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SBIR Program Reauthorization - H.B.2965, Markey Amendment

Posted by Mike Anderson on Tue, Jun 30, 2009 @ 02:03 PM

The Small Business Innovation Research (SBIR) program was established as law in 1982.  This program was designed as a way to 1) spur development of small business in the United States & 2) increase the amount of money spent and the rate of new innovations in this country.  These programs have had tremendous success over the relatively short lifespans of the programs.   Today, more than 25% of new innovations come from the SBIR program where innovation of large business (companies in the Fortune 500 list) has dropped from over 40% in 1982 to less than 5% today.  In addition, employment has significantly been impacted by the SBIR program.  Today over 38% of scientists and engineers are employed by small businesses, in large part due to the SBIR program.  The program is working.

The SBIR program was set to expire in 2008 but congress extended the program deadline twice in order to make a more “informed” decision about the future of the program.  The second extension is about to expire (middle of July) and congress is faced with passing legislation to either end or continue the program into the near future.  There is currently a bill in the House of Representatives (H.R. 2965) that would extend the SBIR program until the year 2011.  When the bill was introduced last year this would have extend the program for 3 years but after the delay it is more like a 2 year extension – less than the time expected for a Phase 1 & Phase 2 award to be implemented.  While at first glance this seems like a good idea, why shouldn’t the program be extended further into the future, especially when considering the benefits?  Also, H.R. 2965 allows for Venture Capital companies to be heavily involved (up to 50% ownership in a qualifying SBIR awardee) in the SBIR program.  There is currently a strong belief that by allowing VC involvement it could dilute the effectiveness of the program or even channel funds away from the small businesses it is designed to help.  There is a proposed  amendment to H.R. 2965 sponsored by Ed Markey that would help extend the SBIR program for 14 years and limit further the involvement of Venture Capital in the program.  We feel that this amendment should be supported and the SBIR program should be allowed to continue into the foreseeable future.  The benefits of growth in employment, growth in the number of small businesses, growth in the amount of innovation coming from the US are some of the many significant benefits of the program.  If you agree, we suggest you contact your congressional representative immediately and let them know your feelings.