SBIR Gateway

SBIR Insider Newsletter
December 11, 2006 Edition

Dear SBIR Gateway Insider,

We are now in the holiday season and there is a lot of SBIR ground to cover. The 109th Congress has officially adjourned, "sine die" after a final barn burning session in the Senate of 19 hours and 10 minutes, and a little less in the House.

Although many are referring to the 109th as a "do nothing" congress, I can tell you without reservation that the staffers, clerks, pages and other congressional support staff were anything but "do nothing." So much is done in the committees that never see the light of day, and that includes some important legislation such as SBA and SBIR reauthorization.

However, 9 major appropriations bills that fund most of the government's activities were not acted upon, and a continuing resolution (CR) will keep the basic funding going until February 15, 2007. Because CRs are flat, and do not incorporate all funding facets, some programs will be in jeopardy, at least temporarily. Money will be tight and future commitments may be delayed. Leaders of the incoming 110th Congress are promising immediate bipartisan efforts to address these matters.

In this issue:

Outlook for SBIR Issues in the 110th Congress

As previously reported, Senate bill S.3778 to reauthorize the SBA (and also the SBIR program) didn't go very far after it left the Senate Committee on Small Business & Entrepreneurship (SBE). The SBA is now on a CR, and the SBIR program is not due to expire until September 30, 2008.

That may seem like a long way off, but remember that FY-2008 starts October 2007 and it takes lots of time, effort and often luck to get a successful reauthorization bill. SBIR reauthorization is NOT a slam dunk! Both House and Senate small business committees are behind it, but perhaps at different levels of support. House and Senate Science committees are also heavily involved and they see things from a different viewpoint that the small business committees.

Changes coming to the Senate SBE committee include John Kerry (D-MA) and Olympia Snowe (R-ME) trading places with Kerry becoming Chair and Snowe the Ranking member. Kerry has been on the committee for 21 years and was Chair for 2001-2002. Also the current count of 10 Republicans and 8 Democrats will change. The Democrats will pick up freshman Senators Ben Cardin (D-MD) and John Tester (D-MT). The Republicans will lose Conrad Burns (R-MT) and George Allen (R-VA).

There are two interesting power players on the SBE, Carl Levin (D-MI), who will become the Chair of the Senate Armed Services Committee, and Joe Lieberman (I/D-CT) whose in the catbird swing vote seat for the full senate.

On the House side, Nydia M. Velázquez (D-NY) will become Chair of the House Small Business Committee, succeeding Donald Manzullo (R-IL). This appointment will make Velázquez the first Hispanic woman ever to chair a full congressional committee.

Upfront for these two committees will be the reauthorization of the SBA. Both committees want to raise the funding levels for this beleaguered agency. In the past, the full Senate would often put the kibosh on the SBE's budget amendments for the SBA. Although the SBE was always somewhat bipartisan, there are still differences. Back in March of 2005 the SBE was fighting to increase the budget request for the SBA. Kerry wanted an increase of $139m but Snowe believed the Senate would never go for that, so they compromised down to $78m. Will the new makeup of Congress be more supportive of the SBA?

The SBIR Program is also guided by Congressional Science Committees. On the House side, the Committee on Science changes with Congressman Bart Gordon (D-TN) becoming chair and former chair, 12 term Congressman Sherwood Boehlert (R-NY) leaving government service to become a public policy scholar at the Woodrow Wilson International Center for Scholars. Boehlert, who served on the Committee on Science since 1983, is featured in an exclusive interview in this week's Federal Technology Watch (FTW) magazine. Congressman Ralph Hall (R-TX) will become ranking member of the committee.

On the Senate side, Senator Daniel K. Inouye (D-HI) succeeds Senator Ted Stevens (R-AK) as chair of the Commerce, Science and Transportation Committee. Stevens will become the ranking member.

Traditionally the science and small business committees see SBIR from different perspectives. All of them will have a voice in SBIR reauthorization.

Update on SBA Administrator, Steven Preston
The early marks on new SBA administrator Steven Preston have been very positive. Preston has been working hard and the new attitude is showing improvements, to the agency, albeit slowly. The SBA has a long way to go in order to meet the many challenges it faces, not the least of which is employee moral.

Administrator Preston participated at the 2006 Tibbetts Awards presentation September 26, 2006 in Washington DC. The SBTC hosted the awards program, and their executive director, Jere Glover was able to spend some quality time discussing SBIR with Mr. Preston. The award program was very successful and most believed Preston to be very impressed by, and interested in the SBIR program. This is a welcome change from the previous administrator.

Confirmation Hearing on New SBA Deputy Administrator
On December 6, 2006, the Senate SBE committee held a hearing on the nomination of Ms. Jovita Carranza to be Deputy Administrator of the Small Business Administration. Ms. Carranza started at the bottom at UPS and worked her way up to become a Vice President at UPS.

Carranza, a very polished and poised woman presented herself well but was somewhat guarded in her responses to Senator Kerry's questions targeted at small business circumstances that the agency handles. Although Carranza has an excellent resume and background, Kerry wanted to get a feel for her small business awareness. It did not go unnoticed that both Administrator Preston and Ms. Carranza are from large entities, and perhaps Kerry wanted to insure that she could relate to the small business needs and provide good support to the agency, administrator, and the small business community.

Her confirmation is not in question.

Changes at DoD SBIR Headquarters
The departure of Donald Rumsfeld has little affect on the SBIR program. However, we have heard that Mr. Frank Ramos, Director, DoD/OSD Office of Small Business Programs (OSBP, formerly SADBU) is stepping down. As director of OSBP, Ramos has many responsibilities, not the least of which is guidance and oversight of DoD's SBIR/STTR program. The DoD SBIR Program Manager, Michael Caccuitto, works for Mr. Ramos. The OSBP Director position is by political appointment and a successor has not yet been named.

Ramos has had an extensive career in government service including the IRS, SBA, and the DoD. Prior to his appointment in 2001 by President Bush, Mr. Ramos served the Commonwealth of Virginia Governor James Gilmore III as the Chief, Deputy Director of the Department of Minority Business Enterprise in Richmond, Virginia.

Mr. Ramos and I have had our differences in the past (the DoD Submission Debacle), but overall he restored functionality and respect to a damaged office, where his immediate predecessor, Robert L. Neal Jr, was found guilty of using the office for a multimillion-dollar bribery scheme, and was sentenced to 24 years in federal prison.

Ramos guided the DoD SBIR program through many substantive changes. We wish him well.

SBIR Data Rights in Jeopardy as Night Vision Corp. Loses SBIR Phase III Appeal

The Night Vision Corp has suffered another blow as the U.S. Court of Appeals upheld a lower court ruling against them.

Previously a ruling by the U.S. Court of Federal Claims against the Night Vision Corp (NVC) back in November of 2005, sent shock waves through the SBIR community. In the case of Night Vision Corp. v. United States, NVC filed a 5 part claim (see relating to their successful Air Force SBIR phase I and II awards in which NVC created 12 prototypes of night vision goggles. Rather than utilize a phase III mechanism, the Air Force chose to have other contractors reverse engineer the goggles and then selected another company to produce them. NVC lost on all 5 counts and the SBIR community was shaken.

NVC appealed the case to the United States Court of Appeals for the Federal Circuit 06-5048. The Small Business Technology Council (SBTC) strongly disagreed with the lower court's decision and viewed it as a threat against small business SBIR data rights and the overall phase III program. While NVC was preparing their appeal, the SBTC under the direction of Jere Glover, went into action and undertook the complex and expensive procedure to write and file a detailed Amicus Brief with the court to try and help NVC, but more importantly to protect all SBIR companies' Phase III data rights.

On November 22, 2006, the U.S. Court of Appeals upheld the lower court's ruling and found in favor of the Air Force. Although NVC lost the case, the SBTC's Amicus Brief yielded a strong positive influence on the court. In a 12 page ruling, the three judge panel stated:

We are mindful of the strong public policy, reflected in the SBIR program, favoring the awarding of government research and development contracts to small business concerns, as the Small Business Technology Council discusses in its amicus curiae brief. That policy, however, cannot prevail over the fatal defects in Night Vision's case that we have discussed.

The SBTC is studying the complete ruling of the court and will offer comments to their members in the near future. It is apparent that a remedy for data rights and phase III problem must come from the SBA and/or Congress. SBTC will be very proactive with both entities to resolve this problem and strengthen data rights for small businesses in the SBIR program. Interested parties should visit the SBTC web site at The court's 12 page ruling is available on the SBIR Gateway web site at

What Happened to NIST's FY-2007 SBIR Phase I Program?

Many of you have contacted us because you noticed we had no listing on our SBIR Gateway for a NIST FY-2007 SBIR phase I solicitation, which usually is released in late October or early November (generally parallel to NOAA).

The Department of Commerce's National Institute of Standards and Technology (NIST) has suffered a major cutback in its R&D funding caused by an Administration and Congressional decision to eliminate funding for its Advanced Technology Program (ATP) competition. The demise of the ATP program has reduced NIST's SBIR program funding by almost 90%.

The net effect to the NIST SBIR program is almost catastrophic, as the agency struggles to revamp their modest SBIR program into a tiny one. Due to commitments for its phase II awards, there are not sufficient funds for a FY-2007 NIST phase I solicitation. The agency is working on a revamped program and schedule for FY-2008.

NIST needs your help. The SBIR Program at NIST is launching a study of how the R&D it has funded over the past few years has been commercialized. NIST is looking for descriptions of the transition of the R&D from the small business into specific applications for the public and/or private sectors. The only requirement is that the technology is attributable to NIST SBIR (alone or in combination with other research projects, including other agency SBIR funding). Please visit the web site at or contact Mary Clague at [email protected]

Celadon Laboratories Wins NIH SBIR Protest, or do They?
Here is an example of winning the battle but losing the war. Perhaps there are some lessons to be learned, on both sides.

Celadon Laboratories, Inc. filed a GAO protest against the NIH concerning an alleged conflict of interest on the part of the evaluators for Celadon's PHS 2006-1 SBIR submission. The evaluation of Celadon's proposal was done by a four member Special Emphasis Panel (SEP). The SEP is an independent peer review panel, which evaluates proposals, determines which small business concerns should receive phase I contracts and makes specific recommendations related to the scope, direction and/or conduct of the proposed research.

This SEP consisted of three members from private industry and one from academia. Celadon contended that the SEP members worked for a firm "whose economic lifeblood" was the development and sale of proprietary technology, which would be directly competitive with the technology proposed in Celadon's proposal.

Although GAO did not decide whether the evaluators had real conflicts of interest, the record shows that the NIH failed in its obligation to determine whether these individuals' employment caused them a real conflict of interest that could bias their evaluation of Celadon's proposal as contemplated under its applicable regulation.

The protest was sustained, Celadon had won…. Or did they? The NIH contended that all the SBIR funds for the fiscal years had been allocated and it has no funds for additional awards under the SBIR solicitation. Under these circumstances GAO recommended that the agency reimburse Celadon its proposal preparation costs, the costs of filing and pursuing its protest, including reasonable attorney's fees.

Thanks to the NSF for the Many Years of National SBIR Conference Support
The final SBIR agency funded National SBIR Conferences was held last month in Milwaukee, WI. Most of you don't know this, and NSF would never ballyhoo it, but over the past several years, the NSF has spent millions of dollars funding these National SBIR Conferences. Originally the brainchild of Mr. Roland Tibbetts when he was at NSF, Dr, Kesh Narayanan, Director of NSF's Division of Industrial Innovation & Partnerships (ENG/IIP), inherited the program and took a strong personal interest in assuring that the conferences served the SBIR community well.

The NSF funding helped to provide outreach to promote the conferences; infrastructure to manage the conference and logistics; provide additional financial support to the rural and disadvantaged states for conference attendance; provide conference materials and a supporting web site. For the last decade this work was performed by the NSF conference contractor, DelaBarre & Associates, Inc., who provided excellent conference support while keeping registration fees very reasonable.

An NSF decision to no longer solely fund the National SBIR Conferences was made last year, based on recommendations from NSF's Committee of Visitors to reevaluate the agency's allocation of outreach resources, including the National SBIR Conferences. Although the NSF was willing to ante up their share, a weakened and under-funded SBA was of little help in trying to unite the 11 agencies to all "chip in" and continue to fund these conferences.

As a result, the agencies formed an ad-hoc committee to accept proposals from states that would like to fund and host a national SBIR conference. The committee selects 2 venues per year and the winning state organizations are to take responsibility for the overall funding and management of the conference. The agencies will provide support by showing up at the conferences and providing presentations and one on one sessions.

The first of these two conferences is slated for April 30, 2007 thru May 3, 2007in Research Triangle Park, NC. The second is October 29, 2007 thru November 1, 2007, in Richardson, TX (suburb of Dallas). Details to come.

As a National SBIR Conference participant/attendee for many years, I want to thank Kesh Narayanan, and the NSF for making these conferences possible. Also thanks for the fine work of Del and Sharon DelaBarre of DelaBarre & Associates (and staff) for their professional conference support.

We look forward to the new model of National SBIR conferences and are eagerly awaiting information from the two states so we can pass that on to you.

SBIR Year in Review and Person of the Year
Not wanting to wear out my welcome, I will be sending out another SBIR Insider next week with information on the Tibbetts Awards, our annual SBIR year in review, SBIR Person of the Year and predictions (from insiders) for 2007.

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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