SBIR Gateway

SBIR Insider Newsletter
January 31, 2009 Edition



Dear SBIR Gateway Insider,

The biggest single question received from SBIR Insider readers is, "What's the state of SBIR reauthorization and what are its chances for survival?" The clock is ticking and the March 20th cut off date is rapidly approaching.

In this issue:

The Future of SBIR

To be honest, nobody really knows the SBIR future, but indicators can lead us to draw some conclusions. On the plus side, SBIR has been a very successful program, a finding backed up by the GSA as well as the National Research Council's intensive $5 million study. SBIR is also a very popular program in most circles.

The popularity and success of the SBIR program has led to it being replicated in other competing countries. Just last week, two international news articles, one from the Netherlands and one from Taiwan touted success of their programs. We've provided copies for you at www.zyn.com/sbir/articles/sbir-international.htm , with translations courtesy of Google.

This led us (and many other experts) to believe that the SBIR program will most likely survive, but the bigger question is, "In what form?' The changes in congressional make up, as well as the staggering economic outlook, will have a major effect on who is able to have the greatest influence on the program. It is very likely that reauthorization outcome will not be your father's SBIR program.

That being said, and with congress facing so many other high profile challenges, it is doubtful that a sweeping, modernized SBIR reauthorization bill can be crafted and agreed to by both House and Senate before the March 20th date. Keeping in mind that this cutoff date also affects many other small business programs, the likelihood of another continuing resolution (CR) to carry these programs for perhaps 6 months or more is increased.

Now is the time to be planning your reauthorization strategy. Small businesses have mostly been reactive rather than proactive. Don't think for a minute that the large special interests that lobbied congress have gone away. They've started their work!

Let's look at the changes to the political landscape that influence SBIR.

Obama Selects Venture Capitalist to Head SBA

Karen Mills
One of President Obama's first nominations was that of Karen Gordon Mills to become the Administrator of the beleaguered SBA. The selection of Ms. Mills raised many eyebrows in the small business community because her background and current work is that of a venture capitalist.

Ms. Mills is president of MMP Group, a private equity organization, and she was founding partner of the New York based investment firm of Solera Capital, and a director in the large firm of Scotts Miracle Grow.

Most Americans want to see our new president succeed (save for some like Rush Limbaugh), but several small business watchdogs have an uneasy feeling from some of the president's statements and actions on the small business front. It appears that he may be thinking the way back to health is mainly through the investment community.

Nevertheless, many of us will give Ms. Mills the benefit of the doubt, that she will aid small businesses by judicial use of the investment community, and not let them try to take over the low hanging fruit that was set aside for independently owned and operated small businesses.

The Senate Committee on Small Business & Entrepreneurship (SBE)

Mary Landrieu
Senator Mary Landrieu (D-LA), is now the committee Chair, and has shown us great understanding of the SBIR program, as well as changes needed in the SBA to support SBIR and other small business programs. Ms. Landrieu has also made the decision to have Ms. Kevin Wheeler (the 2008 SBIR Person of the Year), retain her position with the committee as Deputy Staff Director. Ms. Wheeler, one of the greatest SBIR champions on the hill, will work closely with the committee's new staff director, Mr. Donald Cravins, former U.S. Congressman (D-LA), as well as LA State Senator.

Additional positive news for SBIR support on the SBE is that Olympia Snowe (R-ME) will continue as ranking member, and former chair John Kerry will remain on the committee, as will Carl Levin, current chair of the powerful Senate Armed Services committee.

John Tester (D-MT) has left the committee and is replaced by Jeanne Shaheen (D-NH) who is a newcomer to the Senate. Shaheen is the former Governor of New Hampshire, which should bring a new dimension of expertise to the committee.

Kay Hagan (D-NC), a former NC State Senator defeated Elizabeth Dole (R-NC), and has become a member of the committee. In addition to Dole, Norm Coleman (R-MN), lost his bid for re-election, and his seat on the committee remains vacant. The Republicans will name a replacement soon. For a complete list of SBE members go to http://sbc.senate.gov/about/test_members.cfm

The House Small Business Committee (SBC)

Nydia M. Velázquez
There is usually a good amount of turnover in the House SBC and this year is no exception. Nydia M. Velázquez (D-NY), remains as Chair, and Sam Graves (R-MO), becomes ranking member replacing Steve Chabot of Ohio who lost his bid for re-election.

New members of the House SBC are: Democrats: Dennis Moore (KS), Kathy Dahlkemper (PA), Kurt Schrader (OR), Ann Kirkpatrick (AZ), Glenn Nye (VA), Joe Sestak (PA), Bobby Bright (AL), Parker Griffith (AL), and Deborah Halvorson (IL).

New republican members are: Louie Gohmert (TX), Blaine Luetkemeyer (MO), Aaron Schock (IL), Mike Coffman (CO).

The House S&T Committee

Dr. Phil Gingrey
Bart Gordon (D-TN), remains as chair with Ralph Hall (R-TX), as ranking member. New democratic members are: Donna F. Edwards (MD), Marcia L. Fudge (OH), Ben R. Luján (NM), Paul D. Tonko (NY), Parker Griffith (AL), Lincoln Davis (TN) Kathy Dahlkemper (PA), Alan Grayson (FL), Suzanne M. Kosmas (FL), and Gary Peters (MI).

Only one change for the republicans, but it is huge. SBIR champion Dr. Phil Gingrey (R-GA) has left the committee for other assignments and his slot is filled by Pete Olson, (TX). Gingrey was a very important SBIR voice of reason on the S&T committee.

S&T's Subcommittee On Technology and Innovation is very important for SBIR reauthorization. It is unfortunate that SBIR has lost 2 of it's most reasonable and important supporters from this committee, Phil Gingrey (former ranking member), and Vernon Ehlers (R-MI).

Feingold Offers New SBIR Reauthorization Bill S.177

Senator Russ Feingold (D-WI), offered up the first SBIR Reauthorization bill of the 111th Congress. His bill, S.177 dated 1/8/09 has some interesting goodies but will be going nowhere. It has been referred to the Senate SBE committee, but you can bet that the committee wants to craft their own bill, and with all due respect to Senator Feingold, his bill is considered unrealistic in its funding and award levels.

Feingold calls for extending the program to 2022, incrementally raising the cap by 2.5% per year topping off at 10% in 2012. Similarly STTR would rise to 1% by 2012. With this additional funding Feingold raises the award levels to $300k for phase I and $2.2m for phase II.

Feingold's bill would also create special consideration for projects dealing with energy, security, transportation and water related research.

Senate SBE Hosts Roundtable on Investing in Small Business

Senator Mary Landrieu got off to a fast start on January 29, 2009 hosting her first public meeting as SBE Chair. The SBE chair is Ms. Landrieu's first Senate committee chair appointment and she handled it very well.

Although this was not a roundtable forum discussion on SBIR, one person, Mr. Giovanni Coratolo, Executive Director, Small Business Council, U.S. Chamber of Commerce, stated that it is imperative that congress reauthorize the SBIR program based on the Senate's compromises of last year.

There was additional discussion concerning small business size standards and the possibilities of including middle size companies in many programs. Many other countries have Small and Medium Sized Enterprises (SME), although the description of "middle size" is not always clear.

In many small business set asides the employee/affiliate number can be secondary to the company's amount of revenue, sometimes $6m, and larger contracts at $30m.

Both Landrieu and Snowe want the position of SBA Administrator to be raised to cabinet level, as it was in the Clinton administration.

SBIR Gateway's STTR Stimulus Experiment

This idea is targeted at Universities and small businesses interested in potential partnerships for the newly released DoD STTR solicitation that opens on February 24 and closes on March 25.

This "experiment" is not a DoD project, but perhaps better described as a "simple" idea that I invested some sweat equity in, to try and give interested parties a chance to find each other for partnering opportunities in the DoD's current STTR solicitation.

Most of us have had some negative consequences due to the economy and/or the investment community. Many universities and colleges have incurred major losses to their endowment funds, and that includes their S&T sector. Entities that previously thought STTR was too small to bother with are now interested in becoming involved.

I've talked with many small and medium sized universities that have said it is hard to find interested and qualified small businesses for partnering in STTR. I also hear from small businesses that they have a hard time finding an interested University or FFRDC (including DOE National Laboratories) in an STTR project.

In our experiment, universities, FFRDCs and other qualifying non-profit research organizations can go to our STTR project site at www.zyn.com/sbir/sttr_partnering.htm review the DoD's STTR topics (and full descriptions), comprised of 37 from the Navy and 30 from the Army. They can check the topic(s) of interest to their organization and fill out the contact information. The site is open and functional now, and is waiting for you.

Small businesses in search of a research partner will be able to query topics of interest and see what research organizations may be interested in partnering on selected topics. The query function will open the week of February 9, providing anyone comes.

Times have changed rapidly, and those once not interested are now looking for partnering opportunities. Remember that in STTR, the small business must perform a minimum of 40% of the work, with the partner at a minimum of 30%. IP rights are negotiable and the DoD has a model agreement that can be used as a guide. You'll find it at http://www.dodsbir.net/solicitation/pdf/AllocationofRights.pdf

As with all of our SBIR Gateway projects, this service is free and is offered in the hope that it will stimulate interest in the STTR program, promote strong partnerships, create and/or preserve jobs, and be of benefit to the sponsoring agency and their mission.

Feel free to send me any comments on this to rick@zyn.com. I'm on travel next week, but I'll try my best to answer as many as possible in a timely manner.

Deputy Secretary Of Defense (A&T), Phase III Guidance Memo

From left: Michael Caccuitto, DoD SBIR Program manager; Jere Glover, SBTC; Secretary James Finley, OSD; and Heidi Jacobus, Cybernet
In our last issue we reported on Secretary Finley's work involving SBIR and the DoD. He has been such an important figure to SBIR that the Small Business Technology Council (SBTC) held a special ceremony to present him with their top honors for service to SBIR, DoD and the country.

Finley's last SBIR related action was to issue a memo to all of the DoD, providing guidance on SBIR Phase III. Simply put, the items were:

1. SBIR technical data rights extend to Phase III.

2. Phase III contracts or subcontracts may be awarded without further competition

3. The Department must show preference for SBIR-funded technology in Phase III.

There are many ramifications to be discussed from his memo. We hope to bring some expert opinions to you in our next issue. A copy of his memo is available on the SBIR Gateway at www.zyn.com/sbir/articles/Finley_SBIR_Phase_III_Guidance-8-Dec-08.pdf

SBTC to Host Congressional "Fly-In"

The Small Business Technology Council (SBTC) is hosting a Washington Fly-In on Tuesday, February 10th, 2009. All SBTC members are encouraged to come into Washington on that date and meet with their Senate and Congressional offices to educate the staff about the importance of the program, and urge them to make reauthorization a priority for 2009.

The SBTC has some limited openings for non-members to join them in this Congressional education effort. Achieving a good SBIR reauthorization bill will require both individual and collective efforts on behalf of the small business community.

SBTC has also scheduled a breakfast in the Small Business Committee hearing room from 8:30-11:00 on the morning of February 10th, and are also planning on hosting a short meeting the night before to discuss the next day's meetings.

For additional information please contact Alec Orban at alec@sbtc.org

There is a lot of anticipation about the effect of the stimulus packages such as H.R.1, American Recovery and Reinvestment Act that passed the House on January 28 by a 244-188 vote. The Senate has their own version, S.1 and it is hoped to be reconciled by mid February. Depending on the final outcome of legislation, R&D funding could be significantly increased, thereby making a larger SBIR pool. We'll keep you in the loop.

Thanks again for your time.

Sincerely,

Rick

Rick Shindell
SBIR Gateway
Zyn Systems
40 Alderwood Dr.
Sequim, WA 98382
360-681-4123
rick@zyn.com
www.zyn.com/sbir

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