Innovation at Risk

Jonathan Ortmans, President, Public Forum Institute

One of the few effective government programs to support innovation is at risk. The language authorizing the Small Business Innovation and Research (SBIR) program is set to expire on March 20, and so far, disputes have hampered a reauthorization resolution. What is at stake? Millions of jobs and technological innovations that contribute to national defense, the environment, and health care, among many other areas.

Recognizing that the risk and expense of conducting serious R&D efforts are often beyond the means of many small businesses, SBIR has been channeling since 1982 a small portion of the federal R&D funds to these firms. SBIR reserves a minimum of 2.5 percent of R&D dollars for firms with fewer than 500 employees to conduct research that will enable them to bring technological and scientific breakthroughs to the marketplace.

SBIR rightly targets the entrepreneurial sector because that is the source of most radical innovations. Since its enactment, SBIR has allowed thousands of small businesses to compete for federal R&D awards during their critical startup and development stages. We have benefitted from the commercialization of breakthrough innovations, such as needle-less insulin patches, unmanned aviation, a promising malaria vaccine, and new way to use ultrasound rather than x-rays to detect breast cancer, through SBIR grant recipients like Amgen, Vanu, Qualcomm and Symantec.

Disputes over the issue of whether venture capital backed-firms can be eligible for SBIR funding have blocked efforts to pass a new SBIR reauthorization. We need to solve these issues quickly to ensure that SBIR funds are available to innovative entrepreneurs this year. Unfortunately, hurdles to the program have also come from other developments in Congress. The Senate Committee on Small Business and Entrepreneurship has had to ask the Department of Health and Human Services (HHS) to meet the statutory requirement for small firms now that the American Recovery and Reinvestment Act exempted $8.2 billion allocated to the National Institutes of Health (NIH) from the small business requirements of the SBIR at NIH’s request.

At a time when ambitious innovative firms constitute the lifeline of our ailing economy, cutting even such relatively small support is not prudent. We need to support them to ensure that they continue to create high-quality jobs and cutting-edge technology that reaches the public.

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