News of the WeekSBIR Program

Researchers Fight Against Bigger Slice to Small Business

See allHide authors and affiliations

Science  03 Jul 2009:
Vol. 325, Issue 5936, pp. 18
DOI: 10.1126/science.325_18

A coalition of U.S. scientific societies and university organizations is urging Congress not to expand a $2.3 billion research program for small businesses. To succeed, however, the coalition must overcome one of the most influential interest groups in Washington, D.C., and mend fences with legislators still smarting from a recent tweak to the program.

The campaign involves changes to the Small Business Innovation Research (SBIR) program. Begun in 1983 and funded by taxing the research budgets of 11 federal agencies, the SBIR set-aside is meant to help a sector that many people agree will be key in pulling the country out of its economic doldrums.

Last month, the Senate small business panel passed a bill (S.1233) that would increase the set-aside by 40%, from 2.5% to 3.5%, over 11 years. Under the same legislation, a smaller, younger effort to aid university start-ups, the Small Business Technology Transfer (STTR) program, would grow from 0.3% to 0.6%. “This is an important program that is working, and we believe that an increase is essential,” says Senator Mary Landrieu (D–LA), chair of the Senate panel and one of SBIR's biggest fans. Last year, the panel approved a doubling of the SBIR set-aside over 5 years, but the bill died.

Nothing ventured.

The number of SBIR applications dropped sharply following new rules on participation by venture capital firms, but the connection is not clear.

SOURCE: NIH SBIR PROGRAM

Science lobbyists, however, argue that even the smaller, more gradual rise in play this year would take too big a bite out of the government's overall research budget. They are especially concerned about its impact on the National Institutes of Health (NIH), which runs the second-largest SBIR program after the Department of Defense. NIH has seen a sharp drop in the number of SBIR applications (see graph), and its officials are worried that expanding the program could force it to fund low-quality projects.

The science community much prefers a proposal (H.R.2965) to maintain the current set-aside, passed separately last week by the science and small business committees in the House of Representatives. So does the president's science adviser, John Holdren, who on 2 June wrote Landrieu to say that “the current budget set-asides provide a sufficient floor for agencies to invest in innovation from small businesses.”

The lobbying to contain the program is led by the Federation of American Societies for Experimental Biology (FASEB), reflecting a heightened concern among life scientists that expanding the SBIR program will reduce federal funding for academic biomedical research. “Rather than increasing support for one area at the expense of all others, we urge you to increase funding for all research agencies,” says Richard Marchase, president of FASEB. On 23 June, the coalition sent letters to Landrieu and Senator Olympia Snowe (R–ME), the committee's ranking member, urging them to scrap the increase.

But FASEB faces an uphill battle. The small business sector lost out when Congress added a last-minute provision to the $787 billion American Recovery and Reinvestment Act (ARRA)—known familiarly as the stimulus package—that excluded NIH's SBIR program from its share of the additional $8.2 billion that the agency will receive. That move could come back to haunt the research community.

None of the key committees was consulted about the provision, says Representative David Wu (D–OR), chair of the technology panel for the House science committee and a co-sponsor of the House bill. “I feel strongly that ARRA funds should have been part of the set-aside,” he says. “Exempting them sets a bad precedent and is not a positive thing.” Adds a Senate aide, “We think small business should get its fair share, and, frankly, this seemed like dirty pool.”

The exclusion has become a political hot potato. Wu says that “no one has claimed credit, but NIH has confessed to asking for it.” At a 23 April hearing on the program, Wu asked an NIH official about the apparent contradiction between the exclusion and a letter from acting NIH Director Raynard Kington to Landrieu and Snowe that Wu said “commits” NIH to preserving the set-aside in all appropriations. Sally Rockey, head of NIH's Office of Extramural Programs, acknowledged that NIH was concerned about a dearth of “scientifically meritorious projects” if the SBIR set-aside was applied to the stimulus funds. But in response to a follow-up question from Wu, Rockey wrote the committee that “I have no specific details of how this exemption was put into ARRA.”

Science asked Kington to clarify his position. In response, an NIH spokesperson noted that NIH is not required to devote stimulus funds to the SBIR program but that “small businesses are able to, already have, and will receive NIH ARRA funds … through various [other] funding opportunity announcements” that are not reserved for small businesses. “NIH remains committed to the SBIR and STTR programs,” the spokesperson added.

While science lobbyists are focused on the size of the set-aside, other groups are embroiled in a battle over a provision that affects venture capital firms. The Senate and House bills differ in how best to modify a restriction, in place since 2002, on the eligibility of companies in which venture capitalists hold a controlling interest (see ScienceInsider.org, 22 June). In addition, although both bodies want to boost the size of the awards, now $750,000 for Phase II, the House would go up to $2 million, which is twice the Senate level. The House bill would continue the program for two more years, whereas the Senate bill would let it run until 2023.

The clock is ticking on a compromise. The program expires on 31 July, and although all sides say they want to finish work by then, it's more likely that a short-term extension will be needed so legislators can keep plugging away.

View Abstract

Stay Connected to Science

Navigate This Article