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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SBIR Reauthorization? Hit the Reset Button.

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It ain't gonna happen this year folks. The 111th Congress will be remembered for many things. Reauthorizing SBIR won't be among them.

But, don't worry, they won't let it die. No one wants to be accused of killing a small business program. So it'll be extended as is, with yet another Continuing Resolution, and the 112th will have to start over. With a clean slate. All unresolved legislation is trashed, ya' know.

Hit the Reset Button. It'll be a brand new game.

If the polls are even close to being accurate, there will be a lot of new faces in both the House and Senate. Many of these new legislators are likely to have never even heard of SBIR. So we must start over again with educating, persuading, persisting.

And we'll have new Congressional leadership, both at the top and on Committees. In the case of the House Small Business Committee, that's a good thing. Nydia needs a vacation. She works so hard on behalf of her constituents and supporters' pet projects. Too bad SBIR has never been one of them.

Those of you from Missouri -- get ready to "show me" some style. If the Republicans gain control of the House, Sam Graves is likely to be the new SBC Chair. At least his district of north Kansas City and St. Joseph may actually have some SBIR funded companies in it! Make sure he knows how you feel.

It's also a brand new game at many of the SBIR Agencies. The three biggest in terms of SBIR budgets, DOD, NIH and DOE, all have new leadership at the Program Director level.

Defense, the Big Gorilla with over $1 Billion of SBIR and STTR projects annually, has had Chris Rinaldi at the DOD SBIR helm for just a few months. He's still getting his feet wet. And he's got a bunch of new faces at the twelve DOD component desks as well, as DOD's had a bunch of recent SBIR office retirements including Connie Jacobs (DARPA) and Steve Guilfoos (AF). New game here for sure.

Energy still hasn't officially settled on the replacement for Larry James and has Vince Dattoria serving as Acting SBIR Program Director. No telling what's going to evolve there. But, DOE has done more than any other agency to use their Stimulus Funds for small business R&D projects, so there's hope.

But the biggest new game is at the NIH, where Jo Anne Goodnight recently announced that she is retiring from government service this month. No announcement yet as to who will be replacing her as NIH SBIR Program Director, but Kay Etzler is certainly qualified and capable of handling that job! Heck, she did it most of last year when Jo Anne was on temporary assignment to the Senate. I haven't asked her if she's even put her hat in the ring, but if they don't give Kay the job, watch out. That could very likely portend a significant shift in NIH SBIR policy.

Jo Anne will really be missed, especially by me. She and I haven't always agreed on SBIR policy implementation, but she's been a respected friend. SBIR Conferences just won't be the same without her. Her "SBIR 101" presentations are classic and legendary. She and Joe Hennebury from DOT (also recently retired) were mainstays as the primary cheerleaders for the Program. Now who's going to pick up that slack?

Another SBIR office that's lost a star is NIST. Clara Asmail, in my opinion the most creative thinker among the SBIR Directors, has moved to another NIST post. Hopefully what she started at NIST (see my column on this: Clever Clara...) won't be allowed to fade away.

So, it's pretty much a brand new game. On all fronts. Hit the Reset Button.

I predict this eighth SBIR CR will likely be for seven months, taking us to April 30th of 2011.

We'll have a few months of nothing doing while Congress re-boots and the 112th gets started. New SBIR Reauthorization bills will be introduced by the House and Senate Small Business Committees. Probably similar to the current ones, but hopefully a bit closer together in concept.

Here we go again. Monitor www.SBIRreauthorization.com for updates.

Meanwhile, there are three important events coming up this fall that The SBIR Coach will be participating in as a sponsor or speaker:

• The DOD's Beyond Phase II SBIR Conference in San Antonio (Sep 13-17),
• The National Association of Seed and Venture Funds (NASVF) Annual Conference in Baltimore (Oct 13-15), and
• The Fall 2010 SBIR National Conference in Oklahoma City (Nov 8-10).

If you're attending be sure to look me up and we can talk about your SBIR commercialization game plan. You'd better have one. Companies don't get the luxury of having Reset Buttons!
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