On December 3, 2004, the SBA issued a new "Final Rule" pertaining to SBIR size standards and eligibility for participation in the SBIR program. In brief, this new rule makes changes to 13 CFR § 121.702, which now provides added flexibility concerning ownership and control of an eligible small business.

Effective January 3, 2005, a small business can be majority owned and controlled by another entity such as a Venture Capital Company (VC), Employee Stock Option Plan (ESOP), Joint Ventures (JV), Trusts, or other small business concerns, as long as the entity itself is at least 51% owned and controlled by U.S. citizens and/or permanent resident aliens, and together with its affiliates, meets the 500-employee size standard.

The SBA has also released an Advance Notice of Proposed Rulemaking that seeks comments pertaining to a plethora of small business size standards that may be changed.

Germane to the SBIR program is a proposed rule that would allow VCs an exclusion from affiliation in size determinations for eligibility in the SBIR Program. The net effect of this action would allow large institutional and/or fortune 500 VCs to have majority ownership and control of a small business competing for SBIR funding.

The SBA has extended the cut off date to April 3, 2005 for accepting comments on the proposed rule changes. Your comments should be addressed via email to:

restructure.sizestandandards@sba.gov

Include RIN 3245-ZA02 in the subject line of the message.

The National SBIR Spring 2005 Conference will be held March 7-10, 2005 at the Hilton Omaha Hotel in Omaha, NE. The FLC Far West and Mid-Continent regions will have a display booth in the exhibition hall.

The DoD will be holding a National SBIR Phase II Commercialization Conference in San Diego, July 11-14, 2005.