It's Official - SBIR Reauthorized with the signing of HR.1540

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On New Year's Eve, just as 2011 was running out, President Obama signed HR.1540, the bill that contains the SBIR reauthorization provisions, into law. Whew! Not that I thought he wouldn't, but...

Here's the White House Press Release on the signing: http://www.whitehouse.gov/the-press-office/2011/12/31/statement-president-hr-1540 . SBIR wasn't mentioned, of course. Sigh...

I do want to read the bill that was signed, just to make sure no Federal Agency sneakily weaseled out of their SBIR obligation. Not that I'd think that any of them would be so callous as to do that, but...

The next step if for the SBA to revise the Policy Directive to incorporate the changes into policies for the Agencies to administer. We're going to help them with that. They have 180 days to get the revision done, but we'd like to see it done a whole lot faster - especially since some of the provisions (e.g., eligibility) must be implemented within 120 days!!

The coordination of that help will be through the Small Business Technology Council (SBTC), an arm of the National Small Business Association (NSBA). Jere Glover, Executive Director of the SBTC, will be at the point. White papers will be submitted to each Agency with suggestions for productive implementation.

If you'd like to get involved, especially with regard to a particular Agency with whom you do (or would like to do) business, join one of the committees being formed by (a) joining the SBTC, and (b) contacting Alec Orban (alec@sbtc.org) at the SBTC and letting him know of your interest.

[Note: it's not necessary to join the SBTC to get involved, but it's the right thing to do. They are the voice of the SBIR advocacy in DC. Please support them.]

I will be making the rounds on the lecture circuit during 2012, talking about capitalizing on non-dilutive funding opportunities via strategic implementation of the new SBIR and STTR laws and policies. If you'd like to arrange to have me speak to your organization, please contact Brenda Keefer (info@willowmistpro.com) at Willow Mist Professional Services to discuss details.

My SBIR Coach's Newsletters for 2012 will focus on the new SBIR/STTR Laws and Policies, so be sure to subscribe. They're free, of course.

Well, at this point, all that's left is to wish you a ...

Fred Patterson - The SBIR Coach®

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SBIR Reauthorization is VERY close - But don't light that cigar yet.

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[UPDATE: On Dec 15th, Congress approved the NDAA Bill (H.R.1540) and sent it to President Obama for signature. See SBIRreauthorization.com for that update. As we saw in what happened to the NIH's ARRA stimulus money ("Hidden in the Fine Print"), strange things can happen to bills coming out of Conference Committee and going for signature. So pardon my hesitation to celebrate until the ink is dry and we can examine what was signed. Once we've verified that SBIR has REALLY been reauthorized as heralded, I'll publish a new commentary.]

The SBIR Reauthorization fight is almost over. The House Small Business Committee has FINALLY decided to compromise in good faith. SBIR really does have a good chance to be reauthorized in the next few days without having been destroyed in the process.

Sam Graves (R-MO), the Chairman of the House Small Business Committee, and Ralph Hall (R-TX), Chairman of the House Science, Space and Technology Committee, issued a Press Release on December 12th announcing that a deal had been struck with the Senate. Here's a link to that PR: http://smallbusiness.house.gov/News/DocumentSingle.aspx?DocumentID=272194.

However - and this is a BIG HOWEVER - the fact that a deal has been struck, does not mean a bill has been passed! We're not there yet! As we've seen in the past when we were on the brink of victory, strange things can and do happen to slam-dunk bills.

Your best source for the true skinny is to subscribe to Rick Shindell's SBIR Insider: SUBSCRIBE. Here are excerpts from the Issue he published last evening (Dec 12th):

Dear SBIR Insider,

We have some very encouraging news for you on the status of SBIR reauthorization, but contrary to what you may have read, SBIR has NOT been reauthorized.

We have been deluged with calls and emails tonight by those who said they read in another newsletter that SBIR was reauthorized. Although a deal was struck this afternoon, SBIR reauthorization has not yet happened, but we're closer than we've ever been in this iteration of the reauthorization process.

An agreement between the Senate and House on SBIR/STTR reauthorization has been reached. Reauthorization is in the form of negotiated modifications to an amendment offered to the Senate's version of the National Defense Authorization Act for 2012 (NDAA), by Senator Mary Landrieu (D-LA), chair of the Senate Committee on Small Business & Entrepreneurship.

Because this agreement is part of the much larger NDAA, it was asked that details be kept to a minimum until the entire NDAA conference agreement is forthcoming (hopefully tomorrow, but soon).

A few details we can present include:

· Authorization for 6 years (through 2017)

· Majority ownership by VC, private equity and hedge funds allowed up to 25% for NIH, DOE and NSF, and up to 15% for the others.

· Increasing the SBIR allocation from 2.5 to 3.2 percent and the STTR allocation from .3 percent to .45 percent incrementally over the 6 years of reauthorization.

· Allows 3% of SBIR funds for the agencies to use for administration, outreach, and increasing participation from "have not" states, and minorities.

· Does not include House section 505, limiting awards to companies, but develops guidelines to measure success of a firm's participation.

· Does allow (at an agency's discretion) skipping of phase I (limited to DoD, NIH, and ED).

We will provide the details once it all comes into focus.

Rick Shindell
SBIR Gateway
Zyn Systems
www.zyn.com/sbir

So, we still have a sprint to the finish to go. Stay with us by monitoring Rick's SBIR Insider and our SBIR reauthorization update page: www.SBIRreauthorization.com.

On a personal note, I've been rather silent on this forum for a while, due to some very pressing health issues concerning my wife, Kay, and myself.

She's been courageously fighting ovarian cancer for many years and we're now in the end game with that. Overtime, even - month nine of home-hospice and I'm her primary care-giver. (Note: Median time of a patient in hospice care is less than one month!) She asked me yesterday what I wanted for Christmas, and I replied that she'd already given me the best gift she ever could - having her with me for another Christmas.

Then just since Labor Day, I began to fight my own personal Reauthorization Battle: Throat cancer. Stage IV out of nowhere. I've already had some surgery, and am currently in chemotherapy. I'm writing a Journal of my experiences on this journey via CaringBridge.org - a wonderful website deserving of support. Read my Journal and keep up with my progress on www.CaringBridge.org/visit/FredPatterson/. Please do leave me notes there. They lift my spirits.

I see each course of therapy with this fight as a Continuing Resolution on my life's reauthorization. To stretch a metaphor, God signs the Bills on Fred's Life that get passed. Jesus is my Committee Chairman, and His Plan will be what gets passed to the Heavenly Desk for signature. If you'd like to offer testimony to His Committee, no invitation is necessary, and I understand He accepts knee-mail 24/7. I'm not privy to the negotiations, but can only pray that I've done what He expected me to as I've made my journey through this life. (Thank goodness Nydia isn't in that loop. God only knows what she'd expect of me!)

I'm continuing to work as best I can. Scaling back a bit while taking treatments, of course, but serving my long-term clients as usual, and even taking on some new clients with truly innovative game-changing technologies having a dyn-o-mite Business Model to support their eventual commercialization. I don't have to work so hard to make them competitive!

Thanks to all of y'all who responded to the call for letters supporting this SBIR reauthorization compromise. We did make a difference.

We wish you a very Merry Christmas and a Happy Hanukkah. And, of course, our very best wishes for a Happy New Year.

Fred and Kay Patterson
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SBIR LIVES, despite Nydia's best efforts to kill it!

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The current incarnation of SBIR has more lives than a cat. Twelve and counting. (Details HERE) This SBIR CR life segment will be four months long. Then what? Will small business innovation be sold out to the bigger better funded entities?

If Nydia has her way it will. She's so dedicated to that sell out that she even campaigned to kill SBIR rather than continue it as is. Yes, the Ranking Member of the House Small Business Committee sent out a Dear Colleague letter to her fellow Democrats in the House urging a NO vote on S.1082. She wanted SBIR to die, rather than continue "as is" to allow open debate.

She even addressed the House at the time the vote was called, and appealed for its defeat. But in that appeal, she carefully never mentioned that it was SBIR she was killing. Very clever Nydia!

Don't believe me? Here's the proof - a YouTube video of her calling for S.1082's defeat:

http://www.youtube.com/watch?v=uxH12E1fuZk

Then she called for a recorded vote, and only 33 NO votes were recorded!

THANK YOU NYDIA! Now we know who needs remedial education.

Here's the list of those who voted NO:

Is your Congressional representative on this list? If so, YOU have work to do. The SBTC, SBBC and others will be providing materials to ensure that when the actual SBIR Reauthorization Bill is passed, it improves the Program, not destroys it.

Watch SBIRreauthorization.com for updates and information you can use to educate your Congressional Representatives and Senators. The current posting there is a detail map and demographics on the recorded vote on S.1082. Check it out.

If you'd like to keep up with things in an active way, join the SBIR Advocacy. We have a Google-Group. Here's the link to join: http://groups.google.com/group/sbir-advocacy/subscribe?hl=en¬e=1

I've been rather silent in the past few months in this column. But expect some noise from me in the coming months. I don't know about you, but I've about had it with the political posturing. Huggem-Muggem must stop!
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SBIR Still Alive - Obama Misses Opportunity

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We're still alive! The Congress approved the 10th Continuing Resolution (H.R. 366) in this now 28-month-long drama on SBIR Reauthorization, and SBIR, STTR, and the DOD's Commercialization Pilot Program (CPP) have all been extended four more months, until May 31st.

Hopefully, more of FY2011's SBIR funds will be released soon to the Agencies, and contract and grant processing can resume in those Agencies who have had to suspend those activities after their money for this ran out.

I watched the President's State of the Union address on Tuesday evening. For a moment my heart began to race with anticipation. Here's (verbatim) what he was saying:

"Now, the true engine of job creation in this country will always be America's businesses. (Applause.) But government can create the conditions necessary for businesses to expand and hire more workers.

We should start where most new jobs do -- in small businesses, companies that begin when -- (applause) -- companies that begin when an entrepreneur -- when an entrepreneur takes a chance on a dream, or a worker decides it's time she became her own boss. Through sheer grit and determination, these companies have weathered the recession and they're ready to grow. But when you talk to small business owners in places like Allentown, Pennsylvania, or Elyria, Ohio, you find out that even though banks on Wall Street are lending again, they're mostly lending to bigger companies. Financing remains difficult for small business owners across the country, even those that are making a profit.

So tonight, I'm proposing that we take $30 billion of the money Wall Street banks have repaid and use it to help community banks give small businesses the credit they need to stay afloat. (Applause.) I'm also proposing a new small business tax credit -- one that will go to over one million small businesses who hire new workers or raise wages. (Applause.) While we're at it, let's also eliminate all capital gains taxes on small business investment, and provide a tax incentive for all large businesses and all small businesses to invest in new plants and equipment. (Applause.) "

He then moved on to another subject, and my heart rate slowly went back to normal. RATZ! What I REALLY wanted to hear and wished he would have said next was,

“And, while we’re at it, let’s expand and improve the successful Small Business Innovation Research Program, to give those entrepreneurs who have good ideas the opportunity to build a company and create high-paying jobs, by asking them for more proposals on how to solve some of the toughest technological problems our Government Agencies face, and then funding the best of those proposals. And the good news is that this doesn’t take any new spending. SBIR is included as a portion of those R&D budgets already.”

Betcha that would have gotten some bi-partisan applause and a standing ovation too!

Unfortunately, he didn't say that. What a missed opportunity!

But he did give us precisely the platform we needed to drive the message home to our elected Representatives.

So that’s got to be our message. Let’s get it out there! The Small Business Technology Council (SBTC) will be providing guidance on fact sheets and letters to send. The NSBA's "capwiz" system will help you with sending it. Plan to send a letter to your House District's Representative, your two Senators, and to every member of the Small Business Committees in the House and Senate.

We'll have full support for the letters, contact info for all members of the 112th Congress, and links to the systems on www.SBIRreauthorization.com, so be sure to monitor that website.

So, here we go again. Maybe this time they'll actually get it done. I don't know about you, but, for me, this continually being on life support is exhausting!
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Camouflage! An Innovative but Crappy Use for SBIR Reauthorization

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Just when you thought you’d seen everything. The lengths our limping quackers will go to make their Lame Duck session productive is absolutely stunning. But you’ve got to give them credit for innovation.

I use GovTrack to keep me informed of activities on bills in process with regard to SBIR. One I was tracking was H.R.2965 – the House version of SBIR Reauthorization. When it showed action last week, I eagerly went to see what was up. The Title hadn’t changed. But the bill’s Text had changed – to the repeal of “Don’t Ask, Don’t Tell”! Huh?

I made some quick inquiries, and was given a quick brief on the tactic being employed – using H.R.2965 as camouflage because it was far enough along in the process to avoid having to be further discussed by either chamber and could be immediately voted upon. The title of the bill wasn’t changed, just the text. We know our legislators don’t read the bills they vote on. It was to be a sneak attack. And, it worked.

I was asked to not rattle the cage yet, as some behind-the-scenes action was simultaneously happening with the Senate’s version (S.1233) along with discussions with BIO that just might get things settled, and we were to “stay out of the way”. OK. I’m a good soldier. I put the “pen” down and waited.

Last night Rick Shindell published an SBIR Insider about this monkey business. As they used to say: READ ALL ABOUT IT: SBIR Insider of December 19, 2010. The cat’s out of the bag, so I got out the pen.

I know this is how things get done in Washington, but I don’t have to like it. Resorting to camouflage and subterfuge to sneak things by is just wrong. I don’t care what the issue is. Not that this is anything new to us -- the NIH's sneaky ARRA SBIR exclusion is a case in point.

Frankly, I’m fed up with political posturing, pouting, pontificating, and prevaricating. No one tells the truth about anything. They tell the politically expedient story and use perception management to make it seem like the truth.

Yes, I have mixed emotions. On the one hand I’m delighted to see the guts ripped out of H.R.2965. It was a bad bill. But I know one thing for sure. The deliberate use of SBIR’s name for unrelated political expediency was distasteful. The crappy tactic of not changing the title when the bill has been totally changed should be illegal, but the Congress makes its own rules, and holds itself to a different standard, both legal and ethical.

I guess I wouldn’t make a good politician. I know how to play the SBIR game, and I think I’ve played it well. But this game is another story. To have used a small business bill in this way is flat out dishonest. No one asked me, but I’m telling!

Now what? Will this be another instance of Huggem-Muggem? Now that they've used us for their own nefarious purposes, will SBIR be summarily cast aside and handed off to the next Congress to start over?

Or will the Senate, the House, BIO, NVCA, SBTC, and the NSBA all agree to do what's best for small business and emerge yet this session with an SBIR Reauthorization compromise we can all live with?

Will the egos of our legislators, especially those in the House, be soothed to where they’ll act responsibly instead of selfishly? Will Nydia put her purse away? Will pigs fly?

Don't let my disgust with the process and those who would use it for their own selfish purposes make you think I've given up. I'm basically an optimist. And a realist.

Maybe pigs really will fly. Stay tuned.
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Stakeholder Value from SBIR? Think Assets not Revenues!

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A client recently asked me to help him with a presentation that involved a chart that depicted the value derived by “stakeholders” in an SBIR project. The chart only considered the distribution of the funds provided by the grant. That made me think about the whole issue of stakeholder value in SBIR-funded ventures.

Unfortunately, for most awardees, SBIR has little to do with market share or even market definition. It’s basically a Technology-Push facilitator. The Agencies define technology priorities or projects they’d like done. The small businesses propose a project to develop the technology to proof of concept. That’s not the same thing as a product. And most Agencies would never be the customer and buy the result of an SBIR project. They’re strictly being seed investors.

Even for DOD, who does buy things for deployment, the resulting SBIR-developed technology innovation is not usable until it’s integrated into a solution they can actually deploy. They don’t buy technology, they buy complete and fieldable systems. That frequently requires integration and collaboration with a Prime contractor. The DOD market is what the Prime serves. It’s up to the small business to figure out who to team with to enable that integration. Their market is not the final customer of the solution – it’s the Prime. Their challenge is how to make money from what gets developed as a result of the SBIR funding.

A grant revenue distribution diagram depicts how the money invested in the SBIR project by the Agency gets divided up among the project’s participants. That’s not what’s important. It’s all consumed by the project, so it isn’t an asset. What’s more, it shouldn’t be looked at as strictly working capital. Yes, it pays the bills, but only for this project.

A company that looks at its SBIR awards as invested capital, and considers its return on invested capital (ROIC) is more appropriately considering the asset value of the money received.

What’s important from an asset perspective is how the results of the project turn into a strategic advantage for capturing market share. That rarely has anything to do with the Federal Agency that provided the SBIR seed funding. It has to do with the strength of the intellectual property position, and the ability of the company to make the deals necessary to leverage that IP position into cash. Figuring out with whom to make the deals and how that deal is structured is where the value lies. In the final analysis that has virtually nothing to do with how the SBIR award revenues were distributed.

Unfortunately, the SBIR Program was never designed to even deal with this. It was strictly to be a way to give a small technology business a fair chance to get the seed funding. As SBIR was conceived by Roland Tibbetts back in the late ‘70s and implemented in the early ’80s, commercialization was NOT intended to be an Agency concern. While it did successfully open the door to small businesses, not including direct support for end-use deployment was probably short sighted, as, arguably, there’s no other good way to determine return on investment (ROI).

The current reauthorization legislation is attempting to remedy this by providing some requirements for the agencies to fund Phase III and gather data on what SBIR funded companies do with the technology that gets developed. As it currently stands, virtually no consistent or reliable data on SBIR commercialization activities exists, other than ad hoc anecdotal reports.

Marketing and market research of technologies which have some IP protection are clearly keys to figuring out how to make money from what’s been developed. Business success is most quickly (and sometimes ONLY) achieved when selling to a Market-Pull. But, the Agencies are quite specific about allowable costs in SBIR projects, and marketing, market research, and patent prosecution are explicitly NOT allowed to be included in SBIR budgets.

This is a classic Catch-22. The ROI of an SBIR project is measured on what money the company can make from selling the developed technology, but they’re not allowed to use SBIR money to figure out how to do that. What other money do they have? And the reauthorization’s inclusion of required Agency commercialization support may not be able to overcome this without significant paradigm modifications to what the government allows its money to be used for, as it’s the Federal Acquisition Regulations that define allowability of costs.

So, for “stakeholders” in an SBIR related venture, there’s nothing to be gleaned by simply looking at award revenue distribution.

Who are the “stakeholders” in a venture anyhow? I see them as everyone who has something to gain or lose by associating with the venture. This includes the venture’s founders, owners, employees, suppliers (of all goods and services including consultants), investors (who may or may not be owners), subcontractors, and customers. It may also include those who are building a “culture” (e.g., a professional association) where the venture plays a supportive role.

A “Stakeholder Value from SBIR” chart is, therefore, much more complex than a simple revenue from the grant depiction.

Sadly, there are many “SBIR companies” out there incapable of thinking strategically from a market-driven perspective. They do nothing more than win SBIR awards, proudly looking at the Phase I/II grant/contract revenue as their “bottom line” end game. These “lifestyle companies” (some call them "SBIR Mills") are, for the most part, not sustainable in the long term and doomed to eventual failure. They don’t start out that way, but find that making that transition to commercialization is not automatic.

Phase III is not an entitlement. It requires an entirely different focus and talent for execution not attainable by the founders or technically oriented staff. So, to survive, they stay in their comfort zone – winning SBIR awards. For them, ROI is moot.

Value is characterized by, among other things, ROI expectations. Who has them? How do we measure them for the companies and their stakeholders – including their investors? For the Agencies? For the Taxpayer? Lots of questions.

How we frame the answers may determine whether the SBIR program flourishes and grows as an innovation driver, languishes as an “entitlement”, or even survives. Any thoughts?
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Let’s End “Huggem-Muggem”!

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An open letter to the Republican House Leadership:

Legendary SBIR advocate, Milt Stewart, said it best in observing how Congress treats small business, “In public they hug them, in private they mug them!” I call this the Huggem-Muggem syndrome.

As the House of Representatives changes leadership, and with Republicans once again controlling Committee Chairmanships, perhaps we can get the legislative agenda changed back to enabling free market growth. Crucial to this will be what policies are driving enacted legislation that truly enables small businesses to fulfill their historical position of driving the innovation economy and making major contributions to US economic growth. Unfortunately, small business currently gets Huggem-Muggem: lots of lip service but very little productive legislative action that facilitates their creation of non-government jobs.

The new Chairmanship of the House Small Business Committee will be key to successfully fulfilling that job-creation goal. The incumbent, Nydia Velazquez (D-NY), has steadfastly blocked all efforts to openly debate many SBA initiatives, including the Small Business Innovation Research (SBIR) Program before her committee. Instead she has openly demeaned the small businesses she is supposed to support in favor of advancing the agendas of larger special interests which fund her re-election campaigns. Unfortunately, the heir apparent to the SBC Chair, Ranking Member Sam Graves (R-MO), has, time and time again, supported her outrageous behavior. Lots of Muggem without any Huggem!

Regarding the very successful 28 year-old SBIR Program, which has languished with Continuing Resolutions for two years due to Velazquez’s refusal to consider the Senate’s reasonable compromise to the differences between Senate and House versions of a reauthorization bill, having a House SBC Chairman who will take small business interests into consideration is of extreme importance. Please exert whatever influence you can to ensure that this happens.

SBIR has enjoyed considerable bi-partisan support over the years, and frankly, some of its most faithful supporters have been Democrats. Passing an SBIR Reauthorization bill acceptable to all sides of the issues is certainly possible. Just think of the positive message this will send to the country. All it takes is the willingness of both sides to be reasonable.

As it stands at the moment under the current CR, the SBIR Program will expire at the end of January, 2011. While it’s not impossible that a compromise SBIR Reauthorization bill could be approved in the upcoming Lame Duck session, it’s very unlikely that will occur. What must be prevented is Lame Duck SBC Chair Velazquez getting her way, performing another Muggem, and sneaking the current House version into law against, among other things, the will of the Senate.

I would be pleased to fully brief any House Member and his or her legislative aides on the issues at play with SBIR. One source for information is the website www.SBIRreauthorization.com. Others are the Small Business Technology Council (www.SBTC.org), the SBIR Insider (www.zyn.com/sbir/insider/) and my SBIR Coach’s Playbook opinion column (www.SBIRplaybook.com).

Thanks for paying attention to this. With new leadership and the proper resolve, let’s make ending Small Business “Huggem-Muggem” syndrome a top priority for the 112th Congress! Please!
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Velazquez Caves Under Pressure -- SBIR Extended

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We did it! Hundreds of calls and letters produced an overwhelming level of bipartisan peer pressure that even the most stubborn Committee Chair couldn't stand up against.

A special issue of Rick Shindell's Insider, written from the scene of the almost crime, reports on some of the details:

HOUSE PASSES SBIR/STTR/CPP EXTENSION THROUGH JANUARY 31, 2011

Borrowing the title of a song from My Fair Lady, "You Did It!" There was thunder on Capitol Hill today as hundreds of you responded to an emergency call to action (from many people and organizations) to save the SBIR program from lapsing, and that you did it!

Around 7:00pm this evening, Nydia Velazquez under pressure from her peers and the House leadership, accepted the Senate's SBIR and SBA extender bill, she and moved to suspend the rules to pass S.3839 without amendments. That has now happened and the SBIR program will be extended through January 31, 2011, pending signature of the President (virtually automatic), who supports the bill.

This is the 9th continuing resolution for SBIR, which in and of itself is an outrage, but perhaps Velazquez & Day are now wounded and certainly embarrassed, having been rolled over by the House leadership twice in as many weeks. The Senate has worked strenuously in bipartisan fashion to construct a compromise that Nydia & Day would accept, but they showed little interest.

We will provide a postmortem of this escapade in a future issue to show how close we came to a programmatic lapse. Your voices played a major role in getting the support to overrule Velazquez.

Nowhere were the cries for passing S.3839 stronger than from the great state of Massachusetts. Not only are they the second largest SBIR award winning state, but also the most organized. To that end, two of their congressionals played major roles in this victory, Ed Markey (D-MA) and Niki Tsongas (D-MA). Tsongas wrote a powerful "Dear Colleague" letter (signed by supporters) that truly made a difference. There are many more heros and we'll cover that next week.

So, we can stop holding our collective breath for a little while, but there's much to do. Rick continues:

WHAT'S NEXT

This fight is far from over, but the tide is turning. The big challenge for you is to get out and educate the candidates running for election. Do it not only for the candidate of your choice, but to the opposition as well. Attend their rallies, talk to their staff, and to the press. Undoubtedly there will be many new freshman congressmen and senators coming in to the next congress and you'll want them to know about the importance of the SBIR/STTR programs to your business and the economy. Also, step up to the plate and publicly thank those who have supported your programs, and don't be afraid to criticize those who didn't.

So thanks to all of you who jumped on this and turned around the hostage situation with a favorable outcome.

Jere Glover's Small Business Technology Council (SBTC) has promised to provide some good educational information for us to use in this educational effort. I urge you to please join the SBTC and help support Jere and the others who volunteer their time for SBIR advocacy. If you're an SBIR supporter, it's the right thing to do.
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Velazquez Holding SBIR Hostage for Lame Duck Ploy

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[UPDATE 9/29: Nydia Caved Under Pressure!
Read this and then click HERE for the update.]
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Incredible! And I wish I could say unbelievable! But, sadly, I'm not really surprised.

The illustrious Chairlady of the House Small Business Committee, Nydia Velazquez (D-NY), evidently holds herself above the will of both the Senate and the House. Is this a manifestation of self-importance (with a touch of petulance) or just selfish personal pocket-book protection? Or maybe both. I have my opinion, but you can draw your own conclusions. (Rumor has it she was recently seen shopping at Macy's for a bigger pocket-book.)

In an obvious ploy to sneak into law her provisions for opening up the SBIR program to unrestricted VC controlled company access to these funds, with jumbo awards to boot, she is defying the will of the Senate and many of her own Party in the House to get her way. The intent is to use the post-election Lame Duck session to tack her version of SBIR Reauthorization onto otherwise untouchable emergency legislation.

In his usual inimitable and eloquent style, Rick Shindell blew the whistle on this in his SBIR Insider of September 27:

SBIR/STTR/CPP EXPIRATION LOOMS

The SBIR/STTR/CPP now appears likely to expire on Thursday night, September 30. Some will deny it but here's what's happening.

Allegedly the Senate and House were close to a compromise complete with an 8 year reauthorization of SBIR/STTR/CPP but each time it goes back to the House (Nydia & Day), they change the VC language to masquerade 100% VC involvement as a compromise.

Because time is so short, the Senate passed a bill (S.3839) to simply extend SBIR/STTR/CPP through January 31, 2011. The House was going to pass it on Wednesday with the President signing Thursday. However, the word on the street is that Nydia Velazquez, chair of the House Small Business Committee, and her illustrious second, Michael Day, are rejecting the bill and are poised to let SBIR expire if necessary, at least in the short term.

It seems that Velazquez's hope is to move the SBIR reauthorization into the lame duck session and incorporate all her Wall Street investors' 100% non-compromise VC ownership and jumbo award support into a must pass, end of the year omnibus bill that can't be touched by her detractors.

This sounds like a script for TV, but several years ago we had a similar year end omnibus situation involving Nydia (as ranking member) and Sam Graves (subcommittee chair) and BIO/NVCA, but the main difference was that the small business committee chair was Donald Manzullo who nipped it in the bud. In our scenario today we have to look to the House leadership to do it, but it will take your involvement.

Many senior people in the democratic party called for the House to support the Senate compromise bill H.R. 2965, but Nydia ignored those calls, as did Jason Altmire, the creator of this infamous Altmire Quagmire. Now Nydia's really "miffed" because last week she tried to "scrub" H.R.5297, the Small Business Jobs Act of 2010, but the Obama administration and Speaker Pelosi rolled her over and passed it.

Rick includes a Call To Action to marshal support to prevent this Velazquez ploy from succeeding. You can read about it on the SBIR Insider itself, or on www.SBIRreauthorization.com.

Rick concludes his comments with a discussion of what happens if SBIR lapses, even for a short time:

Theoretically those projects (grants and contracts) that are already in place should be okay, but some not. All new unsigned agreements would stop. Agency comptrollers may start adjusting their budgets to put the overall 2.8% SBIR/STTR back into their own research pools. Administrative funding for SBIR could be severely cut back. Remember, all of your grants and contracts are "subject to the availability of funding."

On the other hand, SBIR can be voluntary, so some agencies may choose to keep their SBIR doors open, hoping for, or expecting the reinstatement of the program.

I agree with Rick. For SBIR to lapse, even for a short time, is bad for you and the agencies.

Please join our Call to Action and stop Nydia in her tracks.

REMIND EVERYONE YOU CONTACT THAT THEIR INACTION IN LETTING A SMALL BUSINESS PROGRAM DIE WILL NOT PLAY WELL IN THEIR RE-ELECTION CHANCES!

Monitor what happens on www.SBIRreauthorization.com.
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Re-inventing SBIR?

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They've been meeting for almost a year with good intent: make SBIR more "effective and efficient". They're calling it SBIR 2.0 - borrowing on the Web 2.0 lexicon that heralded the shift from passive viewing of web content to active interaction among all elements of the web community (from content creators to content users) in a collaborative fashion.

Don't be fooled. It's not the same thing. Not even close. They're talking the talk. But not walking the walk.

Collaboration? Among newbie Agency SBIR Directors (the content creators) - maybe. Are SBIR funded companies (the content users) involved? Nope. Were past and retired SBIR Program Directors consulted? Nope. Were SBIR's founders consulted? Nope. (I'm certainly not in the loop -- not that I should be, although I do have ideas that could have merit -- so if some of the "Nopes" are erroneous, I apologize. But I bet the Nopes are pretty accurate.)

The SBIR 2.0 effort is being spearheaded by Sean Greene, the SBA's Associate Administrator for Investment and Special Advisor for Innovation. (Don'tcha just love government titles?) He's a good guy, a true friend to SBIR, and, as I said, well intentioned. But the naivete here is disturbing.

Here's a quick outline of what's included in the SBA's SBIR 2.0 initiative:

Simplification and Streamlining
- Shortening the contract/grant initiation period after award
- Building a web portal to search for available open topics
- Clarify and simplify SBIR Data Rights
Shared Best Practices
- Expanding bridge financing programs (between Phases)
- Expanding SBIR to facilitate tech transfer (ala NIST)
- Issuing joint agency solicitations
Better Performance Management
- Implement common performance metrics across agencies
- Share performance data publicly

Ambitious for sure! It would be marvelous to get all of that to work. But, folks, it ain't gonna happen quickly. Some aspects may not happen at all. The challenges are daunting. Some of the issues have been debated for years without consensus!

Every one of the agencies can improve the efficiency of project initiation after award. All it takes is money allocated to pay for administration. They haven't got any for this. Current SBIR law doesn't allow use of SBIR apportioned funds for admin. Unfortunately, last I knew, SBIR reauthorization which may fix that provision, hasn't happened yet.

And, at least for DOD, the SBIR Program Managers have NO CLOUT WHATEVER with component contracting authorities, who completely control the contract initiation process. I've seen contracting delays of as much as two YEARS! And, if they did have some clout, the current Army default of Phase I payments every two or three months (instead of monthly) wouldn't be the practice. Can you spell "cash flow"?

A "one-stop-shop" portal with a topic search feature? Gee, don't we already have one? It's called The SBIR Gateway. Not a penny of government money funds it, by the way. The "official" SBIR website (SBIR.gov) certainly could use some work - and a topic search engine - but why waste taxpayer money re-creating something that already works? Or is it simply a control issue?

Getting agencies to work together for improved SBIR efficiency? Don't make me laugh. The agencies are too different and too bureaucratically rigid to make any "one style fits all" approach work. Just the difference in competition compliance requirements between contracting and granting agencies alone makes the whole effort quite unlikely.

Clarifying SBIR Data Rights? PLEASE DO! But this involves getting lawyers to agree. Good luck with that. Ron Cooper, another good guy from the SBA, is at the point for this. If you have ideas, he'd like to hear them.

They're trying a working-together experiment - a five-agency (NIH, DARPA, DHS, NSF, and USDA) joint solicitation on Robotics. Just announced. Here's the info: http://grants.nih.gov/grants/guide/pa-files/PAR-10-279.html. Warning: Take two aspirin before reading, and call me in the morning. Heaven help us, the NIH SBIR application system will be used to collect all five agencies' Robotics proposals!

The NIH's system? Yikes! Y'all know what I think about it: It Sucks! For those of you who are used to doing DOD SBIR proposals, be prepared for EXTREME frustration! I've even put out an SBIR Coach's Newsletter issue about what to expect.

Regarding expanding bridge and commercialization funding, Kristina Johnson, the person at DOE who got their first of its kind Phase III funding initiatives in place, is apparently and suddenly leaving the agency. And the NIST "SBIR TT" program cited as the example for innovative SBIR tech transfer just lost it's creator, Cara Asmail, who's moved on to another NIST post. We have a leadership gap.

The turnover issue also extends to agency SBIR Program Director/Manager roles, as many newcomers are sitting in those chairs this year. I wonder how many of them have actually read the SBIR Policy Directive? Probably about as many as our legislators who actually read the bills they vote for.

Finally, common performance metrics? Oh, please! The agencies don't currently have ANY meaningful SBIR performance metrics. At the Beyond Phase II Conference last week, we were shown some (I thought suspicious) statistics on alleged SBIR performance, but there's no consensus on what constitutes SBIR success and no data gathering that has integrity or accuracy. I'm sure the SBIR funded companies have quite a different view of "success metrics" than do the agencies. Who provides the data? Who collects it? Who is to analyze it? What's to be done with the results? All still undefined.

I'm not usually pessimistic, but it's hard to have optimism about SBIR 2.0. Just being well intentioned doesn't cut the mustard. Maybe I'm jaded. Maybe I'm tired of being told to "trust" and "have hope" for "change" we can count on.

Change huh? This Administration's idea of "change" makes me shudder. (And make no mistake about it, the SBA is an arm of this Administration.) Will "simplification" mean adoption of the NIH's horribly complex SBIR collection and evaluation system? Will "best practices" for laying SBIR eggs (and making them into omelets) be defined by the eggs rather than the chickens? Will "performance metrics" have anything to do with creating jobs and producing innovative technology by giving small businesses access to Federal R&D opportunities?

Until SBIR is reauthorized, much of this is moot. Any efficiency changes will be limited and intra-agency. And, Lord knows, intra-agency efficiency changes are sorely needed! Effectiveness changes? Who knows what that even means?

I do applaud what Sean Greene and the Agency SBIR Program Directors (with a special nod to Chris Rinaldi at DOD) are trying to do with SBIR 2.0. They're sincere and trying hard to do what's best for SBIR. I just entreat them to do it smart and not ignore the user community and what's been tried in the past. Involve Roland Tibbetts, Ann Eskesen, and Jere Glover in the dialog and listen to what they have to say. Involve small business and their advocacy arm, the SBTC, too. Make SBIR 2.0 truly collaborative.

If you're going to talk the talk, please walk the walk.
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