Senate OKs SBIR funding, but full passage remains a question mark

The U.S. Senate has passed an amendment that would reauthorize the popular Small Business Innovation Research program for eight years, but there are still two major hurdles to clear if a long-term reauthorization is to become a reality.For starters, there’s the problem of its packaging.The SBIR reauthorization amendment was tacked on to a much larger defense bill — the National Defense Authorization Act of 2012 — that has been saddled with controversy for some of its provisions, which relate to military detainment.One provision would require suspected terrorists, including those captured on U.S. soil, to be placed in military custody, while another provision would give the government authority to keep terror suspects in military custody indefinitely without a trial, including American citizens.Because of the controversial provisions, President Barack Obama has threatened to veto the $662 billion bill, which the Senate passed last Thursday.Even if the bill does manage to escape the president’s veto, the SBIR amendment will still need to make it through the House. But whether the House will pass the Senate amendment or push for its own version, which it has been considering for months, is yet unknown.Given historical disagreement on the terms of the program, reaching a compromise could prove challenging.Bolstering growthThe bipartisan amendment that passed the Senate on Nov. 29 would reauthorize the SBIR and the Small Business Technology Transfer programs for eight years.Established in 1982, the SBIR program offers competitive grants to small defense and technology companies to help them compete for federal research dollars. It’s funded through the existing R&D budgets of the 11 participating government agencies, which set aside 2.5 percent of their grants for small companies. The STTR program is similar but smaller; it sets aside additional money for partnerships between small businesses and nonprofit research institutions.In the three decades since the SBIR program was enacted, small New Hampshire firms have won $330 million in SBIR grants. Despite its size, the state has been successful in winning SBIR grants — so successful that it ranks 22nd nationally for total grants awarded.While the SBIR and STTR programs have been lauded by both Democrats and Republicans for bolstering small business growth and innovation, a long-term reauthorization has been stalled for years.Unable to agree on its terms, Congress hasn’t passed a long-term authorization of the program since 2008. Since then, it’s been temporarily extended 14 times, with its most recent extension set to expire Friday, Dec. 16.Securing a long-term extension is crucial, since these short-term extensions make it difficult for small businesses and federal agencies to plan for the future, said U.S. Sen. Jeanne Shaheen, D-N.H.The Senate and House will meet this week to work out the differences between the House and Senate NDAA bills, but whether the Senate and House will be able to agree on the terms of the authorization this time around is yet unknown.The versions differ on several points. While the Senate version calls for an eight-year extension, the House wants a three-year extension, which it said would allow for more oversight of the programs.They also disagree on how much SBIR money should go toward private equity firms. Under the Senate amendment, most federal agencies could grant no more than 15 percent of their SBIR funds to majority-owned private equity firms, though a few agencies could set aside up to 25 percent.The House version is much more lenient to private equity firms. It would let agencies award up to 35 percent of their SBIR funding to majority-owned venture capital firms, with a few agencies able to award up to 45 percent.Another big point of contention is how the program should be funded.Since its inception, the SBIR program has been funded in three phases. In the first phase, firms hoping for federal funds have to prove the feasibility of their technology in an independent, peer-review process.The Senate says the first phase exists to protect taxpayer money, and its version keeps the three-phase process. The House version, however, would eliminate the first phase, saying it would save money and speed commercialization.The House version would also limit the number of awards a company can receive.A ‘step forward'”Unfortunately, the fight is not over. There is one more hurdle to jump over to make it to the finish line. We must make sure our colleagues on the House side do not strip this crucial legislation as with years past,” wrote U.S. Sen. Mary Landrieu, D-La., an SBIR supporter, in a press release.Both of New Hampshire’s senators have claimed some credit for getting the amendment through the Senate.Shaheen, a longtime proponent of SBIR, said in a press release that she “helped paved the way” for the vote by including it in its initial consideration before the Armed Services Committee. She called the Senate vote a “step forward” to helping the economy focus on “entrepreneurship and innovation.”Republican Kelly Ayotte said she was “pleased” with the Senate vote. As a member of the Senate Small Business Committee, Ayotte said in a press release, she worked to incorporate the reauthorization bill into the defense bill.”SBIR gives tremendous opportunities to New Hampshire’s small technology firms,” said Ayotte, “generating increased growth and supporting their innovative contributions to our national security.”Both Ayotte and Shaheen were among a bipartisan group of 11 senators who penned a letter to the heads of both chamber’s small business committees, which addressed their concerns with the House version and urged both sides to work toward a compromise. — KATHLEEN CALLAHAN/NEW HAMPSHIRE BUSINESS REVIEW