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Tag: H.R. 5819

Senate Committee Passes Compromise SBIR Reauthorization Bill

Written by on Monday, August 18th, 2008

The Senate Committee on Small Business and Entrepreneurship ("SBE") recently passed a compromise Small Business Innovation Research ("SBIR") reauthorization bill that would allow small companies that are majority-owned by venture capital firms to be eligible for SBIR awards.

According to the SBIR Reauthorization Insider, the SBIR/STTR Reauthorization Act (S. 3362) is a  "completely new bill" that is "not related to H.R. 5819, the House’s SBIR/STTR Reauthorization Act passed in the House" back in April, 2008.  The complete draft of the bill is attached.

According to the SBIR Reauthorization Insider, some of the highlights of this bill are as follows:

  1. Higher Award Amounts – The SBIR and STTR awards are increased to $150,000 in Phase One, $1 million in Phase Two, and are now able to exceed the guidelines by up to 50%.
  2. Increase in the SBIR/STTR Cap– The SBIR cap will be increased from 2.5% to 3.5% at a rate of .1% over 10 years.  The one exception is the NIH, which will stay at 2.5%. The STTR cap will double from 0.3% to 0.6% over 6 years.
  3. Venture Capital Eligibility-A "small business" that is majority owned and controlled by multiple VCs will be eligible to participate in the SBIR program under certain conditions. No single VC can own more than 49% of the small business entity; the VC must be a United States Venture Capital Company; the VC owned small business must register with the SBA when they submit an SBIR proposal. The NIH will be limited to awarding not more than 18% of their SBIR award funding to such VC owned small businesses, and the remaining 10 agencies are limited to 8%.
  4. Length of Reauthorization – The new bill would be reauthorized for fourteen (14) years, resulting in new sunset dates of September 30, 2022, for SBIR and September 30, 2023, for STTR.
  5. Crossover Between Agencies– The new bill would allow Phase One awards at one agency and Phase Two awards at another.
  6. Crossover Between SBIR and STTR Programs-The new bill would allow Phase One awards through the SBIR and Phase Two awards through the STTR, or vice versa.
  7. SBA Waivers Will Not Be Required–SBA waivers will not be required for partnering, subcontracting, or entering into a Cooperative Research and Development Agreement ("CRADA") with a  federal lab of a federally funded research and development center.
  8. Reorganization of the SBA’s Office of Technology.  The bill will move the Office of Technology out from the contracts department and make the Office of Technology directly reportable to the SBA Administrator.  The aim is to restore some of the authority to this office, which was intentionally rendered ineffective in the past due to funding and staff cuts.

This bill obviously falls short of what the biotech industry was seeking in reauthorization legislation, as there is a cap on the percentage of awards that can be given to vc-backed businesses.  However, the industry should be pleased at the fact that a reauthorization bill is now likely to be passed, and some progress has been made toward opening  up awards to vc-backed businesses.  In all likelihood, the final legislation will no longer include a ban on awards to vc-backed companies, which is in itself a victory for the biotech industry.

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SBIR/STTR Reauthorization Act Passes in House; Biotech Industry is Big Winner

Written by on Thursday, April 24th, 2008

The SBIR/STTR Reauthorization Act, H.R. 5819, has passed in the House and is now headed to the Senate; the biotech industry will be pleased to hear that the House has given them exactly what they asked for in this bill, according to Rick Shindell of the SBIR Gateway.

The SBIR Gateway reported on the House’s action as follows:

The voting on the amendments was a virtual "lovefest" with the results known ahead of time. There was absolutely no opposition on any amendments that were allowed to be offered. BIO’s VCs got everything they wanted and more with Sam Graves’ amendment to strike Title II (Venture Capital Investment Standards). Two important amendments were withdrawn (because they stood no chance of passage) and a few simply weren’t allowed to be accepted by the rules committee. . . .

Many SBIR advocates believe this is a bad bill that will be severely leveraged by the BIO/VC community. However, some other credible sources who deal in the DoD world think I may be presenting too severe of a worst case scenario.

SBIR Gateway reports that the highlights of the new bill include as follows:

  • The set aside remains at 2.5% SBIR and .3% STTR
  • 3% of the 2.5% will come off the top for agency administrative funds
  • Phase I Awards $300k Phase II Awards $2.2m
  • Agencies have the flexibility to award more $$ and consecutive phase IIs as they see fit
  • Ability to apply for a phase II award without having received a phase I award
  • Shortening of the time to receive the award
  • More frequent solicitations and topics (at agency discretion)
  • Notification of the right of a debrief
  • Establishment of an SBIR advisory board
  • Ability to crossover between SBIR and STTR
  • Increase in commercialization assistance funding
  • New FAST program funded at $10m

In addition, SBIR Gateway reports that the bill will include the following preferences and priorities:

  • Areas that have lost major source of employment
  • Preference to organizations making significant contributions towards energy efficiency
  • Priority to veteran companies
  • Special consideration to pressing transportation and infrastructure research activities
  • Special consideration for energy related research topics
  • Special consideration for rare-disease-related research topics
  • Priority to rural areas
  • Preference in FAST awards for SBDC applicants that are accredited for technology services  

Thus, it appears that the first round in this reauthorization battle goes to the biotech community.   We will keep you posted as to how the reauthorization battle unfolds in the Senate.

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