Wednesday, May 27, 2009

If the rules for the SBIR change, it could hurt American scientific research

As a publicist for Fred Patterson, it's my job to help him with his ongoing campaign to help those not familiar with the SBIR program understand the challenges of this program.  Fred has been helping companies understand the the regulations and procedures for this program.  Because of his success with this program, Fred deserves the moniker "The SBIR coach."

My staff and I just completed this op-ed piece for some tradtional news outlets.  Still, there are more and more blogs and news portals that I haven't discovered yet.  So, I am going to push this op-ed piece out through my growing social  media channel in the hopes that others will help Fred get his message out.   So, if you have a news portal that deals with scientific or tech research, please consider using this op-ed piece on your site. 

By Fred Patterson
One of the most critical jobs programs in the country is weeks away from disappearing at a time when Congress supposedly has job creation and economic recovery issues on its front burner.
    More than 400,000 scientists and engineers in over 6,000 small businesses are in jeopardy of having their livelihood disrupted if the federal Small Business Innovation Research program is allowed to expire July 31.
            In Champaign, Illinois, firms like CU Aerospace, LLC are heavily dependent on this 27-year-old-program for funding.  David Carroll, the firm’s chief executive officer, has done research for NASA and the Missile Defense Agency. 
For the U.S. space agency, the organization designed a solar sail flight experiment using cube satellites.  Meanwhile, the Illinois company is helping the Missile Defense Agency build high energy lasers that have the potential to shoot down missiles at long range.
    In its 11-year history, CU Aerospace won 21 research grants through SBIR, a program that sets aside for small business a paltry 2.8 percent of research and development funds among 25 federal agencies with annual R&D expenditures exceeding $100 million.
    SBIR grants have accounted for 60 percent of CU Aerospace's business. That heavy dependency on government set-asides is common among the independent laboratories that perform a substantial amount of the nation's raw research - research that can be years away from commercialization.
    But venture capital and big corporate lobbies want to usurp the funding process.  Years ago, the National Institute of Health tried to allow venture capital funds to obtain funding through its SBIR program. 
            However, the U.S. Small Business Administration, the final arbiter of the rules, cracked down on the NIH in 2003 and forbade diversion of funds into VC-captive firms. The venture capital lobby cried foul and found a powerful ally in Rep. Nydia Velazquez, Dem.-N.Y., who as chair of the House Small Business Committee attempted last year to rewrite the rules in favor of venture capitalists.
            Congressional leaders like Representative Velazquez don’t understand that SBIR funds research and development at the earliest stages.  At this phase, there are often unforeseen hurdles that companies like CU Aerospace must address before it’s ready for venture capital funding.
            With their investments, venture capitalists want to have their product ready in a year. When a research and development team can’t deliver the technology, the VC firms lose interest, pull out their money and leave their partners in a bind.

    In 2008, the Senate stopped some of the worst changes to the program, but the prolonged fight over crafting a compromise ultimately died when the international credit crunch diverted Congress' attention.
    So far this year, nothing has yet been done to extend the SBIR program.  Should the program expire, as is becoming increasingly likely, small business startups would not have any way of doing the research that takes an idea to the stage of creating a working prototype.
            We need Congressional leadership to embrace the thought leadership brought by a petition started by the Small Business Technology Council.  Over 50 small business biotech and medical device companies signed the petition opposing pro-VC revisions in the SBIR funding legislation.
            For years, SBIR funding has helped small businesses develop processes and technology that have improved the lives of Americans.  For nearly 30 years, the SBIR process has worked because it allowed researchers like Carroll to fully develop an idea before it was ready for the market place.

            (Fred Patterson, the “SBIR Coach,” works as a consultant for small research and development firms throughout the United States.  Mr. Patterson is based in Arlington, Texas.)

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