Agreement on SBIR Funding at NIH

The House-passed National Institutes of Health (NIH) appropriations for FY 97 included a problematic provision that would have changed the formula for awarding Small Business Innovation Research (SBIR) projects at the Institutes. The provision would allow NIH to fund SBIR research only if the average score of the pool of small business proposals met or exceeded the score of basic research proposals submitted by universities and other research centers.

Several representatives raised objections to the limitation, noting that the SBIR program deals with applied research which cannot be directly compared with basic research proposals. In addition to the difference in the type of research performed, SBIR supporters pointed out that the vastly different evaluation and scoring processes make it difficult to compare the two types of proposals. They argued the provision would curtail the number of grants NIH could make to small business.

Because of concerns about the language, House leadership has agreed to work to eliminate the provision. The agreement comes with the assurance that NIH will have the discretion to allocate the 2.5% SBIR set aside among the various NIH Institutes.

According to the Small Business Administration, NIH awarded approximately $145 million for SBIR research proposals each year in FY 95 and FY 96. That number is expected to rise to $180 million in FY 97 because of the increase in the SBIR set aside rate from 2% to 2.5%.