In the recent recession, many businesses turned to the Federal Government for business out of necessity to "stay alive". After all, the government was spending money when most other consumers were not. As more small businesses got into government contracting, more of these contractors realized how ill prepared they were to deal with the Federal Government. The Federal Government has a mandate to purchase at least 20% of their procured items from small business. In addition, the Small Business Innovative Research program is designed to help fund the development of small business. There are "set asides" for small businesses, disadvantaged businesses and special loans created for small businesses. Still, it seems that the government makes it difficult for the small business as well. For instance, the Office of Advocacy, Small Business Administration has done research that shows small companies (less than 20 employees) can spend as much as 36% more than larger businesses just to comply with Federal Regulations. Many times larger businesses have staff members that can deal strictly with federal regulations but the small business cannot afford a "specialist" on their staff. This expertise can be outsourced or it can be accomplished in one of the employees "spare time". Normally the "spare time" approach ends up in mistakes in complying with one or more regulations which further exacerbates the problem. President Obama seems to be focusing on this issue and has issued a memorandum about regulatory flexibility. Not sure that is enough relief.
There are currently several opportunities for funding to bring products into the hands of the first responder and other DoD users from the Center for Commercialization of Advanced Technology (CCAT). For instance, if you have used the SBIR program to fund product development but you are not quite to the commercialization stage and need funding to get this product into an introductory market, this could be your opportunity. There are currently 4 solicitations from the CCAT on their website:
As you know, the re-authorization of the SBIR program has been delayed 8 times now by congress over the last 2 years. I have blogged about it several times here simply because I believe this is a crucial program for small business, national employment and the development of new products for the American economy among other benefits. I think a recent article by Rick Shindell of the SBIR Gateway (Zyn Systems) sums it all up best. Rick is the author of the SBIR Insider newsletter and has tremendous insight into the SBIR program. Thank you Rick.
It always amazes me to hear about small business entrepreneurs who are successful in receiving SBIR grants or government contract(s) but suddenly have difficulty in collecting money or continually have late payments from the government.
There continue to be "games" in Congress related to re-authorization of the SBIR/STTR bill. It seems Rep. Jason Altmire (D-PA) is continually trying to sweep re-authorization "under the rug" and get it approved without negotiating directly with the Senate. The Senate has offered many compromises over the last 12 months in attempts to finalize the bill (http://www.zyn.com/sbir/insider/sb-insider05-24-10.htm#one). It seems the House continually rejects (or conveniently "forgets") these compromises. So it is becoming obvious that the House wants their version of the bill passed, or nothing. No negotiations. There are some issues from small business owners with the House version of the bill, however. The Small Business Technology Council has drafted a letter to House Speaker Nancy Pelosi (D-CA) and House Majority Leader StenyHoyer (D-MD) expressing their concerns (http://www.sbircoach.com/page.aspx?page_id=35). This letter strongly endorses the Markey Amendment to the House re-authorization bill or the Senate version of the re-authorization. The House committee Chair for the Committee on Small Business, Rep Nydia M. Velázquez (D-NY) has also clearly stated her position on the issue in a letter to the Chair of the House Committee on the Budget on March 4, 2010, stating "...Without the participation of venture-backed companies, the SBIR program has become little more than corporate welfare for marginal companies who are unable to secure external market-based funding." So, politics continues but the SBIR program is being used as the "football". We can only continue to contact our Representatives to try to get this resolved and passed. Our country, our jobs and small business rely on it.
Has anybody in small business wondered where the American Recovery and Reinvestment Act (ARRA) money was and if it would ever trickle down to small business? It has taken a while to get the money flowing on some of these programs (other than construction projects). We are starting to see ARRA funds used for funding of some STTR and SBIR topics. There are some additional stipulations attached to funds coming from the ARRA, however. The contractor must have a funds control system that tracks and reports ARRA funds separate from non-ARRA funds. The contractor must also keep track of jobs created by the ARRA funds or jobs supported by the funds. It is required that the costs claimed are allowable, allocable and properly supported. The contractor is also required to flow down these requirements to subcontractors. These requirements are in addition to the usual DCAA and FAR requirements for government contracting. So the question is; "will the government really be able to monitor these additional requirements"? Well, we had a client last week that received a notice from their contracting office notifying them that a team was coming to their facility to do a "review" of these requirements associated with the ARRA funds. The review is requesting to see "backup documentation" in support of these requirements. Sounds like a system audit. So if you are receiving ARRA funds (or proposing to receive these funds) be prepared for a "review" of your backup documentation. This is beginning to happen.
Yesterday the Small Business Administration raised the threshold levels for SBIR awards. The level for Phase 1 awards has increased to $150,000 where the threshold for Phase 2 awards has increased to $1,000,000. The levels for STTR's were not altered at this time but could also end up being revised. This is good news on a couple of fronts. First, the increased level of award will help cover escalating costs due to inflationary pressures and possibly also help fuel more complete development. More importantly, this is a message to congress that the SBA is highly involved in determining the guidelines of the program. It will help resolve one of the major differences between the House version of the SBIR re-authorization bill and the Senate version. Now we go back to congress where the SBIR re-authorization bills are faced with the April 30 deadline. I'm hopeful that the action by the SBA would help the two sides of congress come to agreement to complete this bill and present it to the President. Will it happen in the next 30 days? Hopefully yes but realistically probably not. Meanwhile small business should continue to pursue the SBIR/STTR programs with earnest. I think the program is too valuable from a jobs standpoint alone to have it disappear.
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