Small business program at risk on Capitol Hill.

• Author: Thomasmeyer, William
• Position: GOVERNMENT POLICY NOTES - Small Business Innovation Research

Small Business Innovation Research (SBIR) is an important federal program that for 25 years has encouraged small businesses to realize their technological potential and provided incentive for them to profit from its commercialization.

Since its establishment in 1982, as part of the Small Business Innovation Development Act, SBIR has helped thousands of small businesses to compete for federal research and development awards. SBIR has produced results that have contributed to the nation's defense as well as helped protect the environment, advance health care, and improve information management. It has even helped launch entire sectors such as the nation's fledgling service robotics industry. And yet the program may be in trouble. Unless Congress acts within the next 15 months, the program will be automatically sunsetted at the conclusion of fiscal year 2008.

Each year, 11 federal departments and agencies, including the Defense Department, are required to reserve a small portion of their research and development funds for awards to U.S.-owned and independently operated, for profit, small businesses, employing less than 500 employees. These small businesses submit proposals on R&D topics designated by each agency. The agencies evaluate the proposals and make SBIR awards based on small business qualification, degree of innovation, technical merit, and future market potential.

The program is highly competitive with only one out of every 10 proposals on average resulting in a contract. David Parish, president of Omnitech Robotics, believes that distributing funding to competitive entities at every level helps ensure the most effective and productive use of SBIR funds.

According to the Small Business Administration website, SBIR targets the entrepreneurial sector because that is where most innovators thrive. In fact, more than 54 percent of the scientists and engineers involved in research and development in the United States are employed by small businesses. Leonard Haynes, president of IM, believes that the key to the SBIR program is its ability to support the initial stages of high risk/high payoff research that small companies cannot afford and that large companies are often unwilling to undertake.

While some argue that universities are the proper place for early stage research, several factors, including increased restrictions on the export of technology, the expansion of what is defined as restricted technology, and the growing prohibition of...