In a new story on Nature’s website, Karl Thiel reports that the reauthorization of the Small Business Innovative Research program is in trouble because of a disagreement about the role of venture capital firms. The legal authorization for the SBIR and its cousin, the Small Business Technology Transfer Program, lapsed in September 2008. They have survived for more than a year because of temporary “continuing resolutions.” The last of these resolutions will expire Jan. 30.
By requiring that a part of the research funding some 12 federal agencies (e.g., DOE, NASA and DOD) be shunted through these two programs, the SBIR and STTR have become important funding lifelines for small businesses.
Thiel says that U.S. House and Senate each approved their own version of reauthorization bills (S. 1233 and H.R. 2965), but negotiators haven’t been able to reconcile the two versions and reach a single compromise, largely because of disagreements about the eligibility of companies that are majority owned by VC firms.
Since 2003, many small businesses that are majority owned by venture capital firms (as many young biotechs are) were prohibited from receiving SBIR grants under the assertion that these businesses do not qualify as ‘small’. Since its inception the SBIR program has enabled federal agencies to award grants to small businesses defined as having fewer than 500 employees. Although the Senate bill would loosen those restrictions somewhat, the House version, favored by organizations such as the Biotechnology Industry Organization and the National Venture Capital Association, both located in Washington, DC, would essentially lift all limits.
Thiel says the the House and Senate Armed Services committees tried to carve out and reauthorize the DoD portions of the SBIR and STTR for the next 14 years, but even this effort got bogged down in a jurisdictional disagreement. If I understand this correctly, the net result is that the DOD portions gained a one-year reprieve, through Sept. 30, 2010.
At least one of Thiel’s sources predicts that if Congress fails to act, the DOD will go its separate way and establish its own small business program.
ADDING: Apropos, somewhat, to the above, I just received notice from the DOE that tomorrow it is hosting a “Small Business Opportunity Session” in Washington. Jonathan Silver, DOE’s new director of the its Loan Guarantee Program, will deliver remarks. The DOE ‘s “Retrofit Ramp-up,” Loan Guarantee and ARPA-E programs are supposed to be highlighted during this session. I realize this is late notice, but the good news is that DOE is offering live webcast of the event (9 a.m. – 1 p.m.). I suspect a postevent webcase will also be available.