Friday, October 30, 2009

Just in time for Halloween: SBIR LIVES! But will it be a monster?

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, 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!

Friday, October 23, 2009

Small Business Funding Gets Fashionable - SBIR Benefits

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.

Wednesday, October 14, 2009

SBIR's Big Dog Barks - Is the House listening?

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]

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? 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.

Friday, October 2, 2009

Do you have a Playbook?

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.