SBIR Gateway

SBIR Insider Newsletter
October 7, 2009 Edition



Dear SBIR Gateway Insider,

The SBIR story you are about to read is incredible but true. For the last month I (and several others) have remained silent on this issue in the hopes that a respectable solution could be found without a "stirring of the pot" from the outside.

We'll start at the end (like a Seinfeld episode minus the talent of a Larry David), and work back for those of you interested in the details. Please pay attention to the alphabet soup or I'll lose you.

In this issue:

House / Senate Conference Report For National Defense Authorization Bill Includes "DoD Only" SBIR/STTR Reauthorization

Wednesday, October 7, 2009 the House & Senate Armed Service Committees reached agreement on the conference report to H.R. 2647, the Fiscal Year 2010 National Defense Authorization Act (NDAA).

In this conference report (agreement on the consolidation/compromises of both House & Senate defense bills) of more than 1,400 pages, there are 2 pages of language that in essence, reauthorize the DoD's SBIR and STTR programs for 1 year (ending September 30, 2010), and extending the Commercialization Pilot Program (CPP) for the same period.

This has no effect on the other ten agency SBIR/STTR programs that will expire on October 31, 2009 unless extended by another CR or reauthorized.

The NDAA should come to the floor of both bodies quickly for a vote, perhaps Thursday. There are some provisions that are controversial and a few that the President didn't want, so the bill's passage and the President's signing, although likely, will not be a slam dunk. We have a copy of the SBIR portion of the report at www.zyn.com/sbir/insider/SBIR-Armed_Services_Report-100709.pdf.

In our last SBIR Insider we told you that staffers of the House Small Business Committee (HSBC), House Science & Technology Committee (HS&T), and Senate Committee on Small Business and Entrepreneurship (SBE) were being very tight lipped about progress of their conference negotiations to pass comprehensive SBIR/STTR reauthorization. Obviously the Senate Armed Services Committee (SASC) and the House Armed Services Committee (HASC) actions reflect a vote of "no confidence" in the ability or likelihood of the other committees to reach SBIR reauthorization in a timely manner.

INSIDE STUFF: Senator Carl Levin (D-MI), chair of the SASC, who is also a member of the SBE, worked closely with SBE committee chair Mary Landrieu (D-LA) as did their staffers, to incorporate the entirety of the Senate's SBIR reauthorization bill (S.1233) into the NDAA. Some SBIR changes were made by the SASC including making the reauthorization for 14 years, making the CPP permanent (rather than its pilot program status), and expanding the CPP to the STTR program.

The HASC worked for inclusion of SBIR reauthorization for DoD only and had some differences with the Senate's bill. Bottom line was that all systems (in HASC & SASC) were "go" to reauthorize SBIR in the NDAA.

Once it came to light that this action was for real and was gaining traction, HSBC chair Nydia Velazquez (D-NY), and HS&T subcommittee chair David Wu (D-OR) fired off a strong letter of complaint to HASC chair Ike Skelton (D-MO) and ranking member Buck McKeon (R-CA), along with a CC to Nancy Pelosi. ( see www.zyn.com/sbir/insider/HASC_letter-9-25-09.pdf )

In the House, there was great pressure on Armed Services to stand down on the SBIR issue. Chairman Skelton would not cave but he would compromise. The 14 years were reduced to 1, CPP was also only 1 year and was not expanded to STTR.

This compromise should serve notice the other House committees that SBIR must be reauthorized properly or the DoD may run with their own program next year.

Although this action is unprecedented in SBIR history, the Armed Services Committees are showing us that the SBIR program is of extreme importance to the DoD and support for the war fighter. It is also vital to many of America's small high tech businesses.

Almost everyone on the hill agrees that SBIR is a good program that accomplishes what it was created to do. That's rare for most government programs, yet the House Small Business and S&T committees want to uproot the program to serve a few of their special interests at the expense of the overall program.

Is it possible that the House Small Business and S&T committees are ignoring the success of the program in order to morph the program to serve their own special interests? Even if you agree with the House Small Business and S&T's sweeping changes, can you explain why they insist on only a 2 year reauthorization? The agencies could hardly get everything changed and running within that time, let alone measuring the effectiveness of the changes. If this doesn't wreak of a fund raising mechanism from their lobbyists, I'd like you to enlighten me.

The House Small Business Committee hearings concentrated mainly on NIH/BIO/NVCA issues with very little attention given to DoD, which is 50 % of the entire SBIR program! Is it any wonder that Armed Services has taken the matter into their own hands?

The Small Business Technology Council (SBTC) has issued the following statement on this unique action by Armed Services:

"The House and Senate Armed Services Committee in their Conference Report on the Defense Authorization Bill of 2010 just approved a one year extension of the DOD SBIR, STTR and CPP programs. We are grateful for the leadership and hard work of House Armed Services Chairman Ike Skelton, Ranking Member Howard McKeon, Senate Armed Services Chairman Carl Levin, and Ranking Member John McCain. We are especially thankful for the hard work of Arun Seraphin of the Senate Armed Services Committee and of Tim McClees of the House Armed Services Committee. This allows the DOD to make sure the SBIR and CPP programs are going to continue developing and transitioning new technology to the warfighter."

We will update you on the progress of the NDAA bill and its effect on the SBIR community. Stay tuned.

Senate Committee On Small Business And Entrepreneurship Hearing On ARRA

On October 6, 2009 the Senate Committee on Small Business and Entrepreneurship held a hearing on "The Recovery Act for Small Businesses: What is Working and What Comes Next?" Although this was not an SBIR focused hearing there was a major SBIR component.

You can't mention the Recovery Act in an SBIR environment without thinking of the NIH's sneak play to get themselves exempted from the SBIR/STTR allocation from their $7.3 billion in extramural research dollars (well over $200 million to SBIR companies).

Dr. Sally Rockey, NIH Acting Deputy Director for Extramural Research was there to represent NIH. Of course committee chair, Senator Mary Landrieu was not going to let Rockey off the hook on the SBIR issue, and asked her who at NIH asked for the SBIR exemption. Rockey continued her claim of not knowing who it was or how it came about.

Perhaps an answer of "I don't recall" may have been more in order because Rockey was a witness on April 23, 2009, at the House S&T Subcommittee on Technology & Innovation, and she was questioned quite directly by chair David Wu, wanting to know who at NIH approached congress to exempt NIH ARRA funds from SBIR. Unable to give a direct answer, Rockey said she would get that information back to Wu. Did she? If so, does she remember?

Under questioning by Landrieu, Rockey was asked if the number of SBIR proposals had dropped in half (2004 vs 2008) as claimed by NIH, why didn't NIH try to drop the ARRA SBIR funds in half rather than zeroing them out. Rockey answered that they created other ARRA programs for small businesses and that NIH expects to spend about $200M in ARRA funds with small businesses. It is not known how much of these funds are for R&D small businesses.

Other panelists included Ms. Brenda Degraffenreid of DOE, Mr. Joe Jordan of SBA, Ms. Linda Oliver of DoD, and Mr. Erik Zarnikow of SBA.

Major SBIR Conferences

Due to the many changes going on in the SBIR programs, it is recommended that you consider attending one of the major SBIR conferences to learn what's happening, first hand. Coming up quickly are:

National SBIR Fall Conference - Nov 2-5 Reno, NV - www.unr.edu/sbir-sttr2009

Mid-Atlantic Regional SBIR - Nov 30-Dec 2, Morgantown, WV - www.midatlanticsbir.com

It will be interesting to see if the House SBC and the S&T committees will be willing to get back to work with the Senate SBE to come to terms with a new SBIR reauthorization bill. I predict we'll all have to get in gear and start writing and calling our Senators and Representatives when the time is right.

We'll be back in touch soon with the results of the Armed Services bill and its effect on SBIR.

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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