STTR Hearing Reveals Differences Between Administration, Congress

The Small Business Technology Transfer Program (STTR) received unanimous endorsement by four federal agencies during a recent House committee hearing, although two federal witnesses emphasized the Administration’s opposition to expanding the program. Language to gradually double the size of STTR, which supports small business-university research projects that could lead to commercializable technologies, is included in S. 856, the reauthorization bill working its way through Congress. 



Currently limited to 0.15 percent of the extramural R&D budgets of five federal agencies, STTR’s set-aside would increase to 0.3 percent in 2004, and 0.5 percent in 2007, if Senate Bill 856 passes in its introduced form.



STTR was first created in 1992 as a pilot companion program to the Small Business Innovation Research (SBIR) Program. The set-aside for STTR has not changed since its inception. SBIR, on the other hand, grew to 1.25 percent during the initial four years from 1982-1986. 



SBIR now represents 2.5 percent of the ten federal agency budgets for extramural R&D, totaling more than $1 billion annually. STTR, for comparison, provided $64 million of support for 329 joint research projects in 1999. 



Maurice Swinton, Assistant Administrator for the Small Business Administration Office of Technology, testified that “[t]he Administration supports reauthorization for the program for a three-year duration and no increase to the percentage set aside for the program.” S. 856 would extend the program through September 30, 2010. The program presently expires September 30, 2001. 



In his testimony, acting director of the Department of Defense Small and Disadvantaged Business Utilization Office, Tim Foreman, said “the information that we have does not support the movement from 0.15 percent to 0.3 percent because the data just doesn’t support that there is merit in those dollars at the current funded level.” 



The following day, in an STTR hearing before the Senate Small Business Committee, General Accounting Office (GAO) presented a report that may allay some of the Defense Department’s concerns. The GAO reported the results of its survey of all 166 companies that had received 201 Phase II STTR awards in fiscal years 1995 through 1997, the first three years when such awards were made. Responses were received from 102 companies. 



The GAO findings include: 

• The companies reported about $132 million in total sales and about $53 million in additional developmental funding. About two-thirds of the projects with reported sales achieved their first sale in 1999 or 2000 and projected about $900 million in additional sales by December 31, 2005. 
• The companies also reported receiving 41 patents for the core technologies associated with their projects and the creation of 12 spin-off companies. 
• Twenty-seven projects were discontinued. When asked to identify those factors that had a great role in the decision to discontinue the project, companies most frequently cited insufficient additional funding for further technical development. 

The balance of the STTR reauthorization bill, including a provision to increase the size of Phase II awards to $750,000, was received more favorably by the federal agencies. 



The GAO report can be found at http://www.gao.gov/new.items/d01766r.pdf 

S. 856, the STTR Reauthorization Act, can be found through the Thomas Legislation Locator: http://thomas.loc.gov/