FAST

SBIR Reauthorization: Improving the Impact of FAST: An Editorial

Last week, SSTI reported the draft SBIR Reauthorization bill circulated by the House Small Business Committee in mid-March included language that would reauthorize the Federal & State Technology Partnership (FAST) for two years at its current $10 million level. FAST was created with the 2000 SBIR reauthorization and received appropriations through the Small Business Administration (SBA) for three of the next four years.
 
In its first iteration between 2000-2004, FAST received mixed reviews. It could be made better through the present reauthorization process. Before that, however, an important and often overlooked point must be made: there is little to no criticism with the underlying concept or mission of FAST to provide financial support to state and local efforts to promote the federal SBIR program and improve the quality of small business participation in SBIR across the country.
 
That lack of criticism can easily be attributed to the fact that promotion of the opportunities afforded small tech firms through SBIR and the provision of high-quality proposal development assistance does make a difference in the number of competitive proposals received from the geographic area served by the outreach and assistance efforts. In its assessment of the SBIR program, the National Academy of Sciences concluded that despite the small dollar amounts of the FAST awards, the short-lived program did appear to make a difference.
 
FAST did develop a sizable collection of critics, however, including many grantees. The situation after the first three funding cycles was so dire, in fact, that there was little fight for appropriations in fiscal year 2005 when the Administration did not request more funding. FAST has remained on the books as an unfunded Small Business Administration (SBA) program ever since.
 
The conclusion: good idea, poorly executed.
 
In February 2008, SSTI convened conference calls with its core state members to develop suggestions regarding how FAST could be improved. Past criticisms essentially could be divided into two groups: 1.) variable quality of FAST grantee service delivery and performance; and 2.) administrative/oversight issues at SBA. There are easy and affordable ways to address each set of concerns.
 
In this issue of the Digest, we highlight some recommendations addressing the first group of concerns dealing with grantee quality, including:

House SB Committee Releases Draft SBIR Bill at Hearing; SSTI Testifies

A brief two-year reauthorization, bigger award sizes, VC eligibility clarification, and a $10 million grant program for state/local outreach assistance are included in the draft SBIR reauthorization bill circulated by the House Committee on Small Business Chairwoman Nydia Velazquez during the third hearing on the topic, held March 13.
 
The SBIR program will sunset Sept. 30, 2008, if reauthorization legislation is not passed by Congress and signed by the president before then.
 
Bigger Awards, Fewer Winners
The draft legislation doubles the award sizes for both Phase I and Phase II, authorizing awards of $200,000 for Phase I and $1.5 million for Phase II. In addition, the committee draft authorizes agencies to award “sequential Phase II awards” for testing and evaluation of promising technologies. The award sizes have not been increased since 1992, although some agencies have exceeded the current limits, as needed, for particular projects.
 
Since the bill does not increase the 2.5 percent set aside requirement for SBIR, the result will be fewer awards, thus increasing competition for small businesses and decreasing the number of innovations supported through the program.
 
Venture Capital eligibility
The most controversial element, as Digest readers following SBIR know, is whether or not small businesses owned by venture capital firms are eligible to compete for SBIR funding. Most of the testimony and questions during this third full Committee hearing focused on the issue. Steven Preston, administrator for the Small Business Administration (SBA), was subpoenaed to participate as the sole member of the first panel of the hearing to present the rationale for SBA’s current eligibility interpretation. 
 
Preston expressed concern with the draft language, stating in his written testimony that “the committee print offers too broad a definitional change to the affiliation standards.” SBA is concerned about carryover of the redefinition of SBIR eligibility into all small business programs, potentially harming them inadvertently.
 
In addition, in his testimony, Preston illustrated the problem that arises with definitions of venture capital-owned companies “which includes patent and licensing organizations affiliated with institutions of higher education.” He expressed an interest in working with the committee to clarify the language.
 
The alternate view on the VC eligibility issue was the dominant topic of the testimonies of the first three witnesses during the second panel: Jim Greenwood, president of BIO; Mark Heesen, president of the National Venture Capital Association; and Mark Leahey, executive director of the Medical Device Manufacturers Association. The VC issue has been most prominently discussed in the industries associated with life science research and biomedical development.
 
All three witnesses appreciated the committee’s commitment to addressing the eligibility issue in the draft language. Heesen outlined how SBA’s definition was being applied in practice, taking some exception to Preston’s explanation. He also referenced the recent SBIR assessment by the National Academy of Sciences, as he described the formerly complementary relationship of SBIR and VC, stating “the NAS report found that there are useful synergies between venture capital investment and SBIR funding in terms of selecting the most promising companies.”
 
Greenwood and Leahey explained the specific impact of SBA’s current definition on the biotech and medical device communities, respectively. Both witnesses cited the steep three-year decline in SBIR grant proposals to NIH as evidence of how SBA’s definition is negatively affecting biomedical research at its earliest stages. NIH applications declined 11.9 percent in 2005, by 14.6 percent in 2006, and by 21 percent in 2007; SBA’s Final rule on eligibility became effective Jan. 3, 2005. The current definition is slowing U.S. health-related innovation rather than increasing it, they contend.
 
Reauthorization of FAST
Authorized for the first time in the current expiring SBIR legislation and funded for only three years, the Federal and State Technology Partnership (FAST) is included in the committee draft bill at the same authorization level of $10 million. The SBA-managed program would provide grants of up to $250,000 per year to state and multistate initiatives dedicated to broadening SBIR’s reach geographically and/or increasing SBIR participation among women and minority small tech firms. Grants, limited to one per state, would have to be matched on a one-to-one basis by nonfederal sources and would be for performance periods of up to three years to allow greater continuity for states in planning, staffing and delivering services to client companies. 
 
Reauthorization and improvement of FAST and explaining the important role state and local TBED efforts play in nurturing SBIR participation and innovation were the central points of the written testimony submitted to the hearing by the fourth panelist, Mark Skinner, SSTI's vice president.
 
“SBIR over the past 25 years has evolved into a state-federal-industry partnership in ways that I do not believe are fully realized by the federal agencies and perhaps even Congress,” Skinner wrote. The testimony explains state and local technology-based programs – now present in nearly every state – have become the de facto marketing and outreach arm of the federal program, filter potential applicants for SBIR appropriateness, and move SBIR technologies closer to commercialization by providing linkages to angel and venture capital groups, production partners and, in some cases, direct financial assistance toward Phase III.
 
The fifth and final witness on the second panel of the hearing was Dr. Charles Matthews, professor of entrepreneurship and strategic management at the University of Cincinnati. Dr. Matthews emphasized the importance of the federal SBIR program in creating a leveraged economic impact on regional economies, providing specific examples of the integral relationship that exists between the public-private TBED initiatives of southwest Ohio, SBIR funding, and the region’s small technology firms.
 
In addition to SSTI’s support for FAST reauthorization, Greenwood stated in his oral testimony that BIO supported FAST. Preston, when asked directly by Committee Chairwoman Velazquez whether or not the SBA supported FAST reauthorization, gave a qualified endorsement, adding that he wanted to talk with his staff more about the particulars of the program as included in the reauthorization draft.
 
Same Time Next Year?
Committee markup for the draft bill had not been scheduled at the time of the hearing, but the process is anticipated to pick up speed, now that a draft has been prepared. After clearing the House Committee on Small Business, SBIR reauthorization moves to the House Committee on Science, which shares SBIR oversight.
 
The current draft only extends the SBIR program for two years – the shortest extension in the program’s 25 year history. As a result, the next reauthorization process would need to begin next spring to avoid the current pressures to renew the program prior to its pending sunset in six short months.
 
The written testimonies of all six witnesses for the hearing are available at: http://www.house.gov/smbiz/hearings/hearing-03-13-08-sbir/hearing-03-13-08-sbir.htm
 
The draft SBIR reauthorization legislation is available at: http://www.ssti.org/Publications/Onlinepubs/Draft_SBIR_Legislation.pdf

SBA Names FY 2004 FAST, ROP Winners

Earlier this week, 22 states and Puerto Rico were named recipients of more than $2.2 million in combined fiscal year 2004 Federal and State Technology Partnership (FAST) and Rural Outreach Program (ROP) awards. All but one of the 21 FAST awards distributed by the Small Business Administration (SBA) were worth $95,000 -- they totaled nearly $1.98 million. Five ROP awards of $49,470 also were made by SBA.

Congress Eliminates Funding for FAST and ROP

Within the past hour, SSTI has learned that Congress zeroed out the $3.5 million for two programs that supported state SBIR/STTR technical assistance efforts. The omission of any mention in the FY 2003 Omnibus Appropriations Conference Report of funding for the Federal and State Technology Partnership (FAST) and Rural Outreach Program (ROP) was not a mistake in the draft as originally thought by the programs' proponents.

SBA Awards FY 2002 FAST Winners

The Small Business Administration (SBA) recently named 27 states winners of the second Federal and State Technology Partnership (FAST) awards. At $100,000 each, the awards totaled $2.7 million. Created in December 2000 legislation that reauthorized the Small Business Innovation Research (SBIR) Program, FAST provides matching funds to enable states to augment or expand their tech business assistance and SBIR outreach efforts. The FY 2002 winners are:

2002 FAST Solicitation Released

Through the 2002 Federal and State Technology Partnership (FAST) solicitation, the Small Business Administration (SBA) anticipates making up to 27 awards to state efforts to stimulate and encourage broader participation in Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs.

SBA Names FY 2001 FAST Winners

This week, 30 states were named recipients of the first Federal and State Technology Partnership (FAST) awards administered by the Small Business Association (SBA). The awards range from $100,000 to $150,000, totaling almost $3.5 million. FAST, included in December 2000 legislation reauthorizing the Small Business Innovation Research (SBIR) Program, provides matching funds to enable states to augment or expand their tech business assistance and SBIR outreach efforts. FAST winners and their respective award amounts are below: 

Velazquez Amendment to STTR Threatens FAST

The House Small Business Committee approved H.R. 1860 this week, legislation that amends and reauthorizes the Small Business Technology Transfer (STTR) Program. STTR funds cooperative research and development projects between small companies and research institutions such as universities or federally funded R&D laboratories. H.R. 1860, as amended, increases the percentage of R&D funds earmarked for this program from 0.15 percent to 0.3 percent beginning in 2004, thus doubling the support for small high-tech firms. The Senate version of the STTR reauthorization would increase the program set-aside to 0.3 percent beginning in 2004 and 0.5 percent for fiscal year 2007 and each fiscal year thereafter.

FAST Deadline Extended

The Small Business Administration has extended the deadline for states to submit proposals in response to program announcement no. FAST-01-R-001 for the Federal and State Technology Partnership (FAST). FAST will support state efforts to foster economic development among small high technology businesses through federally funded innovation and research and development programs. According to the website for the SBA Office of Science & Technology, the deadline for proposals has been extended to June 28, 2001. See http://www.sba.gov/sbir/fastextension.html

SBA Releases FAST Solicitation

The Small Business Administration (SBA) will distribute up to $3.4 million for small technology business development efforts across as many as 30 states through the first Federal and State Technology Partnership (FAST) request for proposals, released online Tuesday. Proposals are due Thursday, June 7, 2001. Individual state awards will range from $100,000 - $150,000.

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