Copyrighted 2000-2008All Rights Reserved …an update on the current politics of SBIR Ann Eskesen,...

Copyrighted 2000-2008All Rights Reserved

…an update on the current

politics of SBIR Ann Eskesen, President

Innovation Development InstituteVoice: (781) 595-2920

[email protected]

Federal Laboratory ConsortiumMid-Atlantic Regional MeetingSeptember 15-17Cumberland, MD


Synopsis of presentation

If there is time - some consideration of where SBIR came from and how - now twenty-five years later - the program fits into present conditions

The source of the data which underpins my analysis -- with indication of the filter that represents

Recent political developments in the SBIR saga

Some of the background to the now three-four year battle over what SBIR is about


Innovation Development Institute (idi): keeping the SBIR recordPart of that very small group working on • development of the SBIR concept in the

1970’s • and then achieving passage of enabling

legislation which instituted the program government-wide in 1982.

In the years since, have been an advocate for the program, extensively involved in all matters related to SBIR reauthorizations and the range of other political, program implementation and developmental issues.


Innovation Development Institute (idi): keeping the SBIR recordTo support these efforts, we began very early to keep the SBIR record, tracking the detail of every SBIR award - a comprehensive cross-agency SBIR system - current, accurate and complete to most recently announced awards.These powerful relational databases have now evolved to include extensive information to chronicle and track the

• business and financial condition • technology base and IP holdings• technical capabilities

of every SBIR-funded firm.


SBIR: fundamentally

a political creation


September 30, 2008

14 days2 weeks336 hours20,160 minutes1,209,622 seconds


H.R. 5819 SBIR/STTR Reauthorization Act - (Amended title:: Modernizing the SBIR and STTR Programs

Introduced: April 16, 2008Marked up: April 18, 2008House Vote: April 23, 2008

SBIR-STTR Legislative effort in 110th Congress

A bill to reauthorize and improve the SBIR and STTR programs, and for other purposes

S 3362

Introduced: July 29, 2008


Probable impasse


Public Law 110-235 110th Congress

An Act To p rovide for an additional temporary extension of programs under the Small Business Act and the Small Business Investment Act of 1958, and for other purposes. <<NOTE: May 23, 2008 - [S. 3029]>> Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. ADDITIONAL TEMPORARY EXTENSION OF AUTHORIZATION OF PROGRAMS UNDER THE SMALL BUSINESS ACT AND THE SMALL BUSINESS INVESTMENT ACT OF 1958. (a) In General.--Section 1 of the Act entitled ``An Act to extend temporarily certain authorities of the Small Business Administration'', approved October 10, 2006 (Public Law 109-316; 120 Stat. 1742), as most recently amended by section 1 of Public Law 110-136 (121 Stat. 1453), is amended by striking ``May 23, 2008'' each place it appears and inserting ``March 20, 2009''. (b) Effective Date.--The amendment made by subsection (a) shall take effect on May 22, 2008. Approved May 23, 2008. LEGISLATIVE HISTORY--S. 3029: --------------------------------------------------------------------------- CONGRESSIONAL RECORD, Vol. 154 (2008): May 15, considered and passed Senate. May 20, considered and passed House. <all>

March 20, 2009Temporary reprieve


SBIR-STTR: at a

crossroads


Bringing SBIR into the 21st

century…. into the world in which we

now must do business


It is important to understand that SBIR-STTR isNOT ‘just’ (or perhaps even)

as a Small Business programBUT is instead as a powerful - and

important - business development and economic impact resource

affecting all segments of the economy


Structural changes in the economy Labor markets: Where do a major percentage

of the technically-trained in the US now work?

Conduct of R&D: Which population of those undertaking some of this early-stage, high-risk work have experienced major funding increases?

IP holders: Who have become a primary source of issuing patent activity - US and international?


Structural changes in the economy

Answer: Small Firms

Database Schematic


… as a population SBIR-STTR Awardees now represent the

largest single concentration of technical

and scientific talentSome 450,000 graduate engineers and scientists


That factors to almost three times as many graduate level engineers and scientists are currently working for

SBIR-involved firms than the total of all equivalently qualified persons employed by every US academic

institutions added together


Tracking Patent Activity in the period 1981-2007

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 20070

1000

2000

3000

4000

5000

6000

7000Total Number of Issued Patents

Number of Issued Patents to USFirmsNumber of Issued Patents toSBIR-Involved Firms


Setting SBIR Patent Issuance in Context:

0

500

1000

1500

2000

2500

1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007

0

1000

2000

3000

4000

5000

Total SBIR-STTR Awardees

Awardees New to Program

SBIR-STTR Awardee Patents

Patents issued to US Universities


SBIR issued patents

A US patent issues to an SBIR-STTR involved firm

approximately THREE-FOUR times a day


Total VC Funding Source: PriceWaterhouseCoopers; Thomson Venture Economics & NVCA MoneyTree Survey SBIR Funding source: Innovation Development Institute Comprehensive 4D tracking system

SBIR VC Dollars (in Billons)

All VC Funding (in Billons)

SBIR VC Investment as Percentage of all US VC

Funding

2000 $2.80 $104.70 2.67%2001 $3.00 $40.62 7.39%2002 $3.16 $22.03 14.34%2003 $2.72 $19.74 13.78%2004 $2.99 $22.46 13.31%2005 $3.02 $23.00 13.13%2006 $3.13 $26.55 11.79%2007 $3.28 $29.41 11.15%

SBIR VC Funding as Percentage of all VC Funding in US 2000-2007


Chronology of SBIR-STTR Legislative effort 1977-present 1977-81 A legislated, small-scale pilot effort in

National Science Foundation: o Senator Kennedy initiativeo Roland Tibbetts

1980-81 Voluntary $5M endeavor in the Department of Defense (DESAT)

1982 Highly controversial enabling legislation enacted by the US Congress making SBIR a government-wide requirement. Six years


Chronology of SBIR-STTR Legislative effort 1977-present

1983-87 Phased-in implementation across (then) eleven participating federal agencies

1986 First SBIR Reauthorization: primarily simply --- extended the sunset provision and, -- critically, legislatively omit 6.6 funding in DOD from base pool. Six years from 1988

Essence of the enabling legislation: To require of every federal agency with an extramural R&D budget in excess of $100M to establish to a common form and format and a required SBIR percentage a competitively bid R&D program - SBIR - for which only small firms would be eligible to compete.


Chronology of SBIR-STTR Legislative effort 1977-present 1992 Second SBIR Reauthorization - further extended to

sunset. Six more years from 1994. Legislation additionallyo increased extensively the scale of the program effort o underscored the critical importance of bringing funded

projects to in-use condition ando made important modifications to how the program

works - primarily to support the achievement of in-use condition. CICA provision

1997 First reauthorization of the STTR Program 2000 Third SBIR reauthorization - EIGHT more years.

First signs of serious trouble 2001 Second STTR reauthorization


Chronology of SBIR-STTR Legislative effort 1977-present2000 Third SBIR reauthorization Instead of tackling reauthorization in preceding Congress, related work did not begin until 106th. Sheer size and scale of SBIR had begun to capture attention. Efforts to try capture parts of the program The September 30, 2000 SBIR sunset came and went with NO passage of SBIR enabling legislation. In a very controversial move, the argument was made that Continuing Resolution covered SBIR. Some of the agencies balked - SBIR Congressional supporters pressured SBIR Reauthorization was achieved in the closing minutes of the lame duck 106th in mid-December, 2000


Year Span Total SBIR-STTR Dollars % of all SBIR-STTR Dollars

1983-1987 $1,586,697,642 6.30%1988-1992 $2,797,635,102 11.11%1993-1997 $5,180,414,479 20.57%

1998-2002 $7,493,715,518 29.75%

2003-2008 $8,128,611,484 32.27%

Dollar Totals

Percentage all SBIR-STTR program $$$ 100.00%

SBIR-STTR Dollar Allocations in Five-Year Increments

$25,187,074,225


Doing the SBIR-STTR numbers (September 2008)

A total of 77,798 Phase I projects have been funded to date

So far 29,631 have converted to more substantial effort of Phase II

Phase I awards: 2004 - 4881; 2005 - 4425; 2006 - 4469; 2007 - 4351

17,086 SBIR-STTR funded projects are currently underway

…. involving 5740 small firms


Doing the SBIR-STTR numbers (September 2008)

A total of 17,591 small firms have been in receipt of SBIR-STTR award over period of the program (1983-most recently announced awards)


Total SBIR-STTR funding to date 1983-2008 (September 2008)

$25,260,835,696Phase II

74%

Phase I26%


Why is there Congressional interest

inSmall firms Technology innovation?


…technology developmentDefines the health of an industrialized economy

Is the single most important factor in

Quality new job creationWealth creation

Achieving economic growth


Background to development of SBIR: late 1970’s-early 80’sSince WW11, US had been world leader in most fields of technological and scientific endeavor. However, by late 70’sThe country was in recessionLarge numbers of jobs in

‘traditional’ US industries were heading offshore


Background to development of SBIR: late 1970’s-early 80’s

There was solid and growing evidence that

small firms were the major job creators and that

technology development was a major stimulus to job creation



and yet .. the career path of most engineers and scientists doing leading-edge work in technology development was the university, large firm, major non-profit and/or federal facility - sometimes life-long; often in sequence



very high interest rates Capital access issues

virtually no Venture Capitalo Viciously high capital gains taxeso No IPO public markets

Dow Jones languishing at less than 1000



Very few high tech start-ups.

In many states …there were none.


Other critical Congressional initiatives in period

Major reduction in Capital Gains tax rates

Modification of the Prudent Man Rule (ERISA)

Bayh-Dole amendment


to support and to encourage technology innovation in

small firms

Two very small-scale pilot programs in NSF and DOD became the basis for SBIR - a government-wide program designed explicitly

In the face of major resistance and opposition to any change by the vested interests in the status quo – academic, large business and government agencies


Primary objective of SBIR program from the get-go

Conversion of Research & Development into

technological innovation and in-use condition.


The Business of Phase III

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Copyrighted 2000-2008All Rights Reserved …an update on the current politics of SBIR Ann Eskesen,...

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