Upcoming Expiration of the SBIR Program

Jason Miller, from Federal News Network, writes, “In about 30 days, one of the longest running and most successful small business programs will expire.

The House will have 14 days in September with votes scheduled to reauthorize the Small Business Innovation Research (SBIR) program when it returns to Washington, D.C. after Labor Day. Meanwhile, the Senate reconvenes on Sept. 6 and doesn’t spell out how many days it plans to be in D.C. and voting on bills.

Emily Murphy, the former administrator of the General Services Administration and long-time Hill staff member who worked on small business acquisition issues, wrote in April when she warned of the program’s impending expiration “ Over the past 40 years, the Small Business Innovation Research (SBIR) program has contributed substantial innovations in the defense, civilian and private sectors. It allows for small federal investments in research and development (R&D) with small businesses through a phased, competitive process. The dollar amounts are relatively modest: $50,000 to $275,000 in Phase I, and $750,000 to just over $1.8 million in Phase II. Yet the results speak for themselves: companies such as iRobot, Sonicare and Symantec are household names. Per the Small Business Administration, 70,000 patents and 700 public companies have resulted from the program. A recent study by scholars at Rutgers and the University of Connecticut looked at SBIR awards at the National Science Foundation and found that the SBIR program allowed the government to select risky but high impact ventures.”

Changes Proposed

According to correspondence between the Hill and the Pentagon obtained by Breaking Defense, even if the Small Business Administration’s (SBA) federal-funded Innovation Research (SBIR) and Technology Transfers (STTR) program is reauthorized in the short term, some lawmakers are looking at major changes to how the program is currently being run.

The program has come under the microscope of lawmakers on both the House and Senate small business committees, according to legislative proposals on SBIR/STTR benchmarks shown in a July 12 response letter to the committees.

In the first proposal, the Senate Small Business Committee would restrict eligibility to the SBIR/STTR programs based on the total number of awards received from the inception of the program. The second proposal, also from the committee, would restrict eligibility to the programs based on the number of awards received over a five-year period. In the third proposal, the House Small Business Committee restricts eligibility based on enhanced requirements associated with the existing Phase I to Phase II transition rate and the Phase III commercialization benchmarks. 

Response

Under Secretary of Defense for Research and Engineering, Heidi Shyu spoke to Defense Writers via zoom at the Pentagon, Washington, D.C., Jan. 13, 2022. In her response, Shyu expressed the benchmarking requirements present “significant concerns” for DoD and a program extension would be the preferred approach to fully assess potential program challenges.

Specifically, the first two proposals would have “drastic impact” on the program, with the second proposal being the most severe, impacting 95% of small businesses. The proposed benchmarks will also be resource-intensive and time-consuming for DoD, Shyu said. 

“The Department, as well as the SBA and other agencies, respectfully disagree with the argument that multiple awards represent a significant problem and that having multiple awards ‘crowds out’ or limits competition,” Shyu said. “All SBIR/STTR awards are competitively awarded efforts with multiple awards addressing multiple topics. While a company can receive multiple awards, those awards are not for the same topic. In addition, the Department is concerned about the impact to the Department’s small business innovation base and its ability to meet warfighter needs if current SBIR/STTR projects are terminated due to benchmarks that go too far.”

SBIR Program History

In 1982, through the Small Business Innovation Development Act, the Small Business Innovation Research (SBIR) program was created and implemented across multiple Agencies. It has continued as the Nation’s largest innovation program. SBIR offers competitive awards to stimulate technological innovation among small private-sector businesses while providing government Agencies with new solutions that meet their diverse needs.

Some other important dates to consider:

• »  The SBIR program was reauthorized in 1992 with
  the passage of the Small Business Research and Development Enhancement Act of 1992. At that time, concern continued about the U.S. economy’s capacity to commercialize inventions. As a result, legislative l anguage was added which highlighted commercial potential as a criterion for awarding SBIR grants.

• »  Then again in 2000, the program was reauthorized until 2009 by the Small Business Innovation Research Program Reauthorization Act of 2000.

• »  Due to a series of Continuing Resolutions the SBIR program was not reauthorized again until December 2011 when it was reauthorized by the 2012 Defense Authorization Act.

  The Small Business Technology Transfer, or STTR, program began later and was initialized in 1992 by the Small Business Technology Transfer Act of 1992. It too contains a sunset pro-vision and has been reauthorized by the Small Business Reauthorization Act of 1992, the Small Business. Reauthorization Act of 1997, the Small Business Technology Transfer Program Reauthorization Act of 2001 and the SBIR/ STTR Reauthorization Act of 2011.

In 2016 both the SBIR and STTR programs were reauthorized as part of the 2017 National Defense Authorization Act, or NDAA, pushing the expiration date to September 30, 2022. This was a simple fve-year reauthorization with no allocation increase or pilot programs.

On August 13, 2018 the National Defense Authorization Act for Fiscal Year 2019 was signed by the President, which extended the four pilot authorities through FY22.

THE ROLE OF THE SMALL BUSINESS ADMINISTRATION
Once a program has been reauthorized, the Small Business Administration has the statutory obligation to provide guidance to the participating Federal Agencies for the general operation of the SBIR and STTR programs. This guidance is referred to as the Policy Directive, or PD. It is prepared by SBA and is subject to public comment before it is fnalized. Federal Agencies participating in the SBIR and STTR programs are obligated to follow the guidance provided by the Policy Directive. Each Agency is required to review its rules, policies, and guidance to ensure consistency with the relevant Policy Directive and make any necessary changes in accordance with each Agency’s normal procedures. The most recent Policy Directives for both the SBIR and STTR programs were published on May 2, 2019.

Though dynamically different, both programs share a common goal – to foster innovation among domestic small businesses engaged in Federal research and development activities. As such, both programs harness the entrepreneurial spirit for which the United Sates is recognized and will continue to evolve over time.