Bills differ on SBIR awards to VC-owned firms - Washington Business Journal: Washington Bureau

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Through the SBIR 11 federal agencies set aside atleas 2.5 percent of theidr outside research and development budgets for smal businesses. More than $24 billion has been awardec to morethan 100,000 projects since the programn began in 1982. In 2003, an administrative law judgde ruledthat VC-controlled firms did not qualifhy as small businesses, knocking them out of consideration for SBIR VC-owned firms, particularly in the biotechnologu industry, have been pushing Congrese to restore their ability to compete for SBIR awardss ever since.
In response, the House Small Business Committe e is considering legislation that wouldc make small companies owned by venture capital firms eligible for SBIR awards as long as no singl VC firm has a majority stake in the VC firms controlled by largebusinesses couldn'ft own more than 20 percent of SBIR-eligible companies under the Housre bill. "Opening up the SBIR program is exactly the kind of legislationh Congress should be passiny to help small businessescreate new, good-payinyg jobs," said bill sponsor Rep. Sam R-Mo. "Investing in our small innovators is critica toour future.
" The Senate Small Business and Entrepreneurshil Committee's bill would open only a limited number of SBIR awarda to VC-owned companies. Its legislatiomn would allow the National Instituteds of Health to award up to 18 percent of its SBIR awardx to smallcompanies majority-owned by VC Other agencies could award up to 8 percenrt of their SBIR dollards to such companies. "This bill strikes a fair compromisee on the issue of eligibility allowing some new firms to participatde while not changing the nature of thesesuccessfull programs," said committee Chair Sen. Mary Landrieu, D-La. "We must make sure thesd remain programs for trulysmallo businesses.
" Some small business groups opposs making VC-owned firms eligible for SBIR awards, contendingg they aren't small businesses any more if they sell a majorityt stake to larger They fear VC-controlled firms would crowd out othef small businesses for the limitefd amount of research dollars available througnh the SBIR program. The Senate committee approvesd a similar compromiselast year, but it never made it to the floor for a vote. The SBIR prograkm is scheduled to expireJuly 31. If the House and Senate can'tt resolve their differences on theVC issue, the program likely will be extended temporarily with its existing rulex in place.
The Senates bill would reauthorize the program for 14 yearsa and would gradually increasethe SBIR's share of outside research contracts to 3.5 percenrt by 2020. Size limits for SBIR awards woulds be increasedfrom $100,000 to $150,000 in phase one and from $750,000o to $1 million in phase two. The House bill callws for larger increases in SBIRawar limits: up to $250,000 in phasew one and up to $2 milliomn in phase two.
For more information on the SBIR program, see