SBIR Gateway

SBIR Insider Newsletter
September 15, 2006 Edition

Dear SBIR Gateway Insider,

The summer vacation season is over and it's back to serious business for many of us. Perhaps even more serious for Congress as they enter a very important and combative period.

In this issue:

Department of Homeland Security FY-06.2 SBIR/STTR Released

The long awaited DHS-HSARPA SBIR/STTR has hit the streets in its pre-release form. As previously reported, DHS has been going through monumental changes and they are not through.

HSARPA's moniker is being "soft pedaled" in favor of the DHS Science and Technology (S&T) Directorate. However, in addition to the six S&T topics, there is a seventh that belongs to DHS's Domestic Nuclear Detection Office (DNDO) that is not a part of the S&T Directorate. The DNDO topic has slightly different terms and more money ($1,000,000 phase II). DHS opens to proposals on October 12, 2006 and closes November 13, 2006 at 4:00pm Eastern Time.

Last issue we reported that Rear Admiral Jay Cohen was nominated for the position of DHS Under Secretary of Homeland Security for Science and Technology. He has now been sworn in and has taken command. In interviews, Cohen stated that he would use similar methods to those that were successful for him during his years as Chief of the Office of Naval Research. He is already starting to make a difference at the much beleaguered DHS.

The DoD Commercialization Pilot Program (CPP)
We have all heard about it, but few really understand it. The more I hear from many of you, the more evident it is that only a few of the savvy SBIR companies really comprehend how they can take advantage of this program. This is not your father's SBIR program.

To explain what it really means is beyond the scope of the Insider, but suffice to say that the opportunities available through this program are for the more advanced SBIR small businesses. CPP lives in the world of DoD transition and acquisition. For example, how can you get a needed technology transitioned to the war fighter or fleet in the most expedient manner possible? The DoD wants this outcome as much as you do!

The SBIR Insider is not here to promote conferences, but this one is an exception. On September 27, 2006 (the day following the Tibbetts Awards), the non profit SBTC is hosting The SBIR in Rapid Transition conference at the Wyndham Hotel, Washington, DC. What makes this conference special is that it is a day long dedication to the CPP, and features top experts in this program. The Honorable James I. Finley, Deputy Under Secretary of Defense (Acquisition & Technology) is giving the keynote address on Acquisition Volatility.

Mr. Richard McNamara, Director, Naval Sea Systems (the man who has successfully transitioned over $1B in SBIR technologies to Major Defense Acquisition Programs) will discuss "How Can SBIR Meet Our Highest Priority War Fighter Needs." Representatives from the primes such as Raytheon, Lockheed, Northrup and others will be there. Well known and top notch SBIR winners such as Trident Systems and Luna Innovations will discuss opportunities for collaboration, as well as the obstacles.

Complete details are on the web site at September 15th is the last day for the early registration discount. Although the information is posted on our Zyn web site, this is an SBTC event, and the SBIR Gateway is donating the space in order to help make the small businesses aware of this important event.

SBIR Reauthorization and Augmentation
In our July 28, 2006 issue we discussed many of the proposed legislative changes for the SBIR program, including but not limited to: VC Eligibility, raising the award amounts, raising the program funding from 2.5% to 5% by FY-2009, improved IP protection, and elimination of requiring waivers to utilize federal laboratories in SBIR RDT&E.

All of these and many more were incorporated into the bill S.3778, Small Business Reauthorization and Improvements Act of 2006. This bill was passed in bi-partisan spirit by the Senate Committee on Small Business & Entrepreneurship (SBE) under the leadership of the committee Chair, Olympia Snowe (R-ME) and Ranking Member, John Kerry (D-MA).

However, inside sources report that the bill is DOA (dead on arrival) to the full Senate. The SBIR portion is but one small part of this bill, originally designed to reauthorize the SBA. The bill proposes many sweeping changes to both SBA and SBIR, but comes at a time when Congress has bigger fish to fry. This bill is just too big and not urgent enough to get the attention it deserves.

In true D.C. spirit, don't count all of these provisions out yet. We hear that Senator Bond has gone shopping, looking for a bill he can attach his BIO VC changes to. There are others in the SBE who are also searching to incorporate some of the more serious changes from S.3778 into pending legislation. The object is to get these passed in smaller chunks.

Senator Kerry and SBIR Reauthorization
We have had several people tell us that they heard Senator John Kerry was not supportive of SBIR reauthorization. This was not partisan bickering, but a misunderstanding of what the Senator actually said. The Senator is very committed to SBIR and small businesses. Below is a quote from Kerry's remarks on August 3, 2006 concerning support for the SBIR in S.3778:
"Finally, let me say a few words about SBIR, the Small Business Innovation Research program. The Small Business Committee had a hearing on SBIR earlier this month, and at that time, I made clear my concern that we were being premature in going ahead with reauthorizing SBIR when the program’s authorization doesn’t expire until 2008. There is a $5 million National Academy of Sciences study due to come out at the end of this year that I am certain will give us much to consider. Yet, this bill does reauthorize SBIR, making it permanent, and it includes some strong provisions to protect SBIR companies’ intellectual property and to reign in excessively large awards – which are a particular problem at NIH. While SBIR Phase IIs are supposed to be $750,000, NIH Phase II are often larger. One Phase II award reportedly equaled $6 million. While the firms getting these large awards may be doing important work, we need to keep in mind that if one firm receives $6 million, there are many firms that are not getting Phase IIs at all. That is why I am glad that we have adopted Senator Bayh’s proposal to increase the overall share of SBIR funds from 2.5 percent to 5 percent of federal research budgets, so that more small businesses will have a chance to compete in this program. I also support several provisions in the bill to encourage commercialization, one of the biggest challenges facing the program.

There is one provision in this bill that was added during our Committee mark up which concerns me, a provision which gives federal agencies the option to direct 25 percent of SBIR funds to firms which are majority backed by venture capital investment. The firms which will benefit from this provision are primarily biotechnology firms and no one disagrees that they are doing critical work and should receive federal support. I am committed to finding a way to help biotechnology firms but I am concerned that this set-aside may crowd out small firms that are not blessed with venture capital. SBIR is the only federal research and development program devoted to small business and it has been universally praised for fostering innovative technologies and lifesaving therapies and medical devices that may never attract the support of venture capital firms. SBIR serves as seed funding for the companies that are willing to take on these research and development projects. It is important to retain the integrity of this program, and I look forward to working with my colleagues to find a way to strike a balance so that we can continue to support cutting edge research that is so early stage it has yet to attract the private sector."

In the next issue we will have coverage of the 2006 Tibbetts Awards. It is rumored that the new SBA Administrator, Mr. Steven Preston will be attending the event. If he does, it will give him a great view of SBIR success and hopefully make him a supporter of the program and his Office of Technology (unlike his predessor).

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



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

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