Perspective: Small Business Programs at Risk as Congress Debates Benefits
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Due to the retirement provisions of the Small Business Innovation Research and Small Business Technology Transfer programs, these programs will end at the end of this year, unless extended by further legislative action.
SBIR and STTR were first enacted in the Small Business Innovation and Development Act of 1982 and the Small Business Research and Development Enhancement Act of 1992 to encourage federal agencies, public research institutes, and government agencies to develop critical technologies. and partnerships with the best and brightest SMEs in the country.
For this reason, their reauthorization is a top priority for the Defense Industry Association. The program achieves its goals by leveraging a small percentage of off-campus federal research and development spending through competitive awards.
In fiscal 2020, our most complete year of data, these programs cost small tech companies about $3.9 billion. Such funding will spur innovation to ensure a competitive advantage in all areas of the combatant.
Although they are not venture capital programs, the awards are diluted for projects that may be early-stage, high-risk research critical to maintaining the U.S. international competitiveness and achieving its goals. They are often referred to as national seed funds because they provide non-collapsed funds. American needs.
The Small Business Innovation Research Program has been reauthorized bipartisanly for more than 40 years, but Congress is now debating its merits. This happens when the time runs out. His September legislative date, with both houses in session, he has only 11 days and, barring the possibility of inclusion in another continuing resolution, the inclusion of SBIR is likely to be enacted before it expires. there is no.
Recently, to everyone’s surprise, there was discussion of an independent bill under rapid consideration — a process that relies on the unanimous consent of 100 senators — no easy criteria. .
The expiration is not due to a lack of effort by individuals on the hill, industry, the Small Business Administration, and the Department of Defense. The House’s Creating Manufacturing Opportunities, Excellence in Technology and Economic Forces (COMPETES) Act included a five-year extension.
However, when the bill advanced in the Senate as a streamlined version of the U.S. Innovation and Competition Act of 2021 as the CHIPS and Science Act of 2022, the governing committees were unable to reach agreement and withdrew the extension of the SBIR. I was.
The House Armed Services Committee added it as a proposed amendment to the National Defense Authorization Act for fiscal year 2023. Its inclusion provides hope for the continuation of the program even if a separate bill or continuing resolution does not reach the President’s desk. The program he expires on September 30th. However, Congress is unlikely to pass a final bill by his October, so using the NDAA as a vehicle would mean the program would be void.
Then you should ask the following questions: Why the reauthorization is controversial?After all, the program is reported to have a 22-to-1 return on investment within the Pentagon.
Proven to bring innovation to the department and the 10 other institutions authorized to use it. However, despite wide bipartisan support, it failed to pass Congress.
To understand what is holding back reauthorization, let’s take a look at the lesser-known Senate procedural process. Most references to the bill passing the Senate focus on passing it by a 50-50 vote. It was often mentioned that the large bill stalled. Or, just as the filibuster debate gave Americans a sense of citizenship, it would take a 60-40 vote to overcome that hurdle. has refused its reauthorization.
So why are so few members able to stop the successful Program of Records from passing for over 40 years? This is the conundrum.
Procedurally, the competent committee passes the bill and then moves forward for a larger vote. Where legislation resides in the larger legislative body, multiple jurisdictional committees will be involved and will discuss those issues internally before proceeding with the legislation. COMPETES had many provisions not included in innovation and competition law, including SBIR, which caused the formal meeting to be called. Negotiations dragged on for months, but the law stalled so anything that didn’t get the approval of the “four corners” was dropped.
The “Four Corners” are made up of the Chair and senior members of the relevant jurisdictional committees of each House. If any of them disagree with the terms going forward, it will not be included.
Further complicating matters is the reluctance of congressional leaders to deny the position of committee leaders. Sometimes through negotiation or bargaining, exchanging members for something else that they may care more about. You may need to take stronger action, such as ignoring and bypassing. However, the latter option is not favored by either party in light of precedent.
Now back to reauthentication and its current state. Senior members of the Jurisdictional Committee of the Senate Small Business Committee have publicly expressed concerns about the impact of the SBIR. This member also cites multiple winners, or pejoratively referred to as “SBIR Mills.” The company has obtained multiple contracts under the program without transferring the technology to the acquisition program or operational use.
Once the focus was on whether the program complied with the intent of Congressional legislation, public debate turned to the program’s security from Chinese influence. development. Small businesses involved in government contracts do not want to compromise national security and endanger soldiers. We also don’t want to risk having our intellectual property stolen.
Parties continue to negotiate, but no consensus has been reached. Including program extensions or reauthorizations in ongoing resolutions is the last hope for a bill to remain in force without expiring if a stand-alone bill fails.
To understand why the stalls are happening, it helps to look at both sides of the argument. Focusing on defense here, it’s also important to examine the input to the customer.
Historically, things have gone smoothly, with reauthorizations akin to rubber stamps, and at times the program appeared to be in jeopardy, but Congress ultimately took steps to ensure its continuation. Action has been taken. For Small Business Innovation Research, the debate over the past few years has focused on making the program permanent, rather than whether it will cease to exist. Congress plays a role in examining the effectiveness of the program and whether it meets the intent of the law.
A lot of the focus tends to be on Phase III and what is often referred to as the “Valley of Death”. The term refers to the failure to put technology born out of research activities into operation. This transition will not be funded by program funding, and successful inventions often end up playing a game waiting for funding from other sources.
Such funding is based on the priorities of the service budget process and whether the service culture and plans can leverage technology at the time. These new technologies often face pushback from established industry interests, service biases, and parliamentary bigotism.
For Small Business Innovation Research, one of the issues being debated is whether there should be a time limit for companies to participate in the program, or whether there should be a cap on the maximum number of awards a company can win. However, some companies’ innovations sit “on the shelf” for a decade or more until the service is ready to be built into their platforms or their respective technology arsenals.
This is not the company’s fault. But more often than not, they are at a disadvantage, waiting for funding while trying to keep the business going.
Another point of discussion is commercialization and the merits of adding an assessment of a company’s ability to bring an invention to market as a metric for determining eligibility for participation in the program. We see this primarily as making it available for military operations, as there is no “spin-off” potential for weapons-related inventions. From that perspective, commercial use in the private sector is of secondary importance and should not be a relevant threshold.
While there is a history of technology spin-offs being commercialized, such as LASIK and technologies that enable wireless connectivity, that is not, and should not be, the primary purpose of any defense program, especially when it comes to matters of national security. We must continue to focus on a high return on investment for programs that put innovation into the hands of combatants.
By working with U.S. entrepreneurs and setting strict eligibility rules that limit participation in U.S. companies, the program harnesses the ingenuity of small businesses, strengthens the economy, and moves technology from the lab to the market. increase ability. Recently, the Office of the Undersecretary of Defense for Research and Development opposed a program change that would cap the number of awards. This is not a limit imposed on large corporations, federally funded R&D labs, and universities.
As many independent observers have asked, there may be areas of change that could improve the program and gain more participants. should be discussed and analyzed rather than
As the clock slows down, it’s more likely that some back legislative deals will be needed to keep the program alive. In classic Washington style, the deal may have nothing to do with the program in question.
Ultimately, the question remains whether the party leadership will make efforts to overcome opposition at committee level. This will allow small, innovative companies to continue working with the defense industry, bring important new entrants to the competitive defense industrial base, and keep the United States at the technology forefront against paced threats from China. is guaranteed.
Is there an effort to ensure that nearly $4 billion in investment capital is available for small businesses to support the country’s combatants? help drive the innovation needed to maintain a competitive advantage.
Losing all that innovation because of miscommunication is a grave mistake.
Kea Matory is the NDIA’s Director of Legislative Policy.
topic: legal information, small business
