SBIR Gateway

SBIR Insider Newsletter
March 11, 2009 Edition

Dear SBIR Gateway Insider,

The top two SBIR stories of interest are the continuing resolution (CR) to keep the SBIR program going, and the NIH's exemption of SBIR funding related to the American Recovery and Reinvestment Act (ARRA) of 2009 (P.L. 111-5).

In this issue:

SBIR Continuing Resolution

The House and Senate small business committees are aware of the upcoming March 20, 2009 deadline. Many of our readers (hundreds in fact), have let us know that they have written/contacted their Senators, Representatives and relevant committees about continuing SBIR. Keep up the good work.

Don't expect anything to happen until the last minute. Just look at this week's FY-2009 omnibus appropriations bill. It was supposed to be passed last year, then a CR kept the government running until March 6, then another CR kept things going until March 10 when the bill was finally passed.

As for the small business and SBIR CR, we are hearing that the House wants a very short fuse on a new CR (perhaps a couple of months), while the Senate believes a longer one is necessary in order to provide a better reauthorization. A short fuse is often used to get a bill passed quickly, limit debate, amendments, and avoid transparency for the special interests, similar to that employed in the FY-09 omnibus appropriations (only a few know what was really buried within that legislation).

The pivotal issues are still the VCs and jumbo awards, both of which are still alive in the House, and the short fuse makes it easy to suspend the rules to avoid "regular order" such as the House did in last year's SBIR reauthorization attempt.

We need only look at House SBC Chair, Nydia Velázquez, who in her March 11, 2009 "Views & Estimates" letter to the Committee on the Budget, (on the President's FY-2010 SBA reauthorization budget) stated: "In addition, SBA should permit venture capital-backed small businesses to be able to fully participate in the Small Business Innovation Research program. Such participation is essential for high-growth small firms seeking capital, particularly during this period of economic weakness."

The bottom line is that the House and Senate will most likely pass another CR but battle over the length. Hopefully the two bodies can strike a reasonable compromise and ultimately come up with a good and fair SBIR reauthorization bill.

The NIH And Their SBIR/STTR Exemption From ARRA Stimulus Funding

The Senate Committee on Small Business & Entrepreneurship (SBE) Chair, Mary Landrieu (D-LA) and ranking member Olympia Snowe (R-ME), have sent a letter to Mr. Charles E. Johnson, Acting Secretary of Health and Human Services (the parent of NIH), to express their concern over the $8 billion in ARRA funding exempted from SBIR. They are asking for a response from Secretary Johnson by March 24, 2009.

This letter is a "MUST READ" for those of you interested in NIH SBIR ( ). As you will read in my apology article below, Senator Specter had nothing to do with this SBIR exclusion. It was actually the NIH working with some in the House to get this change made (in the shadows). The SBE was not pleased with this tactic and let Secretary Johnson know their displeasure.

Basically the NIH was stating that there are not enough "high quality" SBIR proposals from small businesses to fund with ARRA dollars before the expiration date. The Small Business Technology Council (SBTC) has obtained some of the figures and calculations used by NIH, and claims NIH is using fuzzy math! They are currently reviewing the situation and will post an article on their web site at

The Biotechnology Industry Organization (BIO), who is more often as not, at odds with SBTC, is also working on getting the NIH ARRA decision remedied.

On the other hand, NIH claims that it can/will use some ARRA monies for SBIR/STTR where appropriate, and mention that their new NIH Challenge Grants in Health and Science Research, will have $200m available for 200 or more grants up to $1m each. Small businesses are invited to join the ranks of all other U.S. organizations in competing for these funds (see ).

We will keep you posted on the progress.

An Apology And Correction From Our Last Issue

I must start with an apology and correction for my game of "Clue" gone bad (last issue). Several sources had suggested to me that Senator Arlen Specter (R-PA) had the language inserted in the ARRA to exempt NIH from SBIR from those stimulus funds.

In fact, it was the NIH themselves that had communicated with the House, and Senator Specter had no part, nor knowledge of this action. Interestingly enough, there was a "misdirection" play that fed several sources suggesting it was Specter, and he received several letters and calls from small biotech companies complaining.

To Senator Specter, I apologize to you and my readers, and promise to try and do a better job in the future.

As for a correction to the last issue, James C. Greenwood, CEO of BIO contacted me directly and let me know in no uncertain terms that BIO is against the action taken by NIH to exempt SBIR/STTR from ARRA, and is working to have that action remedied.

Greenwood also took issue with the notion that BIO had stated it would not support the SBIR program if the VC initiatives were not passed. I provided him with the source and circumstances under which I heard that statement. Greenwood told me that was not BIO's view and the person who [allegedly] said that was long since gone from BIO.

I did remind him that Mark Heesen (NVCA) did threaten to not support SBIR reauthorization if the VCs didn't get their way, and that was made publicly March 14, 2008.

State Science & Technology Institute (SSTI) SBIR Editorial

The State Science & Technology Institute (SSTI) is not big on doing editorials but when they do, it is worth reading. Such is the case for this weeks SSTI Weekly Digest that includes an editorial on SBIR and reauthorization. (see ). SSTI is a leader in the field of state and regional technology based economic development (TBED).

There should be a lot of action next week and we'll try our best to keep you informed. I believe the SBIR program will not lapse, but I'm sure we'll have some surprises.



Rick Shindell
SBIR Gateway
Zyn Systems
40 Alderwood Dr.
Sequim, WA 98382
[email protected]

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