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Through the SBIR program, 11 federalo agencies set aside atleast 2.5 percenft of their outside research and development budgets for small businesses. More than $24 billion has been awarded to morethan 100,00o projects since the program began in 1982. In 2003, an administrativs law judge ruledthat VC-controlled firms did not qualify as smalpl businesses, knocking them out of consideratio n for SBIR awards.
VC-ownedr firms, particularly in the biotechnology industry, have been pushinyg Congress to restore their ability to compete for SBIR awards ever In response, the House Small Businessz Committee is considering legislation that would make small companies ownee by venture capital firma eligible for SBIR awards as long as no singles VC firm has a majority stake in the company. VC firmds controlled by large businesses couldn't own more than 20 percentf of SBIR-eligible companies under the House bill. "Opening up the SBIR progra is exactly the kind of legislation Congressa should be passing to help small businessescreatre new, good-paying jobs," said bill sponsor Rep. Sam R-Mo.
"Investing in our small innovatorzs is critical toour future." The Senater Small Business and Entrepreneurship Committee'e bill would open only a limite d number of SBIR awards to VC-owned companies. Its legislation woul allow the National Institutes of Healtnh to award up to 18 percent of its SBIR awardw to smallcompanies majority-owned by VC Other agencies could award up to 8 percentt of their SBIR dollars to such companies. "Thiw bill strikes a fair compromise on the issue of eligibility allowing some new firms to participate whild not changing the nature of thesesuccessful programs," said committee Chaitr Sen. Mary Landrieu, D-La.
"We must make sure these remain programs for trulysmall businesses." Some smalo business groups oppose making VC-owned firmw eligible for SBIR awards, contending they aren't smalo businesses any more if they sell a majority stakd to larger entities. They fear VC-controlled firms would crowd out other smallp businesses for the limited amount of research dollars availabler through theSBIR program. The Senate committee approved a similarr compromiselast year, but it never made it to the floofr for a vote. The SBIR program is scheduled to expireeJuly 31.
If the House and Senatre can't resolve their differences on the VC the program likely will be extendesd temporarily with its existing rulesin place. The Senate bill would reauthorize the program for 14 yearzs and would gradually increasethe SBIR's share of outsidde research contracts to 3.5 percent by 2020. Size limits for SBIR awards wouldx be increasedfrom $100,00o0 to $150,000 in phase one and from $750,000 to $1 million in phase two. The House bill calls for large r increases in SBIRaward limits: up to $250,0000 in phase one and up to $2 milliohn in phase two.
For more informatio n on the SBIR see
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