Small business programs at risk as Congress debates

Viewpoint: Small business programs at risk as Congress debates

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The Small Business Innovation Research and Small Business Technology Transfer programs will expire at the end of this fiscal year without further legislative action to sunset the programs.

SBIR and STTR – first issued in Through the Small Business Innovation Development Act of 1982 and the Small Business Research and Development Reform Act of 1992 – creating partnerships between federal agencies, public research institutions, and the nation’s best and brightest small businesses to create valuable technologies.

For this reason, their approval is a priority for the National Defense Industrial Association. The programs meet their goals by using a small percentage of federal research and development spending through competitive awards.

For fiscal year 2020, the most complete data year, these programs resulted in nearly $3.9 billion going to small, high-tech companies. Such funding will stimulate technological innovation to ensure a competitive advantage for warfighters in all domains.

They are not venture capital programs, but are often referred to as the nation’s seed funds because the awards provide unfunded funding for early-stage, high-risk research for projects critical to keeping the United States competitive globally. American interest.

The Small Business Innovation Research Program has been bipartisanly reauthorized for more than 40 years, but Congress is currently debating its merits. This is when time is running out. With only 11 legislative days in September, when both chambers are in session, it is unlikely that any legislative vehicle will pass before passing with SBIR, leaving the possibility of inclusion in another continuing resolution.

To everyone’s surprise recently, there was discussion of a free bill under accelerated consideration, a process that relies on the unanimous consent of 100 senators – not an easy step.

It will not end for a lack of effort from individuals on the Hill, in industry, the Small Business Administration and the Pentagon. The five-year extension was included in the House’s Creating Manufacturing Opportunities, Technology and Economic Strength (COMPETES) priority legislation.

However, when the bill moved through the Senate as the 2021 version of the USA Innovation and Competition Act and the CHIPS and Science Act of 2022, the appropriations committees dropped the SBIR extension after failing to reach agreement.

The House Defense Services Committee has added an amendment to the National Defense Authorization Act for fiscal year 2023. Incorporation offers hope for the program’s continuation if a freestanding law or continuation resolution does not make it to the president’s desk. Applications close on September 30th. However, using the NDAA as a vehicle means delaying the programs because Congress is unlikely to pass the final measure until October.

The question must be asked: Why does relicensing prove controversial? After all, the program is reported to be a 22-to-1 return on investment in the Department of Defense.

It has been proven to bring innovation to the department and the 10 other agencies that have been approved to use it. However, despite broad bipartisan support, it failed to pass Congress.

Understanding what constitutes reauthorization can be learned by looking at a few obscure Senate proceedings. Most references to legislation passing the Senate focus on passing on a 50-50 vote. This is usually because large legislative bills have been blocked in the past year because one or two members of the party did not make it to the minimum level. Or, as the filibuster debates reminded Americans of civics, a 60-40 vote is needed to overcome that hurdle. However, when it comes to small business innovation research, only a select few are pushing for its reauthorization.

So why can a few members keep a record program that has been successful for over 40 years from passing? This is the controversy.

Formally, the Judiciary Committee drafts legislation, then moves forward to a larger vote. The bill is on the big legislative wagon, with several judiciary committees engaged and left to debate those issues before moving a provision forward. COMPETES had several provisions not included in the Innovation and Competition Act, including SBIR, which led to the convening of a formal conference. Negotiations continued for months, but when legislation reached an impasse, anything that did not recognize the “four corners” was rejected.

The “Four Corners” consists of the respective Judging Committee Chairman and ranking members from the Product Council. If one of them does not agree with the future provision, it will not be included.

Complicating matters further, the Congress leadership rejected the position of the committee leadership. Sometimes it is done through negotiation and bargaining, for something else the quid pro quo the member may consider more. Other situations may require more aggressive action, such as the leader of the party in that room “rolling over” the member or ignoring their objections and bypassing them. However, the latter option is not what either side likes to do in hindsight.

That brings us back to relicensing and where it stops. A member of the Senate Small Business Committee’s Jurisprudence Committee has publicly expressed concern about SBIR’s impact. This member mentioned multiple award winners, or so-called “SBIR Mills” – companies that receive multiple contracts in the program without developing technologies for acquisition or operational use.

As talk has focused on whether the program is meeting Congressional intent of the law, public discussions have focused on the program’s security from Chinese influence. Development. Small businesses engaged in government contracting do not want to compromise national security and put the warfighter at risk. They also don’t want to risk their own intellectual property being stolen.

The parties continued to negotiate but failed to reach a meeting of the minds. Incorporating a program extension or reauthorization into an ongoing solution is the last hope of getting the bill up and running without delay if a free bill isn’t issued.

To understand why the tabernacle was created, it is important to examine the arguments of both sides. In addition, it is important to check the input for the customer, focusing on protection.

Historically, there have been reauthorizations that have gone smoothly and resembled rubber stamps, and others where the program appeared to be in jeopardy, but Congress eventually acted to keep the program going. For small business innovation research, the debate over the past few years has focused on making the program sustainable, not ending its existence. Congress is doing its job in reviewing the program’s effectiveness and whether it is meeting the law’s intent.

Most of the focus is on level III and what is often called the “valley of death”. This term refers to the failure to translate technologies from research efforts into practical use. This transition is not supported by program dollars and often a successful innovation ends up in a waiting game for funding from other sources.

Such funding depends on the priorities of the service’s budget process and whether the service’s culture and plans are open to timely introduction of the technology. These new technologies often backfire from underlying industry interests, service bias, and congressional parochialism.

For small business innovation research, one of the issues being debated is whether there should be a time limit for a company to participate in the program or whether there should be a limit on the maximum number of awards a company can win. However, some companies’ innovations wait “on the shelf” for more than a decade before they are ready to integrate the service into their platforms or their respective technology devices.

This is not the company’s fault. But they are often struggling to keep their businesses afloat and waiting for funding.

Another point of discussion is adding an assessment of the business and the company’s capabilities to bring innovations to market as criteria for determining eligibility for participation in the program. The Pentagon sees this primarily as a way to make the invention available to the military. In this sense, commercial use in the private sector is of secondary importance and should not be a relevant limitation.

Despite a history of expanding technology spinoff businesses, including LASIK, and enabling wireless communication, the defense program is not, and should not be, the primary objective, especially when it comes to national security. Emphasis should be placed on the high investment of the program to ensure that technological innovations get into the hands of the warfighter.

By working with US entrepreneurs and developing strict eligibility rules that limit the participation of US companies, the program strengthens the economy by recognizing the ingenuity of small businesses and increasing the ability to move technologies from the lab to the market. Recently, the Office of the Undersecretary of Defense for Research and Development has opposed changes to the program and stands on the number of awards. This is not limited to large companies, federally funded research and development labs, and universities.

As requested by many independent observers, there could be areas of change that would improve the program and raise more revenue. However, these programs should be discussed and analyzed without risking delays.

With the clock ticking down, it appears some backroom legislative business will be required to keep the program alive. In classic Washington style, the dealers may have nothing to do with the program in question.

When all is said and done, there will be a question of whether there will be an effort on the part of the party leadership to remove the objections raised at the committee level. This will allow small, innovative companies to continue to work with the defense industry, bringing important newcomers to a competitive defense industry base and keeping the United States at the technological forefront of the immediate threat from China.

Will there be an effort to channel the nearly $4 billion in investment capital to small businesses to support the nation’s warfighters? The Small Business Innovation Research Program helps develop the innovation needed to maintain a critical and competitive advantage with warfighters.

Losing that creativity by failing to communicate is a serious mistake.

Kea Matory is Director of Legislative Policy at the NDIA.

Topics: Legislative information, small business