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.


Carl Nelson said...

Let's guess what is going on with the Big Dog. A replay of 1992 "Defense conversion" with warm-sounding SBIR being a proxy for a jobs programs with small business as a beneficiary. Have you ever thought who's the customer for SBIR? Not the DOD; the small business community - and even that benefit is mostly a myth since the money would be spent anyway and the small businesses would get about the same share. SBIR is just a handy political tool that does no harm.

The DOD doesn't need (and didn't want) SBIR, and, except for the sole-source procurement provision, could invent its own version within normal procurement rules if ever it wanted what SBIR offers. And it certainly does not need SBA telling it how to do business.

- Fred Patterson - said...

I would have been disappointed if you hadn't commented on this column, Carl!

Frankly, I don't care what the DOD's motives are. I just want to see SBIR reauthorized -- without changing it too drastically. The DOD's NDAA initiative is the best chance we've had to get that done.

We have a lot of work to do to get a customer-driven market perspective applied to SBIR technology projects. I'm not counting on the DOD to do that for us. But if we don't have a program to improve, it's moot.

So, thanks for barking, Big Dog. If SBIR is a political bone for you to chew on, fine.

With DOD projects available to us, despite how the topics were created, I'll continue to help small businesses think strategically, develop hgh-technology-based but market-driven products, and grow. Without SBIR, there's almost no other way to get there!

Carl Nelson said...

Right, Fred. I'm for an SBIR that actually makes an economic difference rather than just providing a mythical jobs program that adds no net jobs. But DOD isn't likely to be much of a vehicle since it doesn't care whether companies succeed and in most cases doesn't want to fund technology with market potential. Worse, some DOD people resent giving any DOD money to companies to enable commercial profits.

So, we will have to have a billion DOD SBIR to get the investment value that a VC could provide for tens of millions to the few businesses with real promise. How much kerosene are we willing to pour on the wood to make a decent fire? Is that a good concept of government efficiency?

- Fred Patterson - said...

Ah, Carl. It indeed would be fallacious to assume that commercialization of DOD's SBIR funded technologies is the responsibility of the DOD. Rather it's up to the companies to make the strategic and tactical decisions necessary to effect taking the technology to end use. Any company that assumes that the DOD owes them a Phase III contract is doomed to disappointment.

The projects funded by SBIR are NOT generally ready for VC consideration. Indeed, any that are should be turned down as being too far along to warrant SBIR funding. It's only after getting through Phase II with a TRL-5 that outside equity investment might even be considered. And even at that, most Angels and VCs really prefer TR-6 or better. (See my ARTICLE on the Funding Readiness Level® for more insight on this.)

So, while SBIR may be a "handy political tool" for the DOD, it is a facilitator of opportunity for the small businesses who get funded -- but will be truly successful only if they're strategically smart and adept at turning the technology into a product to sell to a market pull.

No one says that's easy, but, other than SBIR, there's almost no other way an emerging technology business can get the funding to be able to even play the game.

So, let's get SBIR reauthorized, and preserve this opportunity.

If the DOD wants to make SBIR more contributory to their ROI (however they measure it) then make the CPP include introducing some market pull perspective into topic selection as well as facilitating the partnerships and insertion deals that push the technology into end use.