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Small Business Research Programs up for Reauthorization
Thanks to an amendment sponsored by Representative Vernon Ehlers (R-MI) and the strong support of Representative David Obey (D-WI), the House reauthorization of two small business innovation programs did not include a proposal to increase the set-asides from research agencies including the NIH.
The Small Business Innovation Research (SBIR) program was established in 1982 through the Small Business Innovation Development Act. The purpose of the program is to stimulate technological innovation, increase private sector commercialization of innovation, use small businesses to meet federal research and development needs, and encourage the participation of minority and underrepresented persons in technological innovation. SBIR programs are administered by all federal agencies that distribute more than $100 million per year in extramural research funds. These agencies are required to set aside 2.5% of their extramural budgets to make research grants to small businesses. Eleven federal agencies currently meet these criteria including the National Science Foundation (NSF), NASA and the National Institutes of Health (NIH). A second program was established in 1992 to fund Small Business Technology Transfer (STTR), a program designed to foster collaborations between small businesses and the academic research community. Funded in a manner similar to SBIR, the STTR program set aside is currently 0.3%. It is important to note that the percentage set aside for these programs represents a minimum spending level, and that agencies have the flexibility to spend more than the set aside amount, but not less.
Like many federal programs, SBIR and STTR require periodic reauthorization through legislation passed by Congress. The programs were last reauthorized in 2000 (SBIR) and 2001 (STTR) and this year Congress has been considering legislation that would reauthorize both programs through September 30, 2010. The House of Representatives passed a bill on April 23, 2008 entitled the SBIR/STTR Reauthorization Act (H.R. 5819).
Of significant concern in the original version of the bill was a provision that would increase the percentage set aside for SBIR and STTR programs from 2.5 to 3.0% and from 0.3 to 0.6% respectively. At a time when research budgets at most agencies have failed to keep pace with inflation, any increase in small business programs would come at the direct expense of investigator-initiated research project grants. According to an analysis by the Office of Management and Budget, the increased set aside would result in the diversion of approximately $100 million over the current amount at the NIH, for a total of nearly $700 million. At the NSF an additional $18 million would go to small business programs, which would total nearly $110 million. Moreover, demand for these programs does not seem to indicate an urgent need for an increase in the funding level. As noted in testimony given before the House Subcommittee on Technology and Innovation on April 26, 2007 by Dr. Norka Ruiz Bravo, NIH Deputy Director for Extramural Research, the number of applications for SBIR grants at NIH actually declined in 2005 (down 11.9% from 2004) and 2006 (down 14.9% from 2005). This comes at a time when research project grant applications at the NIH have risen sharply, causing success rates to fall as a result of flat funding.
It was in recognition of the danger that the increased set-aside represented to research that Rep. Ehlers proposed his amendment to strike the increases from the bill, keeping the set-aside percentages the same. Rep. Ehlers is a physicist and long time champion of research in Congress. Rep. David Obey, chairman of the Appropriations committee, made strong statements in support of research funding during the debate on the bill, discouraging the proposed increases for small business programs. While the threat was avoided in the House bill, similar proposals to increase the SBIR and STTR programs have been included in Senate version of the legislation. The APS will continue to work with organizations such as the Federation of American Societies for Experimental Biology (FASEB), Association of American Medical Colleges (AAMC) and the Association of American Universities (AAU) who have all sent letters to Congress expressing concerns about the proposed increase in the SBIR set aside.
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