The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) funding programs are currently at the brink of a lapse in authorization, which has created uncertainty about what the future will look like for a program that has played a key role in the innovation ecosystem.
The SBIR program, better known as “America’s Seed Fund”, has long been a source of research and development (R&D) funding for small businesses. While the programs date back to 1982, they have never been permanently reauthorized, and the current reauthorization in the 2012 Defense Reauthorization Act is set to expire at the end of the federal 2022 fiscal year on September 30. (Disclosure: I was responsible for an SBIR program at one time and am generally a supporter.)
The SBIR program has long been tied to technology transfer efforts. The FLC has an existing Memorandum of Agreement with the Small Business Administration (SBA), which administers the program, because many technology transfer efforts prioritize small businesses in regard to both Cooperative Research and Development Agreements (CRADAs) and licensing of inventions. The Lab-to-Market Subcommittee of the National Science and Technology Council includes both the FLC and the SBIR program as organizations that support national efforts to encourage innovation and invention.
While SBA administers the SBIR program and is responsible for guidance, there are 11 government R&D agencies that run their own SBIR competitions and issue the actual funding awards. These agencies are FLC members as well. There has been some movement at a few agencies to even combine their tech transfer and SBIR programs to improve the mission outcomes in both areas.
So, where do things stand now? As of this writing, some avenues for reauthorization have already closed. The recent CHIPS and Science Act of 2022, which was signed by the President last week, was a potential place for reauthorization, which would have fit with some of the other items in the Act. However, language in the Act related to SBIR reauthorization did not make it out of committee. The big issue—which is not a new discussion—revolves around so-called “SBIR mills.” These are not well-defined, but notionally refers to companies that receive awards but do not end up making products or technologies available to the market.
Several provisions have been proposed to address the SBIR mills, including caps on the number of awards a business or agency can receive, more metrics on commercialization of results and better tracking of Phase III awards. Another issue that has been raised involves keeping SBIR-funded technology in the U.S. Concerns about federal awards ending up in China has been a familiar theme in CHIPS and other recent legislation.
The Department of Defense (DoD) is the primary user of SBIR/STTR awards, consistent with its R&D budget. DoD has supported the program in the past, which is why the current reauthorization is part of DoD-specific legislation, which could still happen again this year. Reauthorization is also possible as a continuing resolution to continue to fund government operations if there is no 2023 budget passed, or even a stand-alone piece of new legislation. The stand-alone option is not easy at this point, and it would almost certainly require significant program changes to gain the support needed to pass it.
Agencies are taking various positions on the fate of the program. Many have the authority to run a program like SBIR even if is not mandatory, but there are unique items in SBIR legislation as written currently, such as the Phase III purchases or SBIR data rights. Other agencies are postponing their SBIR programs or at least delaying new funding opportunity announcements pending the outcome of the reauthorization issue. But no matter the result, it is already an uncertain future for a program that boasts some impressive results.
FLC Executive Director