The House just passed a controversial SBIR reauthorization bill with the usual shenanigans by Rep. Nydia Velazquez (D-NY). As in last year’s reauthorization debacle, Ms Velazquez completely stifled any testimony contrary to her preferences. The major point of contention is whether to allow companies that are majority-owned by VCs to be eligible for SBIR funding—currently they are not. Even though Velazquez chairs the Small Business Committee, through which the bill passed, the small business lobby was not allowed any input on the bill. Velazquez wants VC owned companies to share in the SBIR pool, which, as opponents point out will limit money available for not-as-well funded companies. The argument against doing this is that the earliest stage companies, which are not likely to attract VC funding will suffer the most from this diversion of funds.
Perhaps they ought to change the name of Velazquez’s committee to the VC Business Committee. She certainly is not representing small businesses here.
The following details of the House’s actions are modified from a posting by Rick Shindell, aka the “SBIR Insider”.
The SBIR Program was created by the Small Business Innovation Development Act of 1982. Every few years, the SBIR program must be “reauthorized” by Congress or it will cease to exist. Reauthorization was enacted in 1986, 1992, and 2000 and was slated again for September 2008; but, instead, the program was temporarily extended by a continuing resolution (CR) to March 20, 2009 and again to July 31, 2009.
Although H.R. 2965, “Enhancing Small Business Research and Innovation Act of 2009” passed on the House floor, any opportunity for discussion or vote on compromise amendments that Ms Velazquez did not favor were summarily dispatched by the House Committee on Rules. The rules committee, led by chairwoman Louise Slaughter (D-NY), under a “closed rule” allowed only 5 of 34 amendments to be ruled “in order” and brought to the floor. The amendments mostly spelled out small things like SBIR award preferences for minority and woman owned businesses and for businesses in economically depressed areas.
The big surprise was the committee’s “out of order” ruling of the compromise amendment from Ed Markey (D-MA), Niki Tsongas (D-MA), Peter Welch (D-VT) and Paul Hodes (D-NH). The amendment would put a ceiling on VC awards (similar to what the Senate favors), and increase award sizes to $150K for Phase I, and $1M for Phase II. Reportedly, this amendment has strong bipartisan support in the House and would have passed if a vote was allowed. This would have been a major embarrassment to Velazquez, and perhaps the House leadership.
What’s next?The bill now goes to the Senate which has passed its own version that was sponsored by Russ Feingold (D-WI). As mentioned, the Senate version contains several attractive features that Velazquez has not supported in the past. These include a significant increase in the award size and in the total SBIR set-aside, as well as the compromise cap on the number of awards to VC owned companies. Ultimately there will be a conference committee of the House and Senate that will either hammer out a compromise bill, or, once again, fail to reach an agreement, whereby the decision for another Continuing Resolution (CR) either will be considered, or the SBIR program will lapse (STTR is good through September 30, 2009). Something needs to be done by the end of this month.You are encouraged to contact your congressional representatives to urge them to take action to ensure that the SBIR program does not die from neglect (or abuse). Here is an old template of a suggested letter you might send to your Representative and Senators. If you are worried about the SBIR grant application you plan to submit soon, you might consider sending a letter to every member of the House Small Business Committee as well as to Senate Majority Leader Reid. Tell them what an important “stimulus” the SBIR program is for small business development and job creation. That ought to get their attention.
Recent columns by Steve Clark
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- Steven S. Clark: Slicing and dicing SBIR award data
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- Steven S. Clark: An SBIR potpourri: Politics, Russ to the rescue and a Phase III bonanza?
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