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Senate Close on SBIR Bill

By Matt Jones

NEW YORK (GenomeWeb News) – The US Senate has spent much of this week considering a bill to reauthorize the soon-to-expire Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, just as the House of Representatives begins hearings on the program in preparation for its own bill.

The Senate's bi-partisan SBIR/STTR Reauthorization Act of 2011, (S. 493 – also called the Small Business Jobs Bill), will extend SBIR through 2019, would substantially increase the funding amount of the Phase I and Phase II awards, and would incrementally increase the percentage that federal agencies are required to put into the programs over a 10-year period.

Among a number of changes in the bill, one of the biggest is that it would allow some agencies to grant awards to small businesses that are majority-owned by venture capital companies. It also would enable small businesses receiving SBIR funding from one agency to receive subsequent-phase awards from other agencies.

The House of Representatives will begin holding discussion of the SBIR/STTR reauthorization tomorrow with a hearing in its Science, Space, and Technology committee that will include representatives from industry, academia, and the National Institutes of Health's Extramural Research division.

The bill has been on the floor of the Senate since Monday this week and has been slowed down by the addition of a large number of unrelated amendments — such as those dealing with the federal budget and health insurance law — that senators have added largely to make political points about these other issues, Jennifer Zeitzer, Director of Legislative Relations for the Federation of American Societies for Experimental Biology, told GenomeWeb Daily News today.

Zeitzer said that the bill has wide support and should pass overwhelmingly if these unrelated amendments can be shed before the vote.

The program is set to expire at the end of May, but if the reauthorization bill does not make it through Congress and signed by then, the programs likely will be renewed for a short period —as it has been since October, 2008 — Zeitzer said.

Sen. Mary Landrieu (D – La.), who introduced the bill and has championed it alongside co-sponsor Sen. Olympia Snowe (R – Maine) has expressed frustration recently about the number of amendments that have been added to this bill, 106 total to date, which she sees as a small business jobs funding program as much as an innovation effort.

"[This] program is beneficial not only to taxpayers but to the market generally," she said on the Senate floor this week.

She said that "some evidence suggests that the program is creating thousands of jobs – providing taxpayers with cutting-edge technology and innovation."

"SBIR addresses a paradox at the heart of innovation funding," Snowe said in her floor remarks. "Capital is always short until the results are coming in, but innovation can't get beyond that stage without funding – SBIR provides that funding."

An analysis by the Congressional Budget Office estimates that the increases in the set-aside funding the agencies will add to the programs will boost the number of applications received for both the SBIR and STTR programs by more than a third between 2012 and 1016.

CBO's analysis, based on information provided by the Small Business Administration and the agencies, estimates that implementing the law would cost $150 million over that five-year period.

The Biotechnology Industry Organization (BIO), a biotech industry advocacy group, supports the SBIR renewal but would like to see some minor changes, including how a small business is defined in the law, which affects what firms can apply for SBIR funding, a BIO spokesperson told GWDN in an email.

BIO also wants to see SBIR eligibility rules clarified and made more transparent, and it would like to see agencies have flexibility in how they administer their SBIR programs, the spokesperson explained.

The new reauthorization would increase PHASE I SBIR awards from $100,000 to $150,000 and Phase II awards from $750,000 to $1 million, and it would allow for Phase II recipients to continue receiving Phase II grants to keep developing their technologies.

The Senate bill also will increase the SBIR program's allocation in government agencies by .1 percent each year between 2013 and 2023, raising the agency's allocation from 2.5 percent to 3.5 percent over that period. The bill would raise STTR's program allocation at the agency level from .3 percent to .6 percent.

The SBIR bill would limit the increases in the amount awarded over this period to 50 percent ($225,000 for Phase I and $1.5 million for Phase II), but it also would provide for annual increases in the award levels to account for inflation.

The proposal also reauthorizes the Federal and State Technology Partnership (FAST) program, which provides matching funds requirements for FAST recipients in low-income and rural areas and in states receiving the fewest number of awards. The bill also proposes that each federal funding agency allocate up to 10 percent of SBIR and STTR program funds to start pilot programs for awards for technology development, testing, and evaluating SBIR and STTR Phase II technologies.

As an oversight measure, the bill would establish an independent advisory board at the National Academy of Sciences to conduct periodic evaluations of SBIR programs at each of the NIH institutes and centers in order to improve management, and it requires the director of NIH's SBIR program to see to it that data collection and reporting on the programs are sufficient for evaluations.