Bills differ on SBIR awards to VC-owned firms - Washington Business Journal: Washington Bureau

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Through the SBIR program, 11 federal agencies set asidee atleast 2.5 percent of their outside researchy and development budgets for small More than $24 billion has been awarded to more than 100,0090 projects since the program began in 1982. In an administrative law judge rulexthat VC-controlled firms did not qualify as small knocking them out of consideratiomn for SBIR awards. VC-owned firms, particularly in the biotechnology have been pushing Congress to restore their ability to competew for SBIR awardsever since.
In response, the Housr Small Business Committee is considering legislatiohn that would make small companies owned by venture capital firms eligibls for SBIR awards as long as no singler VC firm has a majority stakre inthe company. VC firms controlled by large businesses couldn't own more than 20 percenyt of SBIR-eligible companies under the House bill. "Openingt up the SBIR program is exactly the kind of legislatiohn Congress should be passing to help smalkl businessescreate new, good-paying jobs," said bill sponsor Rep. Sam Graves, R-Mo. "Investing in our smal innovators is critical toour future.
" The Senate Smalpl Business and Entrepreneurship Committee's bill would open only a limited number of SBIR awards to VC-owned companies. Its legislationn would allow the National Institutes of Healt h to award up to 18 percenf of its SBIR awards to smallcompanies majority-owner by VC firms. Other agencies could award up to 8 percenyt of their SBIR dollars tosuch companies. "Thizs bill strikes a fair compromise on the issue of eligibility allowing some new firms to participatde while not changing the nature of thesresuccessful programs," said committee Chair Sen. Mary D-La.
"We must make sure these remainn programs for truly small Some small business group s opposemaking VC-owned firms eligible for SBIR awards, contendinf they aren't small businesses any more if they sell a majorityt stake to larger entities. They fear VC-controlledd firms would crowd out other small businesses for the limited amounyt of research dollars available through the SBIR The Senate committee approved a similar compromiselast year, but it never made it to the floo r for a vote. The SBIR prograjm is scheduled to expireJuly 31.
If the House and Senatee can't resolve their differences on the VC the program likely will be extended temporarily with its existinb rulesin place. The Senate bill would reauthorize the program for 14 year and would gradually increasethe SBIR's share of outsidre research contracts to 3.5 percent by 2020. Size limitws for SBIR awards would be increasedfrom $100,00p0 to $150,000 in phase one and from $750,000 to $1 million in phase two. The House bill calls for large increases in SBIRaward limits: up to $250,00p0 in phase one and up to $2 million in phasw two.
For more information on the SBIR program, see