House Passes Small-Business Tech Development Bill

Legislation updating a longstanding small business program for R&D won U.S. approval July 8. The bill modernizes the Small Business Innovation Research and Small Business Technology Transfer programs, including allowing venture capitalists to again participate in the programs.

The Enhancing Small Business Research and Innovation Act of 2009 increases the award sizes for early and midstage development (Phase I and Phase II) to reflect the actual costs of doing high-tech research. It also increases the flexibility of the SBIR program by allowing cross-agency awards, allowing applicants to apply directly for Phase II funding and allowing venture capital-backed small businesses to once again apply for awards.

"In the current economic environment we need to do everything possible to support small high-tech entrepreneurs in the United States, and that's the goal of the SBIR program," Rep. Bart Gordon, chairman of the House Science and Technology Committee, said in a statement. 

SBIR is the single largest federal program supporting small high-tech companies' R&D activities. The program provides more than $2.2 billion annually to small high-tech businesses to develop commercial products and assist agencies in their mission-related research agendas. The STTR (Small Business Technology Transfer) program awards grants to joint partnerships between universities and small businesses.

"Given the economic changes we have seen during the past two decades, we need to update these programs to reflect the current economic realities of our increasingly competitive innovation economy," Technology and Innovation Subcommittee Chairman David Wu said. "The National Academies recently released a report stating that venture capital-backed companies are important and do not crowd out other small businesses. The goal of SBIR is to encourage innovation; it is time we fix the administrative ruling of a single judge and support more innovative small businesses."

The legislation also includes an amendment that aims to help the small businesses that support NASA's space shuttle program transition through the retirement of the shuttle, which is scheduled for mothballs at the end of 2010.

"Helping small businesses affected by the retirement of the shuttle program transition to work in related or unrelated industries will encourage cutting-edge R&D and preserve the unique work force which has made us the world leader in innovation," said Rep. Suzanne Kosmas.

The companion bill in the Senate is S. 1233.