Senator Cardin Introduces Bill to Repeal NIH SBIR Exclusion

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It's about time! It's been almost a year since that abomination was perpetrated! As Senator Benjamin Cardin (D-MD) said in a Press Release from the Senate Small Business and Entrepreneurship Committee today:

"It was a severe blow to biotechnology firms across the country when NIH extramural research funding was exempted from their requirement to dedicate funding to SBIR and STTR awards. As a result, small businesses across the country, which the recovery package was intended to benefit, have been denied the opportunity to fairly compete for more than $200 million in grants."

In addition, the bill provides small businesses with tax credits for health insurance and job creation expenses, and opens up new direct loans to small businesses using already allocated TARP funding.

Recognizing the vital role small business has always had in the overall growth of our economy, the bill also encourages elevating the Small Business Administration to Cabinet-level status.

Interesting timing, as the reauthorization of SBIR has still not been accomplished. Where are we on that Senator?

Late word is that the House Small Business Committee has chosen not to respond to the Senate's compromise proposal, and we'll have a sixth Continuing Resolution, this one for 90-days. Oh goodie. Three more months of torture! Don'tcha just love how our Congress works!

We should hear something official by the end of the week. Stay tuned to www.SBIRreauthorization.com for the latest news.
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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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NIH Tosses Small Business a Few Crumbs

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I'm not ungrateful. Really. Small technology businesses appreciate any funding opportunities, and the NIH is doing the right thing. But why did it take so long for them to do it? And why is it so pitifully small?

Want to see what they tossed us for Stimulus-funded SBIRs?: RFA-OD-09-009, Recovery Act Limited Competition: Small Business Catalyst Awards for Accelerating Innovative Research

Small business (via SBIR) should have been allocated 2.5% of the NIH's Stimulus pop for R&D. That's something over $200 million. What are they offering us? $5 million. (Hmmmm.... That's 2.5% of 2.5%! Huh! Coincidence or are they sending us a not-so-subtle message?) Funding on these is for up to one year not to exceed $200K. That means a scant 25 awards. Big deal.

Yeah, there's an alleged pot sweetener. Another $35 million to "Spur the Acceleration of New Technologies". But this isn't a small-business only competition. Sure, we can apply. Gee, thanks. Another Challenge Grant-type competition?

Here's that announcement: RFA-OD-09-008, Recovery Act Limited Competition: Biomedical Research, Development, and Growth to Spur the Acceleration of New Technologies (BRDG-SPAN) Pilot Program

Well, whaddya know? Valley of Death funding! This is a whole new category for NIH, and I do congratulate them for introducing this. It's a good start. For a company extending SBIR funded technology, to get this award means it's a Phase III by definition. But it's not limited to SBIR funded companies or subject to SBIR eligibility rules. It's NOT an SBIR program. It even has a new NIH Grant Code: RC3.

You see, there's some interesting wording in the Eligibility section that says: "Applications received under this FOA may be given funding priority if the applicant is associated with an enterprise/commercial organization that is of small size (e.g., 500 or fewer employees), and/or of limited resources, such as an early-stage company, and/or one positioned for receiving funding or in-kind support from a third-party investor and/or strategic partner, etc." The key words are "MAY BE given funding priority". And there sure are a lot of conditions to be sorted out by the NIH funding decision makers.

A friend of mine is the savvy CEO of a small bio-tech company that has won several SBIR awards. He recently made the following very astute observation: "For many years the SBTC and others opposed to BIO’s legislative efforts have argued that VC owned firms should procure NIH funding from outside the SBIR set aside. BIO and NIH have always responded that there are no business funding opportunities outside of SBIR. This new RC3 program -- not SBIR -- is precisely where VC owned firms should be competing for NIH support."

Indeed, there's enough on the table here to attract a VC funded (dare I say controlled) company -- $3 million over 3 years. Much better than SBIR and more focused on where they probably are in their product development life-cycle.

RC3 is a new sandbox for the bigger boys to play in. (Now will you please stay out of ours?) How this new NIH funding category will color the SBIR Reauthorization debate remains to be seen.

But we have had some crumbs tossed our way, so let's get busy. Due date for grant applications in both of these programs is September 1st.
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New Hope on the Horizon for Getting Through the Valley of Death

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Ever wonder where a week went? This was one of those. Fast and furious. Some things were extraordinarily frustrating. Others were exciting and invigorating. All of them had to do with energizing our American Innovation Economy. The most exciting was that Valley of Death thing, but I'll start with the frustration: NIH. Who else?

Monday was the due date to submit SBIR and STTR proposals to the NIH. I had several clients who struggled with the submission process for DAYS! The Grants.gov portal seemed clogged much of the time, and it took forever for information to move between it and the NIH's eRA Commons.

There are ALWAYS errors to fix, most of them trivial, and NONE of them have anything to do with the project itself. Each time you are forced to cycle through the morass again. So frustrating! (Has anyone figured out a sure-fire way of figuring out the proper "Federal Identifier" to use?)

The NIH claims proposal volume is down. Hmmm... wonder if it has anything to do with how difficult it is to get proposals submitted? Submitting to DOD is so easy in comparison -- and their proposal volume is up! Hmmmm...

I'm standing by my prediction that April 27th (the Challenge Grant due date) will be the Grants.gov Armageddon.

And then there's the NIH SBIR Stimulus Exclusion. The NIH just doesn't seem to get the Innovation Economy concept, or doesn't think it involves them. Basically they don't think small business deserves ANY of their R&D money. They cite all kinds of statistics to justify their position.

Bull-frog-feathers! I used to be a statistician, and I know how easy it is to manipulate data to support a premise.

The Senate Small Business Committee had a "meeting" with the NIH this week to discuss the situation (since congress is in recess it couldn't be called a "hearing".). The meeting was inconclusive (aren't they all?), but happily for us, the Senate isn't buying what the NIH is selling. More discussions are scheduled. Stay tuned. This isn't over by a long shot!

OK, now for what's been exciting and invigorating....

On Monday, the National Association of Seed and Venture Funds (NASVF) announced the intent, in a joint venture with a dynamic "innovation intermediary", Innovation America (IA), to create a National Innovation Seed Fund of Funds to help fill the investment gap faced by entreprenurial companies seeking to get through what's known as the "Valley of Death".

You can download the press release from my website, but here's a SHORTCUT. I'm a member of NASVF, and will be serving on its Public Policy Committee to help put this plan together.

This is big stuff. A Fund of Funds seeds other investment funds. The magnitude of numbers being talked about are using $Bs not $Ms. Control will be regional, closer to where the entrepreneurial companies are and where the investments will be made.

Read the NASVF's April 9th issue of NetNews and peruse the presentation on IA's website for details. Lots to be worked out. Stay tuned on this too.

By the way, Jim Jaffe, NASVF's CEO, and Richard Bendis, CEO of Innovation America, are both actively involved in the SBIR Reauthorization Advocacy. Good guys, both of them, and I'm proud to have been invited to join their team.

And then yesterday we dedicated The Center for Innovation at Arlington (I serve as their Business Coach). Texas' Senior Senator Kay Bailey Hutchison and Arlington's long-time House of Representatives legislator, Joe Barton, were there to help cut the ribbon. Both had been instrumental in making the Center become a reality. Read the press release HERE.

We are also involved in the Innovation Economy, but our scope is broader than just seed funding. We're looking at increasing investment deal flow at ALL levels for the entire mid-section of the country, attracting investors to locate in North Texas, and attracting executive talent to the region.

It also involves creating a Fund of Funds. I'm right in the middle of this big stuff too. More to stay tuned on.

I'm ready for a long weekend! Have a great Easter and Passover break.
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NIH Doesn't Budge on Excluding SBIR from Stimulus Money

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They really have no shame. The NIH, I mean.

Senators Landrieu and Snowe finally got a response to the letter they sent them. Want to read it? It's a masterpiece of bureaucratic doublespeak. Click HERE to retrieve it. It took them over three weeks to write this?

The key words are: "In addition to" in the sentence: "In addition to applying for funding through the SBIR/STTR program, small businesses are also eligible to apply for NIH funding through grant opportunities supported by ARRA...".

Never mind these ARRA opportunities are open to big businesses, universities, and every other organization under the sun.

And those "Challenge Grants"! Oy! Mark my words... they'll see 20,000+ applications for those 200 grants. Maybe a token 2.5% will go to small business - 5 awards! And I predict Grants.gov will implode on April 27th under the submission onslaught. It took one of my clients nearly 24 hours to upload their NIH proposal this week! If they're having this sort of problem now...

They even promise small business will have "appropriate representation ... on [challenge grant] scientific review groups". Hmmm, appropriate, eh? Let's see.... 2.5% of a 20-member committee is half a person. Wonder if they'll round up or down?

If you didn't know better, you'd think they really cared about small business. I'll say it again: they really have no shame.

The sad fact is the NIH is technically correct in taking this position on not increasing "its FY2009 appropriated" funding base. Their FY2009 SBIR/STTR Allocation Base is determined as percentages of their total FY2008 extramural R&D expenditures, and the ARRA funding doesn't affect that.

Basically, it's letter vs. spirit of the law. Stimulus is needed now and we're ready to do the work.

None of the other agencies saw fit to deliberately cut small business out of their extra money.

Who's going to tell the NIH to behave responsibly? The exclusion they snuck in has been signed into law, behind the backs of the Small Business Committees and without informing the President what he was signing.

Congress could repeal the exclusion, but do they have the fortitude to pass a bill that does that? Probably not.

Does President Obama have the authority to issue an Executive Order eliminating the exclusion? Probably not, but then I didn't think he had the authority to fire the head of a major corporation either.

We'll see what the NIH does in FY2010, when their TOTAL extramural R&D expenditures will include ARRA funding, and, as the Senate letter pointed out, the ARRA exclusion doesn't change the total!

Well, Senators Landrieu and Snowe - whatcha gonna do with this? Take them to task, or let them get away with sneaking around you? And Senators Feingold and Cardin - did you get a similar response to your letter?

We're counting on you, the congressional Committees who officially represent Small Business, to right this wrong. Please don't let us down.

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UPDATE: Sunday, April 5, 2009. I faxed a copy of this column to all members of the House and Senate Small Business Committees today. Any of you who feel so inclined should also raise some dust over this. Data files of contact information in three formats are on http://www.sbirreauthorization.com/. The more voices raised, the more likely they are to do something. And, at the very least, their awareness of SBIR and its importance to the high-tech small business community will be enhanced.
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NIH Slowly and Reluctantly Yielding to SBIR Pressure on Stimulus Funding

Letter writing works! A small victory was won by small business yesterday, as The National Institute of Neurological Disorders and Stroke (NINDS), an NIH component, has reversed their previous decision to deny SBIR granted companies receipt of Stimulus funds for "administrative supplements" per the exclusion that was included in the ARRA Stimulus Bill. These supplements were announced on March 16th in NIH Notice NOT-OD-09-056, and are designed to "promote job creation and economic development along with accelerating the pace and achievement of scientific research". Nineteen other NIH Instutues had already decided to allow the granting of supplements to SBIR grantees despite the exclusion.

A letter writing campaign, spearheaded by a Seattle small business called Icogenex, produced a reversal of policy from Dr. Story Landis, NINDS Director, who said, in a brief note to Fred Hagen, Icogenex CEO, "This is to let you know that the NINDS will now accept requests for supplements from grantees with SBIR and STTR funding. The new information should appear on our website in the next day or two". We applaud Dr, Landis' decison and encourage all NIH Institutes to follow her lead.

However, we still have not seen where the NIH or the HHS has complied with the Senate's request for a written response to how they will be funding additional new SBIR and STTR projects despite the ARRA exclusion. If a letter has been received by Senator Landrieu's Small Business and Entrepreneurship Committee, they have not shared it with us as of the time of this posting. If anyone knows of such a response, please let us know.

But the lesson here, is that, again, a letter writing campaign has produced positive results. We're going to continue to use this approach in the SBIR Reauthorization effort that's about to be launched. Keep up with the progress and get template letters at www.SBIRreauthorization.com.

And, in a related note, I had the distinct pleasure of spending a good deal of time with Jim Jaffe and Kelly O'Day of the National Association of Seed and Venture Funds (NASVF) at the World's Best Technologies Showcase conference that was held this week in Arlington, TX. We found much that we agree upon, including the basic issues involved in the SBIR Reauthorization debate, and they will be encouraging an attitude of reason and compromise to their VC membership as the SBIR debate unfolds. I became a member of NASVF this week, and plan to be an active contributor to their mission.

PS: Due to a bad link in a newsletter that features my columns, some of you wrote me that you were unable to read my "Movers and Shakers" column of March 18th. Click HERE to see the full posting.

Movers and Shakers

Y'all know that I'm a shaker-upper. Well, I've decided that I'm going to support the SBIR Reauthorization process in a more proactive way, and really do something to move it along.

In addition to this Blog, I'm going to write opinion pieces and attempt to get them published in various media where my voice for small business advocacy can make a difference.

To hone my writing skills I recently participated in an Op-Ed workshop offered by The Writers League of Texas. The following was first "penned" (sounds so much more elegant than "keyboarded") as a class exercise in that workshop. Thought I'd try it out on you....
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Know any movers and shakers?

Now you do!

Last week, I became one – a mover, I mean…and I didn’t start with something easy. No, not me!

I took on a major federal agency and the U.S. Congress, and moved the Senate to take an action. Oh, I didn’t do it alone. No, it was a group effort. But, I’ll take credit for shaking things up and forging the trail. Yep, that was me, at the front of the line, sticking my neck out and taking action.

In a nutshell, here’s what triggered it all: Some special wording had been slipped into the current stimulus package at the request of the National Institutes of Health. As usual, it was done at the very last moment…probably under the cover of darkness.

The result? About $250 million in research and development projects were denied to small businesses. What’s worse, this wording was in fine print and coded so nobody would notice.

When I discovered this injustice, I fired up my Blog. The story was picked up and broadcast by others and soon a whole bunch of people were up in arms. I encouraged a letter-writing campaign to tell our legislators they had been bypassed, and small business was being harmed. Moreover, as I (not being a lawyer) interpreted the law, the NIH couldn’t and shouldn’t have short-circuited small business R&D.

Up to this point, I was just being a shaker.

That’s when I decided to morph into a mover, too. Posting a template letter on my website, I explained how the system worked. Then I informed hundreds of clients and contacts, via my newsletter. I also kept up the pressure through my Blog and faxed dozens of letters myself to our Senators and Representatives.

Much to my delight, a whole bunch of small businesses began to follow my lead. A flood of letters were sent. A key senator’s staffer even called me, asking for a briefing…and my opinion. That senator -- a lawyer -- evidently agreed with my assessment.

Amazingly, hundreds had followed my lead and my instructions. But what’s even more amazing? The right people on the Hill heard our plea and supported our cause…and, last Tuesday, the Senate sent notice to the NIH. Their message? Follow the law and provide the funding to small business R&D…and don’t you dare bypass us again!

My suggestion had been adopted! I had moved the U.S. Senate to needed action.

Why was I amazed? I’ve always thought of myself as only a shaker – the guy who challenged the status quo, suggested what to do and then let someone else actually make the moves. See, I’m a consultant, and that’s what we do. We shake up situations that need shaking. Then, we make suggestions and let someone else do it. Hey, consulting’s a fun job!

But, I really enjoyed that taste of being a mover, so, while I’ll continue shaking, I just might step up and do some moving too. It’s even more fun than consulting!
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So, please help me out here...

If you have a suggestion for a media outlet that might be useful for marshaling support for SBIR Reauthorization please let me know about it. The name and phone number of their Op-Ed editor would be especially useful. And if you actually know someone there and can get me an introduction to that editor, that's even better.

This is going to be fun!

PS: If you're new to the NIH/SBIR-exclusion story and would like to see the columns that reported on it, click HERE, and scroll down to see them. The story broke on February 21st.
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Key Senators join the call for NIH to "IGNORE" SBIR Stimulus Exclusion

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We got some action! Perseverance pays off!

The Senate's Small Business & Entrepreneurship Committee's Chairwoman, Mary Landrieu (D-LA) and Ranking Member, Olympia Snowe (R-ME) joined my call for the NIH to effectively IGNORE the ARRA Stimulus Bill's SBIR Exclusion in a letter sent today to Charles Johnson, the Acting Secretary of the U.S. Department of Health and Human Services (HHS), the parent organization of the NIH.

The PR Newswire story about the letter can be viewed by clicking HERE.

The headline is:

Landrieu, Snowe Emphasize Importance
of Small Business Innovation
to Economic Recovery

The subtitle is:

Call on HHS to fund SBIR/STTR despite
exemptions in economic recovery plan.

Quoting from the letter:

"While the $8.2 billion allocated through Title VIII of the Recovery Act is relieved from specifically funding SBIR and STTR projects, the Act does not exempt the HHS from its continued statutory obligation of allocating a minimum of 2.5 percent and 0.3 percent, respectively, of its total extramural budget for research and development for SBIR and STTR projects. At stake is as much as $229 million."

"The SBIR and STTR programs allow small research and development firms -- our nation's innovation lifeline -- to create high-quality jobs and cutting-edge products and therefore are fundamental to our country's economic recovery. Consequently, it is of great concern to us that the NIH maximize the benefits of the Recovery funding and provide not less than the statutory percentages of the Department's extramural research and development funding to the SBIR and STTR programs."

All I can say is THANK YOU Senators Landrieu and Snowe, and the rest of the Senate SBE Committee. I know for a fact that, due to the letters that many of us wrote, some of you also had a hand in this.

The HHS has until March 24th to respond to the Senate Committee in writing. Frankly, I don't think they need two weeks to decide to do the right thing. I sugest that we keep the pressure on the NIH to respond quickly and favorably.

Of course, March 24th is after the March 20th expiration date, so we MUST get that Continuing Resolution to make this really be other than a hollow promise.

UPDATE, March 11, 2009: Check out Rick Shindell's SBIR Insider Newsletter of this date. It provides some more information on activities concerning the Continuing Resolution, and some additional background on the NIH deal, including an actual copy of the Senate SBE letter.
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SBIR Exclusion From NIH Stimulus was even more underhanded than we thought!

[THIS STORY HAS EVOLVED SINCE THIS POSTING. SENATE TELLS NIH TO FULLY FUND SBIR DESPITE THE EXCLUSION.....READ THE POST OF MARCH 10th FOR THE STORY!]

The campaign is working folks! Everyone is incredulous that such a counter-productive restriction would have been made in these politically charged times, effectively excluding ARRA Stimulus money from small business, the ONLY sector of the economy that's currently creating jobs! And they're angry that it was intentionally done in such a manner as to escape scrutiny.

But you haven't heard anything yet. My original posting on this only scratched the surface of the underhandedness. It was even worse than we thought. I suggest that you take your blood pressure meds before reading any further.....

I gleaned a very disturbing fact today: The version of the ARRA Stimulus Bill that was engrossed (that's the term for being voted on and passed to the next step in the process) by the House, and the version that was amended and engrossed by the Senate, DID NOT CONTAIN THE NIH SBIR EXCLUSION CLAUSE! That means that when your Representative and Senators voted on this bill, SBIR and STTR were, as they should have been, a part of the NIH's Stimulus funding to the tune of some hundreds of millions of dollars in new projects for worthy small businesses.

The engrossed Bills differed in some minor elements, including the amount of money that the NIH was to receive, so they were sent to a Conference Committee (five Members each from the House and the Senate) to have the differences resolved. The Committee did its business and produced the final copy of the now enrolled Bill for the President's signature. Guess what!

THAT FINAL COPY, AND ONLY THAT FINAL COPY, DOES CONTAIN THE NIH SBIR EXCLUSION CLAUSE, and the President signed it into law, thereby taking away, without a vote, the money for those SBIR and STTR projects that effectively had been authorized by your legislators.

Check it out for yourself. All of the versions of the Bill can be found at: http://www.govtrack.us/congress/billtext.xpd?bill=h111-1. Look at each version. (To find the pertinent section, search for "HIV". It turns out that that term only appears in the same paragraph as the one that contains (or doesn't yet contain) the SBIR exclusion clause.)

When I was alerted to this, I was momentarily speehless. (Those of you who know me know how unusual that is!) I couldn't believe that anyone would have the guts to try such skulduggery and that the rulebook would allow this. So I did some research. They did; I'm not sure if it does; but that's indeed where and when they did it!

What about the Rulebook? According to the official government document "How Our Laws Are Made", Conferees are limited in their authority to make substantive changes: "Furthermore, they may not insert new matter that is not germane to or that is beyond the scope of the differences between the two Houses." Does this exclusion clause qualify as being germane or within scope? I'll leave it up to the legal eagles among you to weigh in on that. But what's done is done. The question now is how to best undo it, or at least undo the effects of it.

The legal eagles can advise us on what would need to happen to get this exclusion lifted, either by an action of the Congress with some sort of Bill, or by the President himself with an Executive Order. I just don't know what our next step should be in a procedural sense (someone please help me on this), only that we shall not sit by and let this stand unchallenged.

Of course, the NIH can choose to unilaterally undo this injustice and do the right thing by simply deciding to add an equivalent amount to what would have been newly authorized funds to their regular Allocation Base for SBIR and STTR, dust off those projects that scored well in recent evaluations but just missed the pay-line due to lack of funds, call up the companies, and issue the grants! VOILÀ! Instant stimulus. Shovel-ready job creation, as they say. What about it NIH, y'all up to doing the right thing? Legally you can do it. So please just do it!

OK, the list of suspects in our whodunit has suddenly gotten much shorter. Call in CSI. The ONLY people who could have introduced that clause into the bill were in that Conference Committee room. Who were the Conferees? Here's a source of that information: http://neinuclearnotes.blogspot.com/2009/02/stimulus-bill-conference-committee.html. [Hmmm.... Seems that Senator Specter wasn't on that Conference Committee, so our previous information may have been incorrect, and, if it turns out that we were wrong, and he had nothing to do with this, we hereby apologize to the Senator for that.]

All right, will the real culprit please fess up? Unlikely. Probably not even CSI can solve this crime. These sneaky-snakes tend to cover their tracks too well and close ranks when challenged. But someone in that Committee room did this, probably at the request of some misguided individual high up in HHS/NIH who thought they were doing something in the best interests of their Agency. At least I certainly hope it wasn't done maliciously. Frankly, at this point, I don't care who did it, just that the effects of it be undone.

I've been receiving lots of emails from people who want to know what they can do to help. Hits on this Blog and on my website's SBIR Reauthorization section are up more than tenfold from before this story broke. At least a dozen other Blogs and News sites have picked up the story and spread the word. It's almost viral!

So, let's keep up the pressure. Send out links to this Blog posting, including to other media. Send letters. Make phone calls. Armed with these new revelations we might get some attention from the right people, either in the White House, in the Congress or at the NIH, and turn this around.

And, one final word. That Continuing Resolution must still be secured. SBIR expiration is only two weeks away without it. The House Small Business Committee is the one that will introduce it, so focus on them. We hear rumors of a CR bill being prepared there, but nothing official has surfaced yet. I know it's a lot to ask, but please keep that pressure on too.

We shall persevere.

UPDATE - Sunday, March 8, 2009, 2:00 PM CDT:

An email letter addressed to the "Small Business Research Community" was sent out today by Jo Anne Goodnight, NIH's SBIR/STTR Program Coordinator, wherein the opportunity for small businesses to apply for grants in a new ARRA funded opportunity called "NIH Challenge Grants in Health and Science Research" was touted with the statement in bold face: Small businesses are eligible to apply for grants under this program.

Yes, Jo Anne, eligible, but competing with who else? You have to drill into the announcements a ways to see the list. Here's a shortcut. Among others, the eligible organizations include Public and Private Institutes of Higher Education, For-Profit Organizations (Other than Small Businesses), Not-for-profits of all types, and City, County, and State Governments. Hardly a level playing field! Good try NIH, but no cigar.

If you didn't get the NIH's email letter and would like a copy, write to me and I'll forward it.
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Hidden in the Fine Print - SBIR Explicitly Excluded from NIH Stimulus Money

[THIS STORY HAS EVOLVED SINCE THIS POSTING. SENATE TELLS NIH TO FULLY FUND SBIR DESPITE THE EXCLUSION.....READ THE POST OF MARCH 10th FOR THE STORY!]

SBIR's long time friend and advocate Ann Eskesen has alerted us to the fact that hidden (YES HIDDEN) in the new "Stimulus" bill is the provision that the money being provided to the NIH for additional R&D ($7.4 Billion) must NOT be used for SBIR or STTR projects. Huh? What were they thinking? As Ann said in her alert, "Such an exclusion is underhanded and entirely inappropriate." There's the understatement of the year (so far)!

Entirely inappropriate for sure. Does it make sense for the NIH to not seek additional innovative solutions from our small businesses -- a sector hailed by President Obama himself as being the most likely one to create the jobs that we so desperately need? 2.5% +0.3% of $7.4B is $207.2M that's been inappropriately withheld from our small businesses. That could be used to create a whole bunch of jobs!

And underhanded to boot! They snuck the wording into the fine print in "code" so we wouldn't spot it. A search for "SBIR" or "STTR" won't turn anything up. Here's the relevant section from page 62 of the Stimulus Bill - H.R. 1 (rub your eyes, it's hard to read):

National Institutes of Health / national center for research resources ...... For an additional amount for `Office of the Director', $8,200,000,000: Provided, That $7,400,000,000 shall be transferred to the Institutes and Centers of the National Institutes of Health (`NIH') and to the Common Fund established under section 402A(c)(1) of the Public Health Service Act in proportion to the appropriations otherwise made to such Institutes, Centers, and Common Fund for fiscal year 2009: Provided further, That these funds shall be used to support additional scientific research and shall be merged with and be available for the same purposes as the appropriation or fund to which transferred: Provided further, That this transfer authority is in addition to any other transfer authority available to the NIH: Provided further, That none of these funds may be transferred to `National Institutes of Health--Buildings and Facilities', the Center for Scientific Review, the Center for Information Technology, the Clinical Center, or the Global Fund for HIV/AIDS, Tuberculosis and Malaria: Provided further, That the funds provided in this Act to the NIH shall not be subject to the provisions of 15 U.S.C. 638(f)(1) and 15 U.S.C. 638(n)(1): Provided further, That $400,000,000 may be used to carry out section 215 of division G of Public Law 110-161....

Spot the coded reference to SBIR and STTR? No? Not even with the "clue" I gave you? Well, you probably didn't know that 15 U.S.C. 638(f)(1) and 15 U.S.C. 638(n)(1) are those parts of the law which address the funding of SBIR and STTR. Yes, the "code" was citing the US Code of Law references without annotation. I agree, Ann, that was underhanded.

Getting steamed? Want to know who put this language in the bill? Ann says that it evidently was included at the initiative of Senator Arlen Specter (R-PA). Why? We don't know. We'd love to find out why he would have allowed such an overtly hostile act against small businesses to have been perpetrated out of his office. If you're in a position to query Senator Specter's office, please do so, and let me know what you find out.

Nothing short of a special bill repealing that exclusion provision can be done about this now -- the bill is law. Maybe we should mount a campaign to promote that. {Senator Kerry - you voted for the Stimulus bill - did you know that provision was in it? If not, please sponsor a bill repealing it!} All you folks from Massachusetts - put some pressure on!

As Ann says, "[This] Sets a strong and dangerous precedent. Once in place, such a provision sets the precedent for every other agency to adopt a similar approach at best to limit, at worst to destroy, the SBIR program." The SBIR Coach joins Ann, and others who advocate on behalf of SBIR, to do everything we can to prevent this from happening.

So, please send everyone you know who's an SBIR supporter a link to this Blog posting (http://sbircoach.blogspot.com/2009/02/hidden-in-fine-print-sbir-explicitly.html) so that they'll be informed of this outrage. Encourage them to be vigilant, and please please please, don't be silent!

UPDATE - Sunday, February 22, 2009: I sent out a FLASH Newsletter to my 250+ subscribers today with some additional information on this. See a copy of it (and other back issues) on my SBIR Coach's Newsletter webpage.

UPDATE - Tuesday, February 24, 2009: My friend Rick Shindell issued an SBIR Insider letter last night that provides some more clues for solving our SBIR Stimulus Exclusion whodunit. You may not like the light it sheds. He also provides some good information to help you support our getting that Continuing Resolution (CR) to keep SBIR alive. Please read it!

UPDATE - Thursday, February 26, 2009: I have crafted a letter requesting repeal of the NIH Stimulus exclusion provision that I will be sending to all of the members of the Small Business Committees in the Senate and the House, as well as to the Leadership of both houses of Congress, my Representative and Senators, and other selected influential legislators. I have posted it on my website in template form. Click HERE to see it. Copy and paste it into your word processor, tailor it as you wish, print it on your letterhead and let 'er fly! Remember, faxing it to the attention of the legislator's "Policy Advisor for Small Business Issues" is the most effective way to get their attention. We can do this.
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