It’s a fair bet that few people would include “US Congress” in the same sentence as “accomplishment” and “good news” these days. Adding the word “sustainability” would probably cause even Google to come up empty. So it’s worth noting last week’s reauthorization of the SBIR (Small Business Innovation Research) program.
In fiscal 2010, this program provided companies $2.3 billion to support often hard-to-fund early stage research and development – evaluating the technical merit, feasibiltiy and commercial potential of innovative technology. Massachusetts companies are particularly successful – since 1982, Massachusetts has garnered 14% of all the funds awarded (over $4 billion), second only to California’s 21%.
The good news is not the reauthorization itself, as Congress usually does get around to reauthorizing programs eventually. The good news is in several changes to the program:
- six-year reauthorization – over its thirty year history, the SBIR program has regularly been subject to short-term (1 or 2 year) reauthorizations, often at the last hour. Ensuring that the program will be in place through 2017 allows companies and investors to focus on the task at hand.
- increased allocation – from 2.5% to 3.2% of agency budgets over six years – the authorizing legislation stipulates that the 14 federal agencies funding R&D allocate a guaranteed minimum of their external R&D budgets to small businesses through the SBIR program. By 2017, this could add over $600 million to the program each year.
- larger grants – the maximum size of individual project grants increases:
- Phase I – from $100,000 to $150,000
- Phase II – from $750,000 to $1,000,000
- funding for majority venture-owned companies – a 2002 interpretation of the statute, affirmed in court rulings in 2005, meant that many venture-funded companies were not eligible to receive funding through the SBIR program. This reauthorization fixes that problem, specifically authorizing federal agencies to provide a percentage of their funding to venture-funded firms as follows:
- Health & Human Services (HHS), National Science Foundation (NSF) and Department of Energy (DoE) – up to 25% of SBIR funding
- All other agencies – up to 15% of their SBIR funding
This reduces a significant barrier to involving more companies and leveraging private funding to accelerate innovation and commercialization.
The SBIR web site is a useful and well designed source of information about the program. Each of the 11 federal agencies that participate in the SBIR program design their own programs and solicitations. Contacts for each agency are listed on this SBIR web page.
The SBIR reauthorization is included in HR 1540, National Defense Authorization Act for Fiscal Year 2012, which was sent to President Obama on December 21st. The President is expected to sign this legislation.