded VC-owned companies will have the advantage
of their lobbyists and large marketing departments to influence the outcome of
the awards. Much larger Phase I and Phase II awards may sound good
until the facts are reviewed. With the Senate proposal for $150,000 Phase Is,
and $1 million Phase IIs, the program retains its 25-year record of quickly
terminating the less successful Phase Is and permitting other good ideas to
gain funding. The House proposals would permit multimillion dollar awards in
both Phases. To the few selected winners, this provides much larger funding
before their technology is proven – and SBTC
believes that this will favor the well-funded VC-controlled companies. However,
the real disaster with this concept is that for every $5 million award this
means that 33 small companies would not receive their $150,000 Phase I award.
And, the House proposal permits even larger awards. Allowing certain awards to go directly to the Phase II
contract violates the fundamental process that has made
the SBIR program so successful. Permitting some awards to go directly to the Phase II
contract completely violates the fundamental down-select process that has made
the SBIR program the most successful R&D program in the world – and it is
copied around the world with these protections. This major change would again
permit the VC-controlled well-funded companies to use their lobbyists and large
marketing departments to influence their awards, thereby eliminating the
smaller companies. SBTC believes that these
three major changes are the reason that the National Venture Capital
Association (NVCA) and BIO have lobbied so
hard for these changes. We also believe that this well-funded lobbying effort
during this protracted reauthorization program (18 months; 6 Continuing
Resolutions) bodes poorly for a level playing field in the future of the SBIR
program if the items above are incorporated into law. The Senate
proposal prohibits “earmarks” for the program; however, the House doesn’t.
Another problem for the real small companies. Reauthorizing the program for only two years is disastrous
for the program. During the 18 months of the
current reauthorization process, federal SBIR agencies have had to start
and stop their outreach and solicitation process to ensure they don’t exceed
their funding authorities. Small companies faced with uncertain and prolonged
awards have had to lay off critical scientists and staff. This challenge so
frustrated the Department of Defense (DOD) management and the House and Senate Armed Services
Committees that they took the unprecedented action of bypassing the House Small
Business Committee and reauthorized the DOD SBIR until Sept. 30, 2010 (at first they wanted
to extend the program for 14 years!). The SBIR program has worked extremely well for 25
years. We shouldn’t let well-funded lobbyists change it for their millionaire
clients. |