SBIR (1983-2009?); Program Set to Expire on March 20… Unconscionable!

Inconceivable? Unconscionable? Inexcusable? Which word best conveys what is happening to the Small Business Innovation Research (SBIR) Program? Perhaps all of them. The SBIR program will expire March 20 unless Congress acts before that date.

No SBIR-related legislation has been considered by either chamber of Congress since the current session began in early January, and without action by Congress by March 20, the program expires. SBIR could be attached to some other bill before the deadline, but there is no indication at this point that that is going to occur.

It is inconceivable that one of the most successful federal programs to support the commercialization of innovation will be allowed to expire at the same time the country is desperately seeking investments to prepare the nation for the next economy. As SSTI has reported, significant portions of the Recovery Act are focused on investing in the future. Green technologies. Alternative energy. Information and communication technologies. Smart tech. SBIR should play an important role in that – just as it has supported the early development of a number of important technologies and tens of thousands of companies for the past 25 years.

It is unconscionable and inexcusable to think that a federal program would be allowed to expire that has proven to be effective. In addition to the hundreds of anecdotal success stories and profit statements from small businesses, a multimillion dollar independent assessment conducted by the National Academies of Science found SBIR to be effective.

The battle over inclusion of venture-backed biotech firms in SBIR derailed passage of an SBIR reauthorization bill last year. Both proponents and opponents were unwilling to compromise, and it seems both sides will lose now.

SBIR has proven to be a valuable screening tool for venture capitalists across many disciplines, including biotech. Compared to other small businesses, most SBIR winners are worthy of a closer look when prospecting for firms to add to an equity portfolio. Is VC eligibility going to prove to be the deal-breaker for SBIR’s continued existence?

We’ve seen from past history that some agencies are not likely to continue to maintain SBIR programs unless it is mandatory. SBIR reauthorization has to be passed to make that happen in all 11 research-intensive agencies. Several Phase I deadlines are looming and for other agencies proposal review is underway for both Phase I and Phase II. Will these processes end abruptly? What will happen to those companies that have already won Phase Is and are waiting decisions on their Phase IIs? Forced layoffs and bankruptcies of promising tech firms does not seem to be the wisest strategy to get us out of the current economic quagmire.

SBIR through its competitive application process and market-driven need for the resulting innovations to be commercialized, costs less than $ 3 billion a year and supports thousands of small businesses across the country and several thousands more high-wage jobs for some of the nation’s smartest entrepreneurs.

This one seems pretty simple. SBIR reauthorization should be part of the economy’s solution.

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