Friday, January 2, 2009

Some SBIR Predictions for 2009

For my first Blog of 2009, with the SBIR Program in flux at the same time that our leadership in Washington DC is about to undergo a major shift and with our nation's economy on life support, I thought it would be fun to offer some predictions and ask those of you who follow this Blog to offer your own contributions.

Prediction #1: The SBA will not raise the funding caps on Phase I and Phase II SBIRs independent of reauthorization activities. They announced the intent to do it last fall, and solicited comments, but we haven't seen any action yet. I doubt we will. The SBA has no real authority over the agencies, and the agencies will resist any efforts to interefere in their administration of their R&D budgets. The new SBA chief, Karen Mills, won't allow her boat to be rocked by this issue.

Prediction #2: The submission portal will undergo some major changes as the agencies rebel against being forced to use it. The SBIR grant application submission process is tainted by the extreme hassles of dealing with the vagaries of the arcane processes involved in using this portal. The Dept of Education has gone back to paper submissions rather than use it. Others will follow. Major changes will be announced in how works this year, increasing confusion. Problems will continue.

Prediction #3: The SBIR landscape will become even more competitive as entrepreneurship grows at the same time that agency R&D budgets are being trimmed. Whenever the economy receeds, and talented people find themselves without salaried positions, entrepreneurs emerge. SBIR is just about the only game in town for getting no-strings high-risk seed funding. There are some State initiatives (such as the Texas Emerging Technology Fund) that provide some early seed money, but the amount of money they make available is a drop in the bucket. The net result is more proposals competing with a shrinking pot as agency R&D budgets are trimmed as money is diverted to supporting operations. Remember, the SBIR pot is a percentage of the extramural R&D budget, not a fixed amount.

Prediction #4: Reauthorization of the SBIR program will not be finalized by the March 20th deadline, and we'll see a new continuing resolution to extend it, probably for a period of up to two years. This Congress has much more critical elements than SBIR to deal with, and this issue just won't generate sufficient buzz to rise to the surface in the short time between now and mid March. Besides, we need the full attention of our legislators to get things done right. With new players on key small business committees in both the House and the Senate, we need to educate them on the issues and garner support for improving the program, not weakening it. There's just not enough time to do what's needed, and we MUST avoid knee-jerk rammed through actions such as was done in House last summer, and in misunderstandings that result in obstruction such was done in the Senate this fall. The path of least resistance will be to delay action. That will give us time to marshal our forces to really evolve SBIR in a direction that will stimulate technology innovation rather than stifle it.

OK, that's enough of The SBIR Coach's neck sticking for today. What say you? Any comments on my predictions? Care to offer your own predictions? Let's get some dialog going! Click on the Comments link below and put your two cents worth in! If you'd rather comment in private, email me.

One more thing -- my monthly SBIR Coach's Newsletter provides education on SBIR issues. The January Issue will be available by clicking on the following link: SBIR Coach's Newsletter - Jan-2009. If you have a subject for which you'd like to see some special coverage in an upcoming issue, email me and suggest it.


DouglasR said...

Do you think that VC Venture Capitalist will be hawking SBIR funds again in 2009?

Fred Patterson said...

I'm not sure what you mean by "hawking" Doug, but I believe that when a re-authorization bill is passed it will change the eligibility rules to allow VC controlled small businesses to compete for SBIR awards for some (but not all) of the set-aside money.

Carl Nelson said...

"Prediction #1: The SBA will not raise the funding caps on Phase I and Phase II SBIRs independent of reauthorization activities."

There is no need to raise the cap to achieve your objective of getting more funds to the most appropriate companies and projects. Congress would be satisfied if the average award were the specified amount, and that can be done by giving less to those projects that are not worth the full amount to reach some sensible objective. I did it for years. Such a policy may require that some single mind in an agency or sub-agency prioritize the award sizes to maximize the expected return. Oh dear, investment economics, in a federal agency? Yes, it can be done.

A single cap for projects is nothing more than a bureaucratic tool for avoiding tough questions.

Fred Patterson said...

FYI, Carl served as the first SBIR chief for the Missile Defense Agency (although it wasn't called that back then) and I can attest from personal experience that he never behaved like a typical bureaucrat! We've remained friends over the years since he retired. He stays active with his newsy SBIR-focused website (, and I link to him on my website's "Coach's Network" page as my "Reality Coach"!