July 2011

The not-so-invisible hand

Plans to expand a government program to help small businesses cash in on scientific discoveries are delayed by contentious legislative language. 

 News-from-the-Hill 
SBIR reauthorization has been a priority for Senator Mary Landrieu, D-La., chairwoman of the Senate Committee on Small Business and Entrepreneurship.


The Small Business Innovation Research program, a congressionally mandated, funding agency-administered program aimed at promoting and developing small business opportunities from basic research, is overwhelmingly regarded as an unequivocal success by researchers, politicians and independent observers. Yet congressional reauthorization of the program is being held up as legislators grapple with proposed changes to the program that would appear to decrease, rather than increase, its efficacy.

The SBIR program was launched in 1982 as part of the Small Business Act to speed technological innovation while also providing incentives for cooperation between government agencies and small businesses. The program instructs 11 federal agencies, among them the National Institutes of Health, National Science Foundation and U.S. Department of Defense, to allocate at least 2.5 percent of their overall research budgets for SBIR grants; in fiscal 2010, SBIR projects received more than $2 billion in government funding. Under the program, agencies generate their own grant solicitations and are allowed great flexibility in determining what types of projects receive SBIR funds. Though the program is aimed at using small businesses to help facilitate research and development that will aid federal agencies, the underlying assumption is that grant recipients ultimately will be able to commercialize their inventions, thereby stimulating economic growth. According to a 2009 National Research Council report, nearly 50 percent of approved projects end up being commercialized. The NRC report also praised the SBIR program for fulfilling its mission to stimulate and support both individual government agencies and small businesses.

Leaders across the political spectrum, ranging from President Obama to Speaker of the House John Boehner, R-Ohio, have credited small business with being the “engine of our economy,” with efforts to support small business generally enjoying rare bipartisan agreement. With such favorable political winds blowing, reauthorization of the SBIR program in 2008, given its past successes, should have been a slam dunk. Yet three years later, Congress still has not passed a full reauthorization, instead relying on a series of temporary extensions to keep the program going. Reauthorization has been a priority for Senator Mary Landrieu, D-La., chairwoman of the Senate Committee on Small Business and Entrepreneurship and sponsor of the reauthorization bill, who lamented wasting “so much good technology and important investments” after the most recent reauthorization attempt was defeated in May. Ironically, it is Landrieu, proposing to increase the minimum set aside for SBIR funding to 3 percent of agency research budgets, who has in effect prevented the reauthorization from being consummated.

Agencies currently are free to allocate more than the mandated 2.5 percent of their budgets toward SBIR grants, so any increase above that value comes off as arbitrary and baseless. Moreover, funding for SBIR grants has grown during the past decade even as the number of applications has fallen, suggesting that economic market forces have determined that the current level is appropriate. For individual investigators already facing record-low application success rates and declining agency budgets, the redirection of funds to one area of research, even one as well received as the SBIR program, at the expense of others would represent a devastating blow. For example, the NIH would be forced to reapportion up to $180 million away from other grant types, including investigator-initiated grants such as R01s. Given that it is often the discoveries uncovered by individual investigators that are developed into the projects funded by the SBIR program, this situation would ultimately result in the roots of the scientific discovery tree being cut off at the expense of preserving the leaves.

Academic groups, scientific societies (including the American Society for Biochemistry and Molecular Biology) and government officials such as White House Office of Science and Technology Policy Director John Holdren have been vociferous in raising their concerns about this proposal in hopes that its removal from the legislation will allow the program as a whole to move forward. With all of the success enjoyed by the SBIR program, hopefully Congress finally will learn when to leave well enough alone.

Geoff HuntGeoffrey Hunt (ghunt@asbmb.org) is the ASBMB science policy fellow.


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