SBIR/STTR Reauthorization

Chad Moutray

On March 9, the Senate Small Business and Entrepreneurship Committee reviewed the “SBIR/STTR Reauthorization Act of 2011” (S.493). It would reauthorize the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs for the next eight years. Both programs are currently set to expire on May 31. At a hearing last month, Sen. Landrieu (D-LA) said, “These programs are providing the government and the private sector with cost-effective technology and scientific solutions to challenging problems.” Reflecting the bipartisanship support of this bill, Sen. Olympia Snowe (R-ME) said the following when the bill was introduced on March 4: “These crucial job-creation programs foster an environment of innovative entrepreneurship for the nation’s small firms most likely to create jobs and commercialize their products, and it is critical that we provide these programs with certainty for the future.”

Overall, this bill is similar to the one that passed the Senate in December. Here are some of the highlights:

  • It would allow firms which are majority owned by venture capital firms eligible for up to 25 percent of SBIR funds at the National Institutes of Health, National Science Foundation, and the Department of Energy. For other agencies, the threshold would be 15 percent.
  • It would increase SBIR funding at the agencies from 2.5 to 3.5 percent of federal agency extramural research and development budgets over 10 years. For STTRs, it would go from 0.3 to 0.6 percent over 6 years.
  • It would increase Phase I awards from $100,000 to $150,000, and Phase II awards would go from $750,000 to $1 million.
  • It would reauthorize the Federal and State Technology Partnership (FAST) Program and Rural Outreach Program.

One of the issues which held up this legislation for years has been the inclusion of venture capital firms in the process. As former Chief Counsel for Advocacy Jere Glover noted in his hearing testimony, though, this legislation includes a compromise which “allowed majority-VC owned businesses into the program, but limited their participation to ensure that small businesses not backed by large firms are not edged out of the program.” (A long-time backer of SBIR and STTR, Mr. Glover also does an excellent job in his testimony of making the case for these programs, using a wide of array of figures and empirical evidence.)

The bill has the support of a wide variety of organizations, according to the Senate press release, including: the Biotechnology Industry Organization, the Small Business Technology Coalition, the National Small Business Association, the U.S. Chamber of Commerce, the National Federation of Independent Business, the National Venture Capital Association, local technology groups, and various universities.

Assuming this Act passes the Senate, it would then go to the House, which did not pass it in the last Congress. The House Small Business Committee is expected to work closely with the House Committee on Science, Space, and Technology on its version of SBIR/STTR Reauthorization. After Congress signed a temporary extension of these programs in January, Rep. Sam Graves (R-MO), who chairs the House Small Business Committee, told Politico, “I am eager to get to work with my colleagues on both sides of the aisle to ensure a more permanent solution is signed into law.”

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