The US government’s Small Business Innovation Research (SBIR) program is a major source of funding for academic and industrial scientists seeking to commercialize their discoveries. But it’s had plenty of near-death experiences since its launch in 1982. This year is no exception, courtesy of Senator Rand Paul (KY), a Republican-ranked member of the Senate Small Business Committee.
Paul, who thinks SBIR grants are often wasteful and possibly even a threat to national security, derailed what was supposed to be a routine renewal of the $4 billion-a-year program by proposing numerous changes that , according to the defenders, would cripple, if not cripple this. But key lawmakers say they are closing in on a compromise that would extend the program beyond its current September 30 expiration date, spurred by strong pleas from the Department of Defense (DOD), the largest provider. SBIR grants.
“Small businesses that participate [in SBIR] are a vital part of the DoD’s R&D enterprise,” Heidi Shyu, DOD Undersecretary for Research, wrote July 12 in the second of two recent letters to the leaders of the Small Business Committees of the Senate and the United States House of Representatives. “The Department is concerned that any deficiencies or delays in reauthorization will cause irreparable harm to the small business community and adversely affect national security,” Shyu explained. In 2021, the DOD awarded nearly 3,500 SBIR awards totaling $1.7 billion.
Higher education lobbyists are also pushing for an extension. “SBIR has become very important to university commercialization efforts, so it’s critical that Congress reauthorize it,” says one, Tobin Smith of the Association of American Universities.
The calls seem to have brought the two parties together to address Paul’s biggest concerns. “I will continue to work in good faith with my colleagues to achieve a bipartisan compromise that will reauthorize SBIR…before it expires while protecting our national security and bringing more program technologies to market,” said Senator Ben Cardin. (D-MD), who chairs the panel, in a July 15 statement to ScienceInitiated. On the same day, Paul’s director of communications, Kelsey Cooper, said ScienceInsider: “We have seen progress and are hopeful that we will reach a resolution.”
Eleven federal agencies run SBIR programs, funded by a mandatory allocation of 3.2% of their research budgets. A companion program for academic spin-off companies, called the Small Business Technology Transfer Program (STTR), receives an additional 0.45% of the research budgets of the five largest agencies: DOD; the Department of Health and Human Services, which houses the National Institutes of Health (NIH); the Ministry of Energy; NASA; and the National Science Foundation (NSF).
The programs, coordinated by the Small Business Administration but run by each agency, have been repeatedly reauthorized by Congress but never made permanent. The most recent extension, for 6 years, came in 2016 as part of legislation providing annual guidance to the DOD.
Last year, Paul signaled his opposition to another extension. In a September 2021 hearing, he argued that SBIR investments often don’t result in a marketable product and asked “whether taxpayers should continue to fund the madness.” [of funding companies] without any expectation of return on investment. He also complained that some SBIR grants ended up helping China, noting a DOD report that pointed to a handful of cases in which US-based SBIR-funded scientists moved to China.
SBIR advocates say these objections do not hold water. At the September 2021 hearing, for example, Jere Glover of the Small Business Technology Council noted that about 20 studies of SBIR by the National Academies of Sciences, Engineering, and Medicine found high rates. high rates of commercialization of important technologies.
Supporters have also objected to the additional security requirements Paul is seeking. In a June 2 letter, Shyu warned that they could place an “undue burden” on researchers conducting unclassified research.
Others have argued that any new requirements would be premature, given that the White House Office of Science and Technology Policy is still developing a government directive on research security issued in January 2021 by the then president. , Donald Trump. In addition, several agencies have stepped up their oversight of foreign collaborations under the now-defunct, controversial China Initiative that the Trump administration launched in 2018.
But Paul and Blaine Luetkemeyer (MO), ranked Republicans on the House Small Business Committee, still believe safeguards are needed to combat what they call “malignant” foreign influences. “We believe the government is not doing enough” to stop countries from stealing federally funded research, says a House committee staffer. One proposal is for Congress to require SBIR recipients to return their money if their ties to China are deemed a national security threat.
Paul’s position has evolved over the past few weeks. For example, he dropped the request for a cap of three awards per recipient (there is no current cap and some companies have dozens of awards) after Shyu wrote on June 2 that the proposed caps will “reduce competition and hinder innovation”.
Paul is now focusing on provisions that would establish business benchmarks for grant recipients, such as the requirement that they derive a preponderance of their revenue from sales rather than SBIR grants. The measure targets what critics call the “mills” of SBIR.
But Shyu says it’s not that simple. “References that go too far… [could] impact the department’s ability to meet the needs of combatants,” she wrote last week. She argued that any new benchmarks should be tested in a 2-year pilot project designed “to understand all the consequences and impact on small businesses”.
With time running out and a busy legislative schedule, SBIR supporters hope Congress will find a way to keep the program alive even if it can’t pass a standalone expansion. One option is to add an extension to the annual defense authorization bill, which is usually a safe bet to pass.
The House included a 2-year extension of SBIR in the version it passed last week, with the White House signaling support ahead of the vote. But it’s unclear whether the Senate can do the same, and then reconcile any disputes with the House, before September 30.
Another potential vector is the spending bill for fiscal year 2023 which begins on October 1. Congress is likely to delay final action until after November’s midterm elections, but it is expected to pass an interim measure that freezes spending at current levels. This short-term solution, called continued resolution, could also include a simple provision extending the SBIR and STTR programs.
It’s unclear what would happen if Congress doesn’t reauthorize the SBIR program by September 30. DOD officials say they will not issue new awards or accept proposals after that date, and last month a Navy component of the program took the preemptive step of dropping an ongoing solicitation. .
But the NIH, which operates the second-largest SBIR program, says it plans to continue soliciting and funding SBIR and STTR proposals “even though there are no legislative requirements.” NSF officials declined to comment on their plans, though some observers believe it and other agencies may choose to operate SBIR-like programs with existing funds. And today, the NSF sent out an email touting their pilot project that launched the program and proclaiming, “Happy 40th Anniversary to the SBIR Program.”