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Agencies Encouraged to Use Recovery Funds on Innovative Small Businesses

Jonathan Ortmans, President, Public Forum Institute

United States Senate Committee on Small Business and Entrepreneurship Chair Mary Landrieu, D-La., wrote on Thursday (05/07/2009) to Secretary of Defense Robert Gates, Secretary of Energy Steven Chu, Secretary of Health and Human Services Kathleen Sebelius and National Science Foundation Director Arden Bement, urging them to use their R&D Recovery Act funds to accelerate the commercialization of Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) projects.

Currently, 2.8 percent of the total extramural R&D budget at these agencies, including their ARRA (American Recovery and Reinvestment Act) funds, must be allocated for competitive grants to small businesses through Phase I and II of the SBIR and STTR programs. An additional option to fund SBIR and STTR Phase III contracts does not come out that percentage allocation, but from the larger R&D budget. The letters bring attention to the option of distributing ARRA R&D funds to directly fund projects from the SBIR and STTR programs as they enter Phase III  (the period during which innovation moves from the laboratory into the marketplace). Sen. Landrieu encouraged these agencies to take advantage of this opportunity to distribute their ARRA funds.

The Committee Chair also requested information about how much of the R&D money these agencies received from ARRA has been classified as extramural R&D, as well as about how these agencies are implementing the SBIR and STTR programs under ARRA.

Senator Landrieu’s effort highlights the important role attached to entrepreneurs in our economy's recovery. Small firms are the economy’s engine of growth, pumping almost a trillion dollars into the economy each year and creating 60 to 80 percent of America’s new jobs annually.

This effort also stresses the need to push technologies in the innovation pipeline towards the market to achieve improvements in national security, health, energy, and other areas of top priority. In this regard, entrepreneurs employ 41 percent of the nation's high-tech workers who generate about 13 times more patents per employee than large, established firms.

The letters also signal the Committee’s commitment to support the SBIR and STTR programs. Sen. Landrieu wrote in the letters: “The SBIR and STTR programs allow small R&D firms – America’s innovation lifeline – to create high-quality jobs and cutting-edge products. Consequently, we believe the SBIR and STTR programs are fundamental to our nation’s economic recovery.”

Click here to read the letter to Secretary Gates.
Click here to read the letter to Secretary Sebelius.
Click here to read the letter to Secretary Chu.
Click here to read the letter to Director Bement.

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