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April 26, 2007

Wu Hearing Focuses on Small Business Research and Technology Transfer

(Washington, DC) Today, the House Committee on Science and Technology’s Subcommittee on Technology and Innovation reviewed the effectiveness and efficiency of two federal initiatives that support high technology small businesses.

Subcommittee Chairman David Wu (D-OR) and Subcommittee Members are reviewing the initiatives in an effort to make certain the Small Business Innovation Research (SBIR) and the Small Business Technology Transfer (STTR) programs meet the needs of the high technology small business sector of today. This hearing follows on a 2005 review by the Committee as well as a roundtable on the topic Chairman Wu held last Congress in his home state of Oregon.

"In Oregon we have many vibrant high-tech start-up companies. Currently it is more difficult than it should be to move innovations from the lab to the marketplace. I want to bridge that gap," stated Chairman Wu. "As this subcommittee begins to focus on this issue, I am hopeful that today's hearing will provide appropriate guidance. It is this subcommittee's responsibility to ensure these programs continue to support the high-tech small business sector and promote U.S. economic competitiveness."

The intent of SBIR is to increase the participation of small, high technology companies in the federal research and development endeavor. STTR is similar in its intent, but invests in cooperative research between small businesses and research institutions such as universities or non-profit organizations.

Investments through the SBIR and STTR initiatives stimulate technological innovation, contribute to federal research and developments needs and move research from the lab to the marketplace in the form of profitable products and services.

In 2004 for example, 71 SBIR awards totaling over $23 million went to Oregon small businesses. Under STTR, 10 awards were given totaling $2.5 million. 

A few of the issues addressed in the hearing were increasing the level and number of awards, integrating program administrative flexibility given the diverse missions of the various federal agencies and how to increase overall participation.

One topic of note was whether or not to change the criteria so that small businesses with a majority venture capital investor are eligible. Currently, SBIR/STTR regulations allow small business with venture capital investment to participate only if the venture capital investor is a minority investor (less than 51%). Venture capital companies argue the rule creates a barrier to private-sector investment that ultimately inhibits the growth of start-up companies as well as commercialization, particularly in the biotechnology sector.

“This year represents significant milestones in the history of the SBIR as well as the Small Business Technology Transfer Program (STTR) program.   July 22 will be the 25th anniversary of SBIR, and October 28 will be the 15th anniversary of STTR,” added Chairman Wu.  “These are highly competitive programs that encourage small business to explore and develop innovative, high risk technical projects. By including qualified small businesses in the federal R&D arena, high-tech innovation is stimulated, strengthening US innovation and competitiveness.”    

Chairman Wu will use the information from today's hearing and a forthcoming evaluation by the National Research Council of the five major SBIR programs (Department of Defense, National Institute of Health, NASA, Department of Energy and the National Science Foundation) to draft legislation to update the SBIR and STTR initiatives.

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BACKGROUND: In 1982, SBIR programs were established within the major federal research and development (R&D) agencies. Today there are eleven federal departments that are required to set aside 2.5% of their R&D budget to fund the SBIR program. From its inception, over $18.9 billion in awards have been made for more than 88,800 projects. Small businesses are eligible for SBIR awards if they are independently owned and operated for-profit companies and employ fewer than 500 people.

STTR was established in 1992 and like SBIR, the research must support the mission of the funding agency. For STTR the set aside is 0.3% for federal departments that spend over $1 billion per year in external R&D. The Departments of Defense, Energy, Health and Human Services, NASA and the National Science Foundation participate in STTR. In fiscal year 2005, there were 832 awards totaling $220.3 million.

 

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