A Fork in the Road - Which Path for SBIR?

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Yogi Berra was one of my heroes when I was a kid. He was in his prime as the perennial All-Star Catcher for the New York Yankees and I idolized him. But it wasn't until after he retired as a player and hit the banquet circuit did I really appreciate his genius.

His quotes have become apocryphal for their malapropisms and "huh?" factors. One of my favorites is, "This is like deja vu all over again." But the Yogi-ism that is applicable to the current SBIR reauthorization situation is, "If you come to a fork in the road, take it."

The question is, which path at the fork do we take? Which way to go? Perhaps the path well traveled - follow the crowd. Sometimes it's the path someone pays you to take. Much of the time, it's the path of least resistance.

In my opinion we're at that Fork with SBIR.

The House is leaning toward the path they're being paid (via campaign contributions) to take, refusing to even talk with true small business interests.

The Senate is leaning toward the well traveled path - 27 years of successful SBIR history.

But in the spitit of "compromise" Congress is being pressured to take the path of least resistance.

Will SBIR remain a seed-funding program designed to enable Small Business participation in a fair competition for developing innovative solutions to agency problems, or will it become another program that funnels agency money to companies already funded by special interests that really have nothing to do with enabling small business innovation?

My friend Carl would argue that it's not the Government's job to foster or enable small business innovation, but rather to improve the ROI on use of the Government's taxpayer funded R&D money. I understand and appreciate that argument.

But I contend that without SBIR, we lose the opportunity for the little guy to fairly compete for a tiny slice of the pie. This opportunity makes the American innovation culture unique. I say if we lose it we're in danger of losing our entrepreneurial souls.

We've heard rumors of an impending compromise. The FDANEWS even ran this teaser in their subscription-only Devices and Diagnostics letter last Monday:

House, Senate May Be Close to Compromise on SBIR Act
The months-long wait for small device companies looking for revisions to the Small Business Innovation Research (SBIR) program may be nearing an end as a compromise version could be introduced later this month, a Senate staffer says. “We’re hopeful we will be able to reach compromise before the November recess,” Vicki Ekstrom, spokeswoman for the Senate Committee on Small Business & Entrepreneurship, said...

They wanted ten bucks for the whole article. I sprung for it. Wasted my money. Not much more there -- just a rehash of the issues.

Compromises are a necessity in our multi-opinioned world. The pressure to get SBIR reauthorization done before Congress recesses for the Holidays probably means that the path of least resistance will be the Fork taken. Just get it done and off the table. Political pressures drive the give and take, not logic. That scares me.

With our Congress's current trend to vote on legislation without reading it first, who knows what we'll get? Frankly, only a few of our legislators really understand SBIR. Most have no clue and don't know where this program had been, let alone where it's going. As Yogi once said: "You've got to be very careful if you don't know where you're going, because you might not get there."

What should we do about this? Continue to educate legislators and their staffers on what's important. Encourage them to follow the Senate's lead. Keep the pressure on to NOT fundamentally change the SBIR program. SBIR isn't broke. It's just overdue for some modernization and tuning.

But mostly we just have to wait and see what the compromise includes. Waiting is hard. After five continuing resolutions, this process seems never ending. I'm tired of it.

So, I guess we'll leave this with one last Yogi-ism: "It ain't over 'til it's over."
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Clever Clara Seeks to Close Research Gaps at NIST with SBIR TT

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You've all heard the cliched proclamation: "I'm from the government and I'm here to help you!" Rarely is it actually the truth. I have just encountered one case where, apparently, it is!

Her name is Clara Asmail. She's the SBIR Program Manager at the National Institute for Standards and Technology (NIST). She's charming, engaging, and absolutely brilliant. A multiple degreed physicist with an entrepreneurial bent. She'll talk technical with the best of you, while being a very helpful and competent administrator. A rare combination.

I attended Clara's presentation at the National SBIR Conference this week on what she's been doing to close research gaps that have prevented NIST funded technologies from achieving commercialization. She calls the program, initiated in 2008, SBIR TT (for Tech Transfer). The NIST SBIR website has a FACT SHEET to explain this innovative approach to fostering innovation.

Essentially, if you can show how you'll close the gap in some NIST research, Clara will give you a FREE non-exclusive research license to use the NIST technology in your project. On top of that, she'll fund your project with NIST SBIR money! Just as with any other SBIR project, rights to the results of the project are yours. And you get access to NIST personnel, facilities, and knowledge regarding the invention. What a deal!

Ann Eskesen was at the presentation too, and she called Clara's approach "The cleverest thing she's seen in thirty years!" Quite a statement from the lady who's seen it all, SBIR-wise!

NIST has just opened their FY2010 solicitation. See a quick list of the new NIST Regular (R) and Tech-Transfer (TT) opportunities HERE. Proposals are due by January 22nd.

We've heard rumors that there is some progress being made on SBIR Reauthorization, with the Senate offering a new compromise bill to the House. There's actually some hope that we'll get this resolved by the end of the year. I'm standing by my predictions for how it will all shake out. If you missed my prognostications, see them HERE. When we have details, I'll let you know.

And finally, we're saddened by the deplorable tragedy at our Texas' Fort Hood yesterday. The stress this incident has added to our brave soldiers and their families is immeasurable. Please join me in contributing to a phone-card initiative for helping Fort Hood soldiers communicate with their worried families.

A special website "Operation Call Home" has been established by an Austin radio station to accept donations for phone-cards. Here's the link: http://www.590klbj.com/community/OperationCallHome.aspx. Thanks for your support.
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Just in time for Halloween: SBIR LIVES! But will it be a monster?

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Well it lives for three more months anyhow. The House has, predictably, shortened the SBIR Reauthorization fuse recommended by the Senate and agreed to yet another Continuing Resolution. The new "drop dead date" for the SBIR program is January 31, 2010.

But, it'll get settled before then. Probably by year end. And probably tucked into an Omnibus Appropriations Bill. And that could mean that it might emerge as a monster nobody loves.

My friend Rick Shindell and I talked about this yesterday, and his SBIR Insider issue from last night reflects on the situation. You can read the basic facts (courtesy of Rick) on http://www.sbirreauthorization.com/, but here's some interesting insights, also courtesy of Rick:

Just so you don't feel slighted, CRs are not the sole domain of SBIR. Actually Congress just passed a much bigger and more important CR today, the one that funds the government and keeps it running! It too was set to expire on October 31, but the new CR will keep the government funded through................ December 18, 2009. The CR was part of H.R. 2996; Department of the Interior, Environment, and Related Agencies Appropriations Act, 2010.

The relationship of this to SBIR is that Congress has a lot to do before the end of the year. They go home early for Christmas, so the December 18 date is "drop dead" for finishing and passing the remaining 7 (out of 12) appropriations bills that fund the government. Although Congress wants to address each of the remaining 7 bills individually, it is most likely they'll fail and the tool to fix everything will be an end-of-the-year omnibus bill.

By now you're familiar with the phrase "too big to fail" (i.e., AIG, GM et al.), well the same is true for the end-of-the-year omnibus bill. Historically all kinds of items are slipped into these "must pass" bills. Is it possible that SBIR reauth may be one of those? Could it be used to "sneak" some unpopular small business items into law? It's been tried before.

I think Rick is right on point here. I believe that SBIR Reauthorization will be accomplished by year end. But, just as with Dr. Frankenstein's monster, extra parts may get attached just beacuse they were available. We won't much like some of the provisions that latch on, like leeches, to the program.

My gut-feel predictions (not supported by any inside information):

• Non-individual majority owned companies will get SBIR eligibility -- with some limitations and restrictions.
• The funding caps will be increased, but not by as much as the House wants.
• The funding base will also be increased, very slightly and over time, but not enough to compensate for the increased caps. The result: fewer awards.
• Phase I will still be required, but Fast-Track will be enhanced.
• Proposal evaluation cycles will be shortened.
• Multiple Phase IIs (and follow-ons for further development) will be permitted.
• Support for Phase III (commercialization) will be expanded for all agencies -- and all agencies will place increased emphasis on commercialization potential as a criteria for award.
• Required inclusion of projects for some critical technologies will be specified.
• Special award preference for some non-technology demographic interests (including veterans) will be included.
• The policy and oversight authority will be a Committee co-chaired by NIST and the OSTP.
• The SBA's Office of Advocacy will continue to be able to comment on SBIR issues.
• Money will be authorized for SBIR administration and award database maintenance.
• Reauthorization will be for five years or less.

Will the SBIR Program still be effective? Yes. Will it be harder for a lone-wolf inventor with a good idea to get funded? Yes. Will some non-small business interests use the new rules to get access to the funds. Yes. Will promising technologies get seed funding via SBIR? Yes. Will the national interest be served by the new rules. Yes.

And that's the bottom line. SBIR is good for this country. It promotes entrepreneurship. It contributes to the innovation economy. It should survive. But, it won't be perfect. And that's OK.

SBIR is not an entitlement. Nothing in the Constitution says that the government must provide opportunity for small businesses to develop innovative technology. Any awards must be earned. And decisions on who gets funded will always be subjective. As Walter Cronkite would say, "That's the way it is."

Times are changing. The SBIR program must change with it. The strategies for winning awards will change. I'm actually writing a book that will help you formulate your winning strategies. Watch for it in the Spring.

So, enjoy handing out the candy entitlements to the costumed characters who ring your doorbell this weekend. And in honor of increased SBIR caps, if any Frankenstein monsters show up, give them a double ration!
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Small Business Funding Gets Fashionable - SBIR Benefits

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It's been a week of good news for a change. Congress is actually allocating money for small businesses instead of just talking about it. SBIR is benefiting. The DOD SBIR Program will get another year of life as soon as President Obama signs the National Defense Authorization Act into law. And the NIH soon will be required to pony up a big chunk of the ARRA Stimulus money they tried to keep away from the SBIR community.

We'll come back to the NDAA in a moment. This NIH news is what's really exciting for me.

You'll recall back in February shortly after the ARRA Stimulus was signed, this column broke the big story: Hidden in the Fine Print - SBIR Explicitly Excluded from NIH Stimulus Money. Turns out this dastardly deed was done in secret while the bill (H.R.1) was in Conference, bypassing the House and Senate Small Business Committees.

I personally sent faxes to every member of both Committees, cluing them in. I called for legislative action to repeal the exclusion and give small business back the $230 Million in projects stolen from them. Reaction was swift from the Senate (I got calls), but the House was strangely silent. Hmmm. The NIH refused to budge, effectively thumbing their nose at the Senate by responding to letters with bureaucratic gobbledygook and not even showing up at a special hearing called to discuss the situation.

It took ten months, but the Senate has finally taken steps to repeal the exclusion. Senate SBE Committee Chair Mary Landrieu introduced a bill (S.1832) this week that, in addition to enhancing small business loan provisions, requires the NIH to provide $150 million out of their ARRA funds for new small business projects during GFY2010. Seven other Senators (Kerry, Harkin, Cardin, Shaheen, Boxer, Pryor and Casey) have immediately joined her in co-sponsoring it. The Press Releases are flowing (Landrieu's, Cardin's, Shaheen's, Boxer's, Casey's). Other may also join -- how about asking your Senators to co-sponsor!

Why only $150 million? Seems that's what the NIH said they could do in a negotiated settlement. Other than having admitted behind the scenes that they did instigate the skulduggery, they're still not revealing who on the Conference Committee slipped the wording into ARRA. Did they really think we wouldn't notice it?

Now this has to get through the sausage grinder that is our legislative process, but with the co-sponsorships and Obama's recent small business support proclamation, it's a cinch to get passed.

Now, back to the NDAA. The NDAA's inclusion of SBIR was reported in last week's "Big Dog Barks" column. Not much more to say about that here, other than to again thank those responsible. Rick Shindell does a great job of that in his SBIR Insider column he sent out last night.

What about the other ten Agencies? Their SBIR and STTR programs will expire at the Witching Hour on Halloween unless another Reauthorization CR is passed. Watch for it in your trick-or-treat basket. No one in the Congress wants to be caught not supporting small business just now. It's suddenly become fashionable.
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SBIR's Big Dog Barks - Is the House listening?

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The Big Dog in the SBIR world is the Department of Defense. After being silent for a long time regarding SBIR reauthorization, the Big Dog barked last week. Loudly.

The House and Senate Armed Services Committees (ASC), evidently fed up with the inability of the Small Business Committees in the House and Senate to agree on SBIR reauthorization, decided to preempt them and simply do it as part of the National Defense Authorization Act. They effectively incorporated the Senate's version of SBIR reauthorization into the NDAA. It almost worked. [Read the whole story HERE and keep informed at SBIRreauthorization.com.]

Maybe it should have. After all, DOD has over half of the total SBIR and STTR budget. They deserve a seat at the table -- maybe at the head of the table. NIH has gotten most of Congress's SBIR attention as of late, and not in a very good light either. If it were up to some of the NIH's supporters, the SBIR Program would likely die -- they've as much as said so. Clearly the DOD's supporters won't let that happen.

When the House Small Business Committee cried foul, claiming jurisdictional authority (Stay in your own yard, Big Dog!) the ASCs agreed to withdraw the reauthorization language and give Congress another year to get it done -- but the DOD's SBIR, STTR and CPP programs are to be unilaterally extended (as is) to September 30, 2010. Essentially the NDAA provides a continuing resolution just for DOD.

Big Dog has barked. Big Dog has agreed to sit and stay, but only for a year. But it will provide innovative technology project funding for its small business community for that year - NO MATTER WHAT.

It couldn't be clearer. The Senate's SBIR reauthorization bill is the one that DOD supports. Hello! Is the House listening?

We've another deadline looming. Halloween. October 31st. The DOD's SBIR program will continue (assuming the NDAA is signed), but the other Agency SBIR programs will expire at the stroke of midnight on Halloween unless something happens.

Will they get it done by then? Unlikely. My bet - another CR. The fifth in this long, drawn out drama. Why should Big Dog wait alone in the yard?

Appropriate this is happening around Halloween. Time for costumes, parties, and trick-or-treaters. Trick-or-treaters are totally self serving. Grabbing goodies while masquerading in an assumed persona. Threatening consequences if not indulged.

Hmmm... do I sense a metaphor here? Our Congresspersons as self serving trick-or-treaters? Most wearing donkey and elephant costumes? Staying in character or be banished from the Party? Instead of candy, they want our money (taxes) and power? If they don't get it, we're all going to suffer some dire consequence? Naw....it couldn't be that simple! Or could it? Now that's scary!

Will SBIR be invited to the legislative Halloween Party? We're not bringing much in the way of treats. Only $2 Billion or so. And it's not even new money. Boring. Sort of pales into insignificance in the big picture. So maybe more tricks.

I wonder what costumes HSBC Chairwoman Velazquez and HS&T Subcommittee Chairman Wu are wearing to the Party? Hopefully their hearing won't be muffled and they'll heed Big Dog's barks. Please.
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Do you have a Playbook?

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What's a Playbook? Ask any coach and you'll get a quick answer. It's a collection of things the team will do in various situations. Things designed to give your team an advantage over the competition and score points. The more points you score, the more likely you'll win the game. Should SBIR companies have a Playbook?

You betcha! Every company should have a written down collection of things to do in various situations. Is that a Strategic Plan? A Business Plan? A Marketing Plan? Yes. Yes. And yes. But it's more besides. Plans usually limit their focus to what is intended to be done (offense). That's not enough.

You need to have scenarios of alternative plays to execute (paths to take) in both offensive and defensive situations. You must have goals for how many points to score (revenues to bring in). And you must have winning the game (building wealth via an exit event) clearly in your sights.

Whatever pops up you should have a play in mind. Handle surprises by designing new plays. The more practice you've had in doing it (conducting planning sessions) the quicker you'll be able to respond and run the new play. Remember, the clock is always ticking. There are no "time-outs" in business.

Only the best reach the "Playoffs". For SBIR companies that means playing with the "big boys" and selling your technology to the end user.

If you've got a good Playbook you'll know what to do no matter what you encounter along the way.

Don't keep the Playbook in your head. Write it down. If you've written down the Plays then everyone on your team will be executing the moves necessary to score points. The more points you score, the more likely you'll reach the Playoffs and win the game.

It's a good metaphor. I first put "SBIR Playbook" under registered trademark protection several years ago, and have used it on my website as a metaphor there. Just this week I realized it applies here as well. I do this column to help guide productive utilization of the SBIR program. So I've renamed it "The SBIR Coach's Playbook."

I hope it motivates you to create your own company's Playbook. And, of course, if you need an experienced Coach to help you put it together, you know where to find me.
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Another month of SBIR Reauthorization agony - Is Dr. Dolittle running the show?

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The quick news is the informal conference committee hasn't done its job and no SBIR Reauthorization compromise was produced. SBIR (this time along with STTR and the DOD's CPP) has been extended again -- a mere month to October 31st. Gee. Is anybody surprised? We have a do-little-but-argue-and-sling-mud Congress. Maybe Dr. Dolittle is in charge.

Remember the Dr. Dolittle story? In the charming Hugh Lofting series of children's stories he was a doctor who eschewed human patients for animals, and he spoke their language. He lived in a fantasy world. Sort of like our Congress. But that's not why I'm raising this metaphor.

I have two reasons, actually. The first is his name -- irresistible!

The second is one of the animals he encounters -- the Pushmepullyou. It had two heads, was conflicted as to which direction to go, so had trouble going anywhere. Sort of like SBIR companies.

I was at the DOD's "Beyond Phase Two" (BP2) Conference this week. It was all about how to transition the technology created via SBIR funding into end use. I had a revelation. It finally dawned on me why SBIR commercialization is so hard to do.

SBIR has always been a technology push game. Techies rule. With some SBIR funding, create some whiz-bang technology and then try and find some applications for it.

I'm a Business Coach. I help companies focus on what it takes to be successful. A basic tenet I stress is "be selling something to a market pull". Find a market with a pain that is begging for a cure. Develop the cure. Sell the cure. It's so much easier than pushing a new technology on a resistant market.

Market pull vs. technology push. It's so basic. Think Pushmepullyou. The pull side should dominate. But it doesn't.

Where do SBIR topics come from? From my observation, in the DOD it's largely from their R&D shops. Techies. Looking for new technologies, to be developed by other techies. Yes, there are applications in mind. Certainly that's true. But the ultimate customer isn't involved. Projects are not market driven.

The DOD's Commercialization Pilot Program (CPP) is supposed to connect the SBIR company that's finished Phase II with the customer. That's probably the first time that the light of a market perspective is shined on this effort. For the most part, it's too late. It's still technology push.

There were several companies at the BP2 Conference who talked about their commercialization successes. I was struck with a common thread. In each case the companies had approached the process from the beginning with a marketing perspective. I was very proud. I had actually coached two of them.

If the DOD is to make the CPP (or whatever it evolves to) a success, it must offer more product-focused end user generated topics. Clearly identify market pull early on. Trying to push the technologies into possible applications after development just doesn't work very well. Pushmepullyou.

It comes down to this -- it's not about being funded to develop the technology, it's about selling something to a customer who will use it. Strategic planning focusing on that user customer from the start is the key.

My friend, and fellow SBIR consultant, Russ Farmer of PBC, summed this up well in his excellent presentation on the last morning of the Conference. Russ emphasized that SBIR commercialization success is "all about marketing!!" and "if we are real lucky" is not a business strategy.

Russ's presentation on Business Models of SBIR Funded Companies is a must read. Every SBIR company will see their stage of development profiled - and they probably won't much like what they see. A copy of it will be available for download from the BP2 Conference website by mid next week.

Will Congress get SBIR reauthorized by the end of October? I doubt it. Watch for yet a fifth CR extending the agony to next March.

I heard that a certain Congressperson was upset that I've been criticizing the Committee for being unwilling to compromise. There's a cure for that. Stop futzing around, reach a compromise and I'll stop criticizing! In the meantime, I'm pleased that someone from the Hill is actually reading this column!
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The Seed Investment Landscape - Interpreting a Picasso

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It's like Picasso painting landscapes. All the pieces are out there but the picture is confusing. Making sense of it is very much up to individual interpretation. So where should an entrepreneur look for finding seed investment? The answer may lie in understanding what investors are looking for.

The NASVF conference this week presented a wide array of options and opinions on seed and early stage funding. Representatives of federal, regional, state, and both public and private sector economic development and investment organizations participated on panels. Most felt that their approaches would be successful, but the only things they truly agreed upon was that such investment was both necessary to our future economic growth and harder to get in this economy.

One of the more interesting panels was on "Hot Markets and Sizzling Sectors". Each of the three panelists said something I felt profound.

Tom Pickens (Astrotech Corp) said that he firmly believed that it takes a team of at least four people to make an entrepreneurial company succeed. It stems from a Psychology Today article he read years ago. Take any four people and let them take an IQ test pooling their answers, and they'd rate at the genius level. Think about that a while.

Richard Helfrich (Alameda Advisors) said that scientific discipline collaboration is the key. We need to combine chemistry, physics, biology, mathematics, and engineering disciplines to evolve new ideas for applications. This may mean that our academic departments may actually have to talk to one another! Fits with the "team of four" premise too.

Bill Reichert (Garage Technology Ventures) cautioned against pre-determining likelihood of success based on the type of technology. His premise: The most important technologies are the ones we can't categorize yet! Cast a broad net and keep your mind open to novelty. And don't be constrained by your biases.

And then, reinforcing all of this was a conversation I had recently with Laurence Briggs, CEO of the InvestIN Forum, a Dallas area private investor network, which has joined with other Angel groups around the country and internationally in a syndicated manner. This effectively forms a "Band of Angels" over 420 strong, looking to make deals.

And make deals they do. At about the rate of one a month currently. They'll put in up to $7 million for the right deal. Angel investing isn't what it used to be!

I asked Laurence what they look for. He said that no particular technology is preferred. What they look for is a proved-out concept for a product or solution addressing a significant market with scalability, and a good coachable team appropriate for their stage of development. Proved-out product. Significant market. Scalability. Appropriate team. Coachable. (Hmmm.... sure sounds just like what the NASVF panel said was important.)

A featured speaker at the NASVF conference was Rick Wade, the Senior Advisor and Deputy Chief of Staff at the US Department of Commerce. He made the point of saying that the DOC was reinventing itself, and, that short of actually being renamed, wanted to become known as the "Department of Innovation".

I couldn't resist. When the session was opened to questions from the floor, I asked him what the Commerce Department would do to support SBIR if the provision in the current House bill (HR2965) that would put NIST in charge of formulating SBIR policy becomes law. He replied that he had recently participated in a discussion in the White House on that very subject, and "the Department of Commerce would do everything it could to see that SBIR is appropriately supported". (I'm in Missouri as I write this, so I'll just say "Oh yeah? Show me!") In a private conversation later that morning, he asked me to provide him with some briefing materials, and I promised to do so.

So, let's sit back and gaze at this Picasso-like picture. SBIR companies should listen to this guidance, and think beyond the grant to the business that they'd like to evolve. Create a masterpiece by paying attention to what works in today's economy.
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SBIR Reauthorization Redux? No Such Luck.

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Here we are -- just a few days from expiration of the third SBIR Reauthorization Continuing Resolution. Is there any hope for resolution by the end of the month? Nope.

Word from behind the scenes is that discussions are pretty much at a standstill. Staffers on the various Committees are standing firm on their bosses' positions. Provisions to significantly open up eligibility, provide special preferences having nothing to do with technology, eliminate the Phase I vetting process, have multiple Phase II awards possible, and increase funding caps without increasing the funding base just aren't going away. There's as much spirit of compromise here as there is on the health care debate. Nada. Zilch.

The University lobby has been pushing hard for just plain letting the SBIR program expire. They've been consistent over the years on this. They want "their" $2B back! Research is "their" game. Tech Transfer royalties from commercialization of innovations is "their" reward -- never mind that they, for the most part, can't figure out how to do it!

The VC/BIO lobby has been keeping up the drumbeat too. BIO had a press conference yesterday where they expressed how they were "very pleased with the result of the vote on the reauthorization bill in the House." They repeated the "Big Lie" that the bill was "an attempt to overturn "fairly arbitrary" administrative agency decisions that prevented venture capital-funded companies from participating." Arbitrary? Participating? Sheesh! Perception management at its best.

There are actually provisions in the House bill that move SBIR administration out of the SBA and into the Department of Commerce with oversight controlled by the White House Office of Science and Technology Policy. If this happens, SBIR becomes a politicized innovation economy program, with true small businesses frozen out of participation.

Some will argue that this is a good thing; that it will improve the Government's ROI on R&D investment. Perhaps it will. But, the vision of Arthur Obermayer, Roland Tibbetts, the late Ted Kennedy, and many others, for fostering innovation from true entrepreneurs, will be lost. That would be a shame.

The SBA is in trouble folks. SBIR isn't the only SBA administered program that is languishing in Committee and facing expiration. Will they survive as an independent agency? I fear not. SBIR being moved out is, in my opinion, an omen.

My prediction, shared by many in the SBIR Advocacy: we'll get another SBIR Continuing Resolution. How long? I say six months -- taking us to next March.

Some of the Agencies aren't waiting for Congress to act. Some are independently increasing funding caps. DOE and NSF, for example, are now providing $150K for Phase I, and DOE is doing $1M for Phase II. Others, like DOD and NASA, are standing pat. NIH generally ignores caps anyhow. It's really getting confusing -- helps justify the need for a coach! (smile)

So, the SBIR game is still being played, although the rule book is being very liberally interpreted. Check out the Gateway for proposal opportunities, and monitor www.SBIRreauthorization.com for updates on what Congress is (or isn't) doing.

The SBIR Coach will be at the NASVF Conference next week, and at the DOD sponsored Beyond Phase II Conference the week after that. My columns will report on what I learn there. Stay tuned.
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Reflections on the Birth of the SBIR Program

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SBIR lost perhaps its greatest champion on August 25th with the passing of Senator Ted Kennedy. Relatively few know how much he did to ensure the SBIR Program became reality.

There were many back in the late 1970s and early 80s who worked tirelessly to get the legislation crafted and passed. Among them was my friend Ann Eskesen. Ann recently shared an email letter she had received that shed much light on that early process, including Ted Kennedy's behind-the-scenes role, and I'd like to give it wider exposure here.

To the SBIR Community:

Whether strong supporter or ardent foe of his political stance, the recent passing of Senator Ted Kennedy has generated among those on both sides of the aisle extensive discussion of, and comment on, the extraordinary diversity of his legislative impact.

Few are aware that the creation of SBIR is high on that list.

This weekend I was in receipt of an email from an old friend who in the early-mid seventies was the original source of the idea of a special federal R&D access by small firms - an idea that later became the SBIR program - and with whom a few of us then worked to get to the enabling legislation which took that program government-wide in 1982. My friend's email is printed below in its entirety along with, from my own files, some photographs from the Rose Garden of the White House on that very hot and humid day in July 1982 when President Reagan signed that very controversial legislation.

It is useful, I think, first also to tell you a little about Dr. Arthur Obermayer - the essence of the dignified gentleman and creative talent - who is now well into his eighties and still active in the technology development space.

Arthur was/is a highly regarded MIT PhD and his wife - Judy - also a published PhD from Carnegie Mellon, had run a very successful, research-based small firm for a long time through the sixties and seventies. Publicly traded when few small firms were, Moleculon Research was founded, I think I recall, on the research that had been Arthur's doctoral dissertation.

Their work had important medical application. However, despite a solid, research-based track record, when Arthur approached NIH for potential R&D support, he was summarily turned away. At that time NIH did not fund anyone who came from a for-profit entity - a condition that actually remained in effect until only months before passage of SBIR.

Knowing that they were probably missing out on something important, however, a few senior NIH players advised Arthur to set up a non-profit arm which they told him they would be delighted to fund. He saw that as manipulating the system - effective for his firm but not an option for many others - and he refused. Instead he had a discussion with his Senator and his friend - Ted Kennedy.

At that time, the Senator controlled the NSF budget to some extent so the decision was obviously to go with that agency, not NIH. Arthur's idea was simply that there be established a place in a federal agency where small firm applicant's research work could be considered. The Phase I-Phase II classic SBIR design was Roland Tibbetts - subsequently hired by NSF as the first SBIR program Manager - and came much later.

It is classic Kennedy that he knew how to work the system. However, I have to admit, I had not previously known that was actually a two-step process until I read Arthur's accounting of the NSF effort to avoid the Kennedy original directive and his out-maneuvering them - see below. It is also classic Kennedy that when, with two NSF SBIR offerings and one DOD under our belts, we subsequently shifted the political effort to making SBIR a government wide program, rather than being at the head of what was to become a highly contentious and, at times, downright nasty fight, the Senator opted for a behind-the-scenes role - out of the frame but very clearly, not out of the picture. Instead, that leadership role was assumed by Warren Rudman (NH.R) - a brand new Senator and a Republican.

It was also Arthur Obermayer, BTW who met with Horace Crouch in DOD in about 1979-1980. Crouch was a retired Army General working in the Pentagon but open to the interesting challenge of enabling an effort that would bring within reach of DOD, the leading-edge capabilities of small firms. It happened that Horace Crouch was Strom Thurmond's brother in law - already then a senior player on the Senate Armed Service committee. Arthur persuaded them to the idea of having a version of the NSF program in DOD. They found a spare $5M and DESAT was launched as a small-scale effort in DOD in 1981.

With the NSF and DOD experience in place and a record of achievement already becoming evident, under the able direction of the late Milt Stewart, to include Arthur and Judy and a few others some like Jere Glover and Dave Metzger - being still prominent in the SBIR space - in 1980 we all worked the halls (big time) at the White House Conference on Small Business to get SBIR and the precursor to Bayh-Dole among other things onto the agenda of that convening. I am still somewhat incredulous, when you consider how few we were, that we got that assembly of 2000 small business people - most of whom were in retail, services etc (nary a high tech firm among them) - to vote that issue (as I recall) Number 5 of the 60 top recommendations to come out of that Conference. As further testament what can happen when small firms speak together, of those 60 recommendations - well over 40 are now implemented.

Ann Eskesen, President
The Innovation Development Institute
Swampscott, MA
www.inknowvation.com

See Dr. Obermayer's letter
"The Role of Ted Kennedy in the Birth of the SBIR Program"
by clicking HERE.

L to R: The Obermayers, Senator Kennedy, and Ann Eskesen (7/22/82)

President Reagan signing the SBIR Program into law on July 22, 1982.

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