SBIR Gateway

SBIR Insider Newsletter
April 3, 2006 Edition

Dear SBIR Gateway Insider,

Major news to report in this issue.  If you are interested in retaining small business programs, read on.

In this issue:

SBA and Small Business Programs in Peril?
Depending on who you want to listen to, Congress and the Administration may be trying to eliminate the SBA and most of its small business programs, or they are merely evaluating the effectiveness of the agency and its programs. Either way, this is a serious issue!

The U.S. Senate Committee on Homeland Security and Governmental Affairs, Subcommittee on Federal Financial Management, Government Information, and International Security, is holding a hearing titled: The Effectiveness of the Small Business Administration.  This hearing requested by committee chair Senator Tom Coburn (R-OK), will examine the effectiveness of SBA programs and the financial impact of them on the budget and economy.

Senator Coburn, or Dr. Tom, as he likes to be called, is known to vigorously oppose earmarks, plus-ups and the rapidly bulging budget defect.  However, the manner in which he called this hearing had the "earmarks" of a railroad job to kill SBA and many of its programs.  Its existence was kept especially quiet as were the list of witnesses. 

This fact didn't go unnoticed by some small business insiders including Jere Glover of the Small Business Technology Council (SBTC), and LLoyd Chapman of the American Small Business League (ASBL).  When it was discovered that one of the witnesses would be Veronique de Rugy, of the American Enterprise Institute (AEI), Glover immediately referenced de Rugy's controversial AEI paper "Are Small Businesses The Engine Of Growth?"

Glover, former SBA Chief Counsel for Advocacy and current Executive Director of SBTC took great exception to de Rugy's writing and published opinions.  SBTC is currently formulating a response to her "opinions."  On the other hand, Chapman, who some say often "shoots from the hip", takes no prisoners and knows how to spread the word, authored and widely distributed a press release on March 28, 2006 entitled "Oklahoma Senator Calls for Hearing to Abolish Small Business Programs" see

This infuriated Coburn, who sharply criticized the ASBL press release that Coburn claims included a false and deliberate distortion of the Senate oversight hearing he plans to hold on the Small Business Administration.  By the same token, Chapman didn't take delight in Coburn's response where he said, "If the ASBL believes the SBA represents the pinnacle of economic perfection and efficiency and is beyond scrutiny, then they should be confident that their perspective will be vindicated during this hearing.”

Claims of Illegal SBA Lobbying - In an article published by, a Coburn spokesman reflected that some SBA employees had lobbied some Oklahomans to put pressure on the Senator.  At the time of this writing these charges were unfounded.  It is an illegal activity for an agency to spend federal funds for lobbying activities. 

The Hearing Witness Veronique de Rugy - If Senator Coburn wonders what precipitated this brouhaha, he need only look at the choice of Dr. de Rugy for a witness at this hearing.  She possesses distinguished educational credentials from the University of Paris-Sorbonne and directed academic programs for the Institute for Humane Studies in France.  In a recent Forbes magazine article, Small-Firm Idolatry, Stop Babying Small Businesses, Dr. de Rugy demonstrated how wonderful academe prose could be contrary to common sense and actual fact.  Her lilting phrasing, "The President's latest budget proposes to shower a budget of $605 million on the SBA.." is void of the fact that the actual SBA budget has been reduced again, as it has for the last 6 years, and no federal agency has had to endure those severe level of cuts. 

Dr. de Rugy also states: "Because everybody loves small businesses, everyone wants to do something for them, whether it's targeted tax credits, special regulatory treatment or preferential access to government contracts."  What planet is this person on? If her statement were even remotely true, you wouldn't need small business advocacy, SBTC, ASBL, or the SBIR Gateway News.  I could actually enjoy my evening and you wouldn't be burdened with my diatribes. 

Of highest importance to most of our readers would be de Rugy's comment including small business "preferential access to government contracts" [that should be abolished].  Of course, that would include the SBIR/STTR programs. 

Coffee with Dr. Tom - I must admit that in talking with one of Senator Coburn's staffers, I became convinced of the staffer's loyalty and admiration for the Senator.  Dr. Tom hosts morning coffee for his constituents on Thursdays from 8 am to 9 am EST (call for R.S.V.P.) and he seems genuinely interested in serving his constituents and the country.  If I were privileged to have coffee with the Senator, I would ask him the following questions pertaining to Dr. de Rugy's comment on "preferential access to government contracts": 
Is it true that all 50 Senators are from above average income households (millionaires), and do you think an intelligent citizen who only makes $60k per year could be successful in competing and being elected to the U.S. Senate?  If so, are there any recent (last 10 years) examples?  If we apply this same principle to federal government contracting, do you feel that high tech small businesses could compete straight up with large well-funded companies?  If yes, can you show me the small business success rate in such a competition? 
Bottom line, small businesses need government help to compete in federal government contracting, especially in the research and development sectors.  

Senator Coburn's hearing will take place April 6, 2006 at 2:30 PM in the Dirksen Senate Office Building, Rm. 342.  We will cover that for you in our next Insider.

You can visit the SBTC web site at and the ASBL web site at

National Academies' Symposium on Innovation Awards and Entrepreneurship: SBIR, the States, and the Innovator.
On April 7, 2006 the National Academies is holding a symposium on the topic listed above.  This event will take place in Room 100 of the National Academies Keck Center at 500 5th Street, NW, Washington, DC, beginning at 8:30AM and concluding at approximately 5:45PM with a reception.

This important symposium, part of the Congressionally-mandated study of the SBIR program, is designed to bring together representatives of selected state programs to discuss state-level initiatives and their interaction with the SBIR program.  In addition, the meeting will provide an opportunity to review empirical measures of innovation at the state and regional level.  The meeting will also provide the opportunity to discuss the role and effectiveness of outreach programs for best practice lessons for both SBIR and regional programs.  Fundamentally, the goal is to better understand SBIR's role in regional innovation systems and how their interaction might be enhanced. 

More information on this symposium can be found on the SBIR Gateway at

Senate SBE Hearing - More Woes for SBA's Barreto -
On March 9, 2006 the Senate Committee on Small Business and Entrepreneurship (SBE) had a hearing on "The President’s Budget Request for the Small Business Administration for Fiscal Year 2007”  The only witness was SBA's Administrator Hector V. Barreto. 

In a bipartisan spirit, SBE Chair Olympia Snowe (R-ME) and Ranking Member John Kerry (D-MA) delivered opening statements critical of the administration's continued cutbacks of the SBA's budget.  Senator Snowe stated:
The SBA argues that it “does more with less,” but the Agency’s resources and employees are stretched too thin. We cannot, on one hand, cite how important small businesses are to our country and our economy, and, on the other hand, refuse to provide the Small Business Administration with the resources it requires to meet its mission.
Both Snowe and Kerry were extremely tough on SBA Administrator Barreto and his management.  Listening to the various Senators on the committee it seemed as though they saw Barreto as an impediment rather than an enabler.  This was totally apparent in Kerry's opening statement where he stated:
Madam Chair, thank you. Thank you for this hearing and that important opening statement. I was listening to your statement and it’s a pretty remarkable statement to come from the Chair of this Committee, where you are in the majority that represents the same party as the Administrator. This is not a party issue. When you think of the past hearings that we’ve had over the last years with the same Administrator and the same Administration, it just seems like a Johnny-one-note process of repetition of the same old, same old. You don’t seem to hear what anybody sitting at this table or on this Committee is saying. I see this chart that shows increased loans and I know what you’re going to say. You’re going to come in here and say we’ve had this big increase in loans. But you didn’t do that, we did that. You didn’t propose these lending levels. You didn’t ask for it. You didn’t fight for it. We had to fight for it over your objection.
Kerry went on to say:
I take a look at this and I say to myself, are you trying to get rid of the SBA? Is that really what’s going on here over a period of time?
The SBIR Gateway News has been critical of Administrator Barreto since his 2004 transfer of Maurice Swinton from the Office of Technology (see ).  The morale and effectiveness of SBA has diminished greatly under Barreto's leadership but some see it as his following orders from the Administration rather than his inability as a leader.  Regardless, in a fall 2005 survey of government employees, the SBA was considered the worst federal government agency to work at.  It came in number 30 of 30 agencies overall.  In leadership SBA came in 27th.  Although there are many good employees at SBA, under staffing and poor top management are contributing to the inefficiencies and ineffectiveness of the agency. 

All in all, SBA is becoming less relevant to the SBIR program as many agencies go off and do their own "thing" in order to satisfy their own agency interests.  This is often counter to the policy directives, and in some cases the legislation.  As one insider once put it, "You have one program with eleven different agendas."

Note to SBA: Help is on the Way... Maybe...
On March 16, 2006 the U.S. Senate passed a bipartisan amendment to the budget resolution by Senators John Kerry and Olympia Snowe, Ranking Member and Chair of the Committee on Small Business and Entrepreneurship, that will add $130 million to the President’s budget request for the Small Business Administration (SBA), bringing the agency to a total of $754 million for next year. This compromise amendment was also sponsored by Senators Mary Landrieu (D-LA), Joe Lieberman (D-CT.), Carl Levin (D-MI), Bill Nelson (D-FL), Norm Coleman (R-MN), and David Vitter (R-LA.).

Although this amendment includes $4 million for SBIR/STTR outreach, don't get overly excited because a similar measure last year was eliminated by Congress, strangely enough, during National Small Business Week.   

The Return of the Tibbetts Awards Program
The Tibbetts Awards Program has been revived after a three year hiatus.  The awards ceremony will be held September 26, 2006 at the Wyndham Hotel, Washington, DC. 

Due to SBA woes as listed previously, the Tibbetts Awards are being organized by the SBTC with sponsorship including DoD, DARPA, Navy SBIR, NASA, NSF, Boeing, The Association for Manufacturing Technology, Gregg Olson, ATF, Homeland Ventures, RDM, and Physical Sciences Inc. 

Named for Roland Tibbetts, the person acknowledged as the father of the SBIR program, these prestigious, national awards are made annually to those small firms, projects, organizations and individuals judged to exemplify the very best in SBIR achievement.

The emphasis is on recognizing those accomplishments where, in the judgement of those closely involved and often most immediately affected, the stimulus of SBIR funding has made an important and definable difference.

The Awards Committee will start accepting award nominations on May 15, 2006.  Nomination packages and complete information will be available on the web site at

A Personal Note
When we started this SBIR Insider odyssey we never imagined we would be covering so many political issues.  It is not our intent to try and influence your view of a political party.  Our way of teasing that we are non-partisan is to say that we hold both parties in equal contempt. 

Unfortunately this one time joke has become the feeling of many Americans.  Public support for Congress is at an all time low.  We often feel so distant from our elected officials that we don't bother to let them know how we feel about issues.  By providing meaningful feedback, we can help our politicos do a better job.  If you don't agree with your elected official, don't just complain, offer solutions.  If you agree with your elected official, let him/her know they have your support.  When it nears election time, support those whom you like, and support the opposition of the ones you don't. 

Thank you for your interest and look forward to your comments. 



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

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