Greed Drives Continued Campaign to Hijack SBIR's Funding Base

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We're getting it from all sides. Small business is being pushed by big bullies. What we get from SBIR funding is tantamount to lunch money -- just enough to keep us from starving. But they want it. Want it all. Want it bad enough to lie and cheat to get it.

Yes, lie.

The bullies make statements asserting that VC funded businesses can't participate in SBIR. Of course they can. The companies just can't be controlled by VCs and still be eligible. And they tearfully make statements asserting that VC controlled company SBIR eligibility was "taken away" in 2002. Bullfrogfeathers. It was never allowed. Tell a lie often enough and people begin to believe it. Trouble is, it's our elected officials who believe the lies. Or (tucking campaign fund envelopes in their pockets or purses) choose to ignore the truth.

And, yes, cheat.

Will someone please ask Representative Jason Altmire (D-PA-4) why he keeps trying to cheat the system by sneaking the House version of SBIR Reauthorization (HR. 2965) into other legislation? This is a bad bill. Viewed by everyone other than the NVCA/BIO bullies as being destructive to true small business innovation.

Altmire tried a couple of months ago to sneak it into the first Jobs Bill. Word is it was stopped by the Speaker after a rather rapid and loud outcry by small businesses all over the country. Altmire's on the House Small Business Committee. Isn't he supposed to be looking out for small business interests? Why is he taking the side of the bullies?

And, he's trying again. In a "dear colleague" letter sent out a few days ago, Altmire asked for support for including HR 2965 in the new "Jobs" bill, asserting that this was a "compromise" and good for small business. More bullfrogfeathers! In fact, the House Small Business Committee has steadfastly refused to negotiate with the Senate's Small Business Committee and hasn't even considered a compromise version of their much more reasonable SBIR reauthorization bill (S.1233) that was presented to it last October!

What's more, Altmire's letter was not signed by a single true small business. Lots of Universities and Big Businesses signed it though. This hijacking attempt is both a lie and a cheat!

We're appealing to the Speaker to again quash this attempt to cheat the system. (Join the Stop Altmire campaign!)

The bullies have gotten $1.5 BILLION in new funding from a combination of provisions in the recently enacted Health Care Reform Bill and the Jobs Bill. You'd think that would make them happy and they'd leave us alone for a while. All it's done is make them more greedy, emboldened to go and get it all. They're well funded and determined. And did I say greedy?

Even the Finance Reform bill inadvertently threatens small business via an unintended consequence of redefining accreditation of Angel investors and the process of doing funding deals. (Join the Save the Angels campaign!)

There have been a few voices out there on behalf of small business. The SBTC, Ann Eskesen, and Rick Shindell, for example, have tried valiantly to get out the word and counter the lies. And there are a host of other advocates who do their best to spread the word. Largely, these efforts have been ad hoc and woefully underfunded.

A new group has formed to try and organize some truth and reasonableness into this mess. It's called the Small Biotechnology Business Coalition (SBBC). Check out their website: http://www.smallbiotech.org. See everything they're into. If you're a biotech small business, join. If you're interested in supporting small biotech businesses, join. Any of you not covered by that? Join anyhow.

And, finally, in my last column, I mused about antibacterial lip balm for our legislators' excessive lip-service challenged chapped lips. Little did I know there actually is one. And, it's incredibly (some might say appropriately) branded:


Nothing to add to this, folks. I rest my case.
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SBIR Companies' Futures Threatened by Finance Reform Unintended Consequences

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UPDATE: The Senate's Cloture Vote failed on Monday, but they'll try again. It's not too late to follow this guidance ...
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It's so tiresome. Every time I hear one of our politicos, from the top guy on down, talk up the importance of small business I just want to puke. Not because what they're saying isn't true. Quite the contrary. It is true. It's the lip service they pay.

Not only do they not find the time or take the effort to actually enact legislation that's beneficial to the growth of small business, but they don't even stop to think about the consequences to small business when they try and fix something they think is broken.

This time it's Finance Reform. S.3217 to be precise. The Congress is hell bent on fixing Wall Street. We're not going to debate here whether they're doing it right, and God knows there are aspects that do need overhaul, but it's the unintended consequence to small business that I'm upset about.

SBIR only takes you so far. To proof-of-concept. Right up to the edge of the Valley of Death. Then other funding is needed to get you to a marketplace. So what does S.3217 do? Cut off the most likely funding source. Angel Investors. That's right, S.3217 kills the Angels.

The Small Business Technology Council (SBTC), led by my friend Jere Glover, began beating the drum on this as soon as the bill was made available for reading. (Yes, some of us actually do read these things.) Senator Dodd has assured Jere that they'll put in some amendments to save the Angels, but you'll pardon me if I don't just sit back and trust it to get done.

The deadline for introducing amendments to S.3217 is TODAY, Monday, April 26th, as the Senate will call for a Cloture vote at around 5PM EDT. So it's time to marshal the troops, warm up the fax machines, and be proactive.

I sent out an URGENT ALERT Newsletter to my clients and friends list yesterday. Here's a short link to the Newsletter:

http://budurl.com/SaveTheAngels

It has the Call to Action with links to resource materials and a template of a letter you can send to your Senators urging inclusion of the "Save the Angels" amendments.

Read the information in the Newsletter carefully. Follow all the links and get informed. Send a letter or two or twenty. Then, spread the word. Forward this info around to anyone who can help us.

I've already heard from some of my contacts that they're re-broadcasting the Alert to their lists, doing Tweets and recruiting Facebook friends to help Save the Angels. One of these is my friend The Fiscal Doctor. (Thanks, Gary! Much appreciated.) Check him out -- he has good advice for emerging companies.

All that lip service has to be quite chafing. I wonder if they have trouble keeping lip balm in stock at the Capitol commissary? Hope they offer an anti-bacterial version for use with lobbyists!
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The NIH SBIR proposal submission process SUCKS!

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There. I said it. And I meant it.

Over the last few weeks I coached five companies through the intimidating, arduous, and demeaning NIH SBIR proposal submission process for the April 5th deadline. A few of them may need therapy, but by and large, they all survived the process. The jury's still out on me! What's the treatment for "craniac arrest"? I'm getting too old to work this hard!

Why does the NIH's SBIR process have to be so difficult? Required registrations on THREE websites, with multiple registrations on two of them. Just that alone may take a week or two. One of the websites, the NIH's eRA Commons, requires a faxed signature page! Even the IRS eschews that now.

Then, if that wasn't enough, one has to deal with an Adobe Form system with eleven major subforms (one mandatory subform marked "optional") and at least a dozen PDF attachments needed for those subforms, some with page limits, others not. There are dozens of fields and buttons to be filled in and selected, and you'd better do it just so. Or else.

Yes, the NIH provides an Application Guide. Only 234 pages. Shallow Table of Contents. No index.

Once you get the registrations done, all the forms filled out, and the various and sundry documents attached, you still have to endure the submission process. Take a deep breath...

First, upload the completed Adobe Form to Grants.gov (my favorite website...NOT!). Pray you've registered properly and that they'll pass it on to the eRA Commons. If not, fix the AOR credential, and upload again. Don't forget to use the Grant Tracking Number -- but it's called the Federal Identifier in the form. Huh? If it's passed on to the NIH, then the SO and PI can go to the eRA and check the eSub. Alphabet soup anyone?

And, better not have Firefox as your default browser. Grants.gov uses JavaScript. Firefox doesn't. You need JavaScript enabled to "Sign" the application. Aaargh! If JavaScript isn't enabled, you just sit and watch a screen that doesn't change. No message. Nada happens.

Then the eRA Commons does what I call the Nit-Pick Check. If everything's not perfect, you get ERRORS, and have to go back to the start, fix the Adobe Form and resubmit through Grants.gov. You may only get WARNINGS, which do not require a re-submit, but scare the bejezus out of you.

The most ridiculous field that can trip you up is the "Congressional District". Collected for statistical purposes only, it's needed on two different subforms. The format is XX-nnn where XX is the state abbreviation and nnn is the District as a 3-digit number. The use of 3 digits is required even for Wyoming which only has one district. Come to think of it, California has the most Congressional Districts of any state - 53. Why do they require a 3-digit number? That's what I call a Walter Cronkite - "That's the way it is." Put it in wrong? ERROR! Fix and re-submit!

But the Walter Cronkite that really frosts my cookies, is the question that requires you to LIE to answer it right. Yes, LIE. I wanted to do a Joe Wilson when I first read it. It's in the Vertebrate Animals Use section. Here's the quote from page I-69 of the Guide: "Applicants should check “Yes” to the question “Is the IACUC review Pending?” even if the IACUC review/approval process has not yet begun at the time of submission." Then they want you to put "None" in the field for the Animal Welfare Assurance Number. (Isn't that obvious?) If you don't -- go all the way back to the start, put it in, and re-submit. (I know this because we had to do it yesterday!) A button for "Not yet" would make it so much clearer - and truthful!

The DOD's Spring SBIR solicitation will be out in a couple of weeks. Their Guide is only ~40 pages. One website with a 5-minute registration process. You write your proposal and upload one (1) PDF file. Three forms: a cover page, a budget, and a company information form. If you've had prior Phase IIs there's one more form. That's it. And NO submission process! They close the website at the deadline. Anything there gets evaluated. Period. So clean. So simple. Thank you DOD!

So, I'll say it again: The NIH's SBIR proposal submission process sucks. It's so tied up in administrivia it's easy for the applicants to neglect paying attention to the objective: clearly articulate an innovative solution to an important health-related problem. And the agency is so wrapped up in its process that it seems more time (and taxpayer money) is spent on bureaucratic enforcement of policies than on enabling innovation for solving serious health-related problems.

And now, the NIH is campaigning to eliminate the "Error Correction Window", the five extra days (used to be only two but they had to increase it because of recent policy/procedure changes) they give you to fix all the Nit-Pick problems they find. DON'T LET THEM DO THIS! You can weigh in until April 19th at this weblink: http://grants.nih.gov/cfdocs/era_process_changes_rfi/add.htm. Read the NIH's view on why they should be allowed to do this in the Federal Register (page 11889, 12 March 2010). Again: DON'T LET THEM DO THIS!

Remember, the NIH is part of HHS -- our National Health Care agency. They'll be administering ObamaCare. And the IRS will be enforcing it.

Oy Vey! What are we in for?
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SBA Raises SBIR Award Caps

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NOTE: STTR was not changed by this move -- only SBIR (for now).
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The SBA announced the intent back in 2008. They sought comments. They sat on it for almost two years and did nothing. Until now.

The SBA decided not to wait for Reauthorization and kicked the cap for Phase I awards up to $150K and Phase IIs up to $1M. It's been published in the Federal Register (http://budurl.com/SBAraisesSBIRcaps) so it's official.

Rick Shindell has some background in the March 30th Issue of his SBIR Insider. Check it out on the SBIR Gateway's Insider page.

This doesn't mean that an agency must raise their award levels, nor does it mean that they can't exceed these caps. The agencies can (and do) do what they please. What changes is the level at which they have to explain themselves.

It remains to be seen which agencies will immediately change their funding policies. Note that the NSF actually made this change (at least for Phase Is) last fall.

Making SBIR awards that exceed the authorized caps means the agency must include a justification in each case in their Annual Report to Congress. Making awards below the caps requires no justification.

Some agencies (notably NIH) frequently make awards in excess of the caps. Now they'll have less work to do writing justifications! That should make our hard working public servants happy!

I expect we'll find out what the agencies will do at the SBIR National in Hartford (April 21-23). It'll be a hot topic of conversation. Another reason for you to join me in attending. Check out the agenda for this important Conference and register HERE.

So what about Reauthorization? Does this affect the likelihood of it getting done by April 30th?

Yes it does, and my feeling is: NO, it won't get done. It actually takes the pressure off Congress to act quickly.

Given this development, I now predict another Continuing Resolution, probably to September 30th. Unless Nydia gets her usual way and makes it shorter. Or just lets it die. After all, remember, she thinks SBIR awardees are just "marginal small businesses" on "corporate welfare", and don't matter much.
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ObamaCare "Cures" SBIR Controversy - CAN it be true?

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Yes, you're reading that right. The "Patient Protection and Affordable Care Act" aka the Heath Care Reform Bill signed by President Obama today includes a provision that may affect SBIR. Maybe even CURES the controversy surrounding SBIR eligibility!

The provision is called the "Cures Acceleration Network" or CAN. It's Section 10409 of HR.3590. Look it up. (An SBIR awardee who's been one of the program's strongest advocates found this and alerted me to it's existence.)

CAN is an NIH funded initiative to provide a new grant mechanism open to biotechnology and pharmaceutical companies of all size to receive NIH grants of up to $15 million. A pot of $500 million has been allocated for the remainder of FY2010. It will be administered by a CAN Review Board of which at least 4 of the 24 members must be VCs.

If the bill avoids the upcoming procedural minefields and this provision survives, it completely obviates the need to include VC controlled companies in SBIR. For years many of us argued that VC controlled companies should be eligible to receive NIH grants - just not from the 2.8% SBIR/STTR allocation. BIO always replied that companies could never get funding outside of SBIR. The CAN program would completely turn their argument on its ear!

Now that Health Care won't necessarily hog the front-burner we might get some attention to other things -- like SBIR! And, maybe with CAN we have a way to keep SBIR from being hijacked by VCs and Big BIO.

Dare we hope this indeed "CURES" our impasse and allows SBIR to be reauthorized without drastically altering the program? Stay tuned.
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SBIR dodges a bullet -- for now. But they'll reload, so let's get busy!

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The House passed the so called Jobs Bill (HR.2847) on Thursday with only minor changes from the Senate version. SBIR Reauthorization does NOT appear to have been one of those changes. We haven't seen the actual wording of this bill yet, however, and we do know how sneaky they can be. But apparently Speaker Pelosi wasn't willing to back the Altmire/Velazquez maneuver to fold the House version of SBIR Reauthorization (HR.2965) into this bill.

The Jobs Bill now goes back to the Senate for approval of those minor changes before getting signed. It's doubtful that the Senate will do anything to delay enactment, so we can breathe a sigh of relief.

But make that a brief breath please. We have only a few weeks to get the attention of our legislators to actually get a compromise together that will include the Senate's bill (S.1233) and improve SBIR, not harm it. And there's much work to do

I spoke to Deb Santy earlier this week. She runs the Connecticut SBIR office as an arm of Connecticut Innovations. Deb's group has stepped up to again host the National SBIR Conference. It will be April 21-23 in Hartford. We figure this will be right around the time that SBIR Reauthorization goes on the front burner on Congress before it's expiry date of April 30th. Here's Deb's message to y'all:

"The SBIR Program is under attack. All of us are trying to figure out how to get our government to properly reauthorize the SBIR program. A demonstration of your commitment and support is to show up -- attend the 2010 SBIR National. If you have won awards over the years and want to continue winning them -- you need to show your support and get your "you know whats" over to the SBIR National in Hartford. Make this the best attended SBIR National ever -- because it really needs to be the best. If you want this program to continue, if you want the billions of grant dollars to continue, you need to come and make headlines. Hey, you might even make some great contacts and help commercialize your technologies -- because there is a great lineup of networking and "Partner for Profit" activities. I'll be there .. and so should you. No excuses. Just Register"

I'll be there too, Deb. We know our collective voices can make a difference. We just showed that to be true.

The SBTC is leading this fight, and Jere Glover will be hosting a special meeting of the SBTC in Hartford. We had 100+ at the last such meeting in Reno. Let's double or even triple that for Hartford. Better schedule a big room, Deb!

Make no mistake about it. Those who would hijack SBIR for their own bigger business Wall Street focused agendas will reload and take aim at Main Street's small business interests. We've raised the awareness of SBIR among our legislators to unprecedented levels, but we have to even do more.

Pay attention to the strategies that will be suggested on www.SBIRreauthorization.com. Pick up your pens (or Blackberries/iPhones/etc.) and keep the information flowing. We may be small business, but we have big voices.

Come to Hartford. We'll get some national attention on our National Conference. Together, we will make a difference.

And, a personal thanks to all of you who wrote me with expressions of support and copies of the letters you wrote to counter the Altmire/Velazquez maneuver. It's exhilarating to know that someone is actually reading what I write! Yee-Haw!
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SBIR Reauthorization compromise suggested -- but is it a ploy?

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It works! Raising our voices slowed the attempt to smuggle the House version of SBIR Reauthorization into the Jobs Bill.

But they haven't given up. The train's going down a new track. And the new direction is so ironic: compromise with the Senate's version!

Representative Jason Altmire (D-PA) has sent out a new Dear Colleague letter. Here's the new part:

"As Congress crafts legislative packages to stimulate the economy and create jobs, American small businesses should be first and foremost on our minds. SBIR Reauthorizations passed the House and the Senate in 2009, but have yet to be reconciled and signed into law (H.R. 2965 and S.1233.) A compromise of these two bills to reauthorize SBIR would be an ideal job-creating addition to a jobs package."

Compromise? Really? The House has steadfastly refused to even discuss compromise for quite some time. Why should we believe that's what's intended now? All of a sudden. And the term "reconciled" got my attention too. Uh Oh.

Hmmm.... I seem to remember the Senate offered an SBIR reauthorization compromise almost six months ago. No one has seen it, and the House refused to even consider it. Why are they hiding it? Let's see it! It may actually be worth considering.

Compromise means that both sides have to give and get something. What's the House going to give? What's the Senate going to get?

And what's the darn hurry? We have until April 30th to get an SBIR Reauthorization compromise negotiated. WHY STUFF IT INTO THIS HURRY-UP BILL?

Think about it -- even if SBIR is reauthorized via this Jobs Bill will any new SBIR projects be funded (or jobs created) immediately? Of course not! That's not the way SBIR works. And, the new rules wouldn't even apply until FY2011.

Rick Shindell revealed the existence of the new Altmire letter today in his latest SBIR Insider letter. As Rick points out, this "compromise" suggestion is very likely just a ploy to get us to lay down our pens while they do sneak the House version on the Jobs Bill train.

I agree. It's a ploy. We'd be foolish to trust them.

So please keep the pressure on. Send another letter to your Congressman. Thanks to the NSBA there's an easy way to do it:
http://www.capwiz.com/nsbaonline/issues/alert/?alertid=14725141&type=CO
But make some edits in the template:

1. Let's use Altmire's language to our advantage. Insist that the suggested compromise discussion actually be held. There's even an existing Senate compromise that's waiting for examination. Let's do that.

2. Be sure to point out the ridiculous assumption that this initiative would create small business jobs immediately. Yes, it will spur small business job growth -- next year. We've got two months to do SBIR reauthorization right. No need to rush it through this week!

See www.SBIRreauthorization.com for guidance on how to contact your legislators and updates.
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The Jobs Bill Train is Leaving the Station -- and SBIR is being smuggled aboard!

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Evan Bayh said it true. The process Congress uses is flawed. It's more about partisan deal making than the public interest. Back room deals. Sneaking legislative provisions into sometimes unrelated bills to serve private interests and avoid scrutiny and discussion.

We have new evidence today, as they're at it again. With SBIR the victim! And they do it with smug satisfaction, unabashedly sanctimonious. They talk up the little guy (small business) but serve big money (VC) interests instead.

Basically, the House, via Rep Jason Altmire (D-PA), is attempting to bypass the SBIR reauthorization negotiations with the Senate and force the House version of the bill (S.2965) through the back door. If he succeeds in including it in the Job Stimulus bill, it will be difficult for the Senate to oppose it, especially since the President wants this legislation passed quickly.

The alert was sounded yesterday by both Rick Shindell in his SBIR Insider, and by the Small Business Technology Council (SBTC) in a Special Alert. Follow the links, or just go to www.SBIRreauthorization.com to see them in their entirety, along with an open letter from my good friend Gary Marsden of Trout Green Technologies (a savvy SBIR Awardee), who by asking a simple question at the Navy Opportunity Forum, created a small firestorm.

It's not over until its over (thanks Yogi), but I fear this train is gathering speed. The Engineer (Pelosi) has blinders on, the Conductor (Velazquez) has had her pockets stuffed and refuses to look at (let alone punch) our tickets, and the Fireman (Altmire) is stoking the furnace with false fuel.

Somehow we need to find the right switch, and divert this train to a siding. We need a bunch of Evan Bayhs to stand up and say ENOUGH! Any more of you out there?
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DC Snow Job - A metaphor for SBIR reauthorization?

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Washington DC is shut down this week, buried in a couple feet of snow! Nothing much happening in Congress this week. That's probably a good thing, over all.

The only thing of interest this week is the SBIR Gateway's Matching Service for the new DOD STTR Solicitation. Read all about it on the Gateway: http://www.zyn.com/sbir/sttr_partnering.htm. This is a very effective way for small businesses and universities to find STTR partners -- always a challenge. Check it out!

Nothing's happened with SBIR reauthorization for months, so I guess we won't notice any difference there. Besides the snow job done by the VC lobby and their BIO compatriots still has the House Small Business Committee immobilized. Guess they gave away all of their shovels to the Stimulus -- remember "shovel ready" -- and just can't dig out of their offices to discuss the still secret Senate's SBIR reauthorization compromise. It does take two to compromise. So far it's just one-sided.

Hmmm... Come to think of it the situation may not be an incongruity. If con is the opposite of pro, Congress must be the the opposite of progress!

And speaking of incongruities, my lovely daughter-in-law, Kelly, gave me the biggest smiles this week with a list of them. Since there's nothing much else to talk about, I thought I'd share:

• Why do drugstores make the sick walk all the way to the back of the store to get their prescriptions while healthy people can buy cigarettes at the front?
  
• Why do people order double cheeseburgers, large fries, and a Diet Coke?
• Why do banks leave vault doors open and then chain the pens to the counters?
• Why do we leave cars worth thousands of dollars in the driveway and put our useless junk in the garage?
• Why are hot dogs sold in packages of ten and buns in packages of eight?
• Why do they have drive-up ATM machines with Braille lettering?
• Why does the sun lighten our hair, but darken our skin?
• Why can't women put on mascara with their mouth closed?
• Why don't you ever see the headline 'Psychic Wins Lottery'?
• Why 'abbreviated' is such a long word?
• Why is it that doctors and lawyers call what they do 'practice'? (Lawyers I can understand, but doctors???)
• Why is lemon juice made with artificial flavor, and dish washing liquid made with real lemons?
• Why is the man who invests all your money called a broker?
• Why do your feet smell and your nose run?
• Why is the time of day with the slowest traffic called rush hour?
• Why isn't there mouse-flavored cat food?
• Why do they sterilize the needle for lethal injections?
• Why don't sheep shrink when it rains?
• Why are they called apartments when they are all stuck together?
• Why do we park on driveways and drive on parkways?

Thank you, Kelly! We needed the smiles!
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Congress Extends SBIR Program for 90 Days

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Jere Glover, Executive Director of the Small Business Technology Council (SBTC), issued the following announcement this morning:

"The House of Representatives voted on Wednesday to extend the SBIR program for another 90 days. The program had been set to expire on Jan. 31, 2010, but the new continuing resolution now pushes the expiration date back to April 30. The Senate is also expected to pass this legislation in short order.

This is the sixth CR passed since the SBIR program was originally up for expiration in 2008. Although reauthorization bills have been passed in the House and the Senate, the language in the two bills was very different, and the two Chambers have so far been unable to reconcile the differences in the two bills into a single bill that can be sent to the President for his signature.

While we are happy that Congress has not allowed this important program to lapse, it is important that the two sides can reach an agreement this year, before the new Congress starts next year and this process will have to start all over again.

SBTC has endorsed the Senate’s language as an acceptable compromise, and urges the House to do so as well."

Keep tuned to www.SBIRreauthorization.com for updates.
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