Senate Continues Debate Over SBIR Reauthorization

With the Senate in recess, debate over SBIR/STTR reauthorization has been temporarily put on hold for the week. The reauthorization act has landed at the center of a larger congressional debate over federal spending, due to the more than 80 amendments that have been submitted for consideration. Most of these amendments propose spending cuts unrelated to SBIR. The main text of the bill would extend the SBIR and STTR programs through 2019 and increase award levels for Phase I and Phase II awards. It would also allow companies that are majority-owned by venture capital firms to receive some awards.

The SBIR/STTR Reauthorization Act of 2011 would be the first long-term reauthorization of the program since 2000. Temporary extensions have been used since 2008, the latest of which is set to expire on May 31, 2011. By authorizing SBIR through 2019, potential SBIR recipients, as well as others in the innovation and commercialization community, would have a more reliable source of support for early stage technology development.

The act also makes permanent the increase from $100,000 to $150,000 for Phase I SBIR awards and from $750,000 to $1 million, with annual inflation adjustments. The award guidelines for SBIR initially were raised last year, through a Small Business Administration (SBA) policy directive. That increase was the first change in SBIR funding levels since 1992. The would act also limit awards to no more than 50 percent more than the guidelines. In the past, some agencies had made larger awards, reducing the number of companies that could receive funding. Agencies may still supplement the SBIR awards with their own funds. Companies may receive subsequent Phase II awards from another agency, as long as it is properly reported and the funding is not duplicative.

Within SBA, the legislation would create a new Office of Technology to oversee the SBIR and STTR programs. Overall funding for the program would increase, with the SBIR allocation at all participating agencies growing from 2.5 percent to 2.5 percent over 10 years. The STTR allocation would increase from 0.3 percent to 0.6 percent during the same period. Up to 3 percent of the total amount would be available for administrative costs at the new office if there is an allocation increase. The Federal and State Technology Partnership Program, which provides outreach to rural and underrepresented states to increase participation in SBIR and increase technological competitiveness, also would be reauthorized.

The National Institutes of Health, the Department of Energy and the National Science Foundation would be able to allocate up to 25 percent of their SBIR and STTR funding to businesses that are majority-owned by venture capital firms. The Department of Defense and other agencies may allocate up to 15 percent of their awards to these companies. SBIR agencies would be required to provide decisions to applicants within 90 days after the close of the solicitation process. The administrator would be able to issue an extension for up to 180 days. A new NIH pilot program, Accelerating Cures, would help design new programs that encourage the development of cures for diseases that the private sector has little incentive to research due to unprofitability.

Debate over reauthorization is expected to continue when the Senate reconvenes next week.

View the complete text of the SBIR/STTR Reauthorization Act and track its progress at: http://thomas.loc.gov/cgi-bin/bdquery/z?d112:SN00493:.