The following is a letter from Ann Eskesen, long time SBIR advocate and president of the Innovation Development Institute, Swampscott, MA - www.InKnowVation.com

Subject: CALL to ACTION: House to VOTE on seriously flawed SBIR reauthorization bill on Wed April 23, 2008 H.R. 5819 Wednesday, April 23, 2008

Contact your Congressional Reps. RIGHT NOW urging that they NOT enable passage of this seriously flawed bill

Don't know your Member? Use this useful C-Span Congressional database:
http://www3.capwiz.com/c-span/dbq/officials/directory/directory.dbq?command=congdir

Dear SBIR community:

As many of you are aware, the SBIR enabling reauthorization will sunset on September 30, 2008. There is timely need to get to appropriate reauthorization. Current and would-be SBIR awardees need this; to address our seriously troubled economy demands strong support of the technology development that underpins the health of an industrialized economy. SBIR is a proven, key factor in that process - see discussion below. Hence, the fact that the House is about to vote would appear to be good news. However, the untimely haste and manner of approach with which certain Members and powerful lobbyists are now pushing HR 5819 speaks to an approach to reauthorization that longtime SBIR advocates find very disconcerting and almost entirely energetically oppose.

You might find interesting the following article which appeared April 11, 2008 in Fortune magazine
http://money.cnn.com/2008/04/03/smbusiness/pretending_small_SBIR.fsb/index.htm?section=magazines_fsb

You need to step up to the plate and be heard. This is YOUR program. Fight for it!

• Limited hearings on SBIR reauthorization have been held and almost the entirety of invited witness lists explicitly excluded those who had expressed concern about provisions at the heart of the bill which will radically limit who is likely to be in receipt of the major percentage of SBIR support.
  
  In other words, HR 5819 explicitly give specialized access into SBIR funding to a significantly broadened base of VC funded firms. Applicant firms which do not meet VC criteria - either at this point in their development or, for many, ever - will effectively be squeezed out. There is a hugely important role and a major connection between SBIR and VC firms which goes back to the earliest days of the program BUT NOT to the exclusion of everyone and everything else. Important technology development is about much more than projects which target large markets and high ROI to the investment community.

• A tripling of the size of Phase I and Phase II AND an almost entirely unrestrained capacity of agencies to make very large awards outside normal boundaries could have enormous adverse impact. With most of them in NIH but several in DOD over 200 Phase II awards have been recently made in amounts over $2M per - - some being between $5 and over $8M each. How many promising Phase Is are not made and quality Phase II rejected when awards on this scale are being made.
  
  Institutionalizing this large project/large award practice will almost certainly radically reduce the number of awards which any agency can (and will) make. In a program that is already highly competitive, there is major concern that less experienced firms and those working on projects of smaller scale or of earlier stage in development will inevitably lose out. Is that you?
  
  Reduction in awards totals has already been happening. The number of Phase I awards now made annually is significantly reduced since 2004 Where is that reduction being felt most keenly?
  • Largely among the younger, smaller firms whose numbers in SBIR have been dropping significantly,
  • and in those states which were already under-represented in SBIR relative to their population size and which, not inconsequentially, are also the states in which VC is, to say the least, already thin on the ground.

  Do VC advocates really expect anyone to believe that if HR 5819 passes they will increase at all the amount of their investment(s) in firms doing business in states they have largely previously ignored? Your firm? Your state? Speak up!

• Efforts by longtime Congressional supporters of SBIR to introduce any modifying amendments to maintain the highly competitive but open-access which has defined SBIR activity to date have been systemically rejected. Pro- HR 5819 advocates are supported and backed by a powerful lobby which has already spent many millions on this now three-year long effort to capture SBIR. They are not easily ignored and, for whatever their reasons, many Members have bought into the idea that the criteria that drive VC investment decisions should be those which define SBIR also. Flawed reasoning.

• Having been reported out of the small business committee over the objection of other members on committees which also have jurisdiction over SBIR - Science and Armed Services - the bill was pushed through markup last Friday afternoon (April 18) when most Members are heading to their districts and, more importantly, in the hour or so BEFORE the announced time for mark-up. When non-supporters of HR 5819 arrived at the posted time to participate in the mark-up process, they were met by proponents leaving the meeting which had actually begun some time earlier. The real time of the meeting had been pushed up without announcement. Business done - fait accompli

• HR 5819 was placed with the Rules Committee for Monday April 21 with provision for any amendments required to be in place by Tuesday 10AM and will be evaluated by Rules by 5PM - a timetable difficult to meet at the best of times; impossible in these positively underhand circumstances.

• The bill is expected to be brought before the Full House for vote on WEDNESDAY afternoon April 23.

At first blush, HR 5819 provisions may appear innocuous, maybe even desirable - obviously awards need to be larger. There has not been an award size adjustment in a long time; and who can argue supporting high-growth firms is a good thing - right? SBIR has been a very successful program and everyone likes it. House leadership is in favor. Obviously we need to continue the good work. Let's vote yes. NO!

Very rapid - nigh clandestine - movement of the legislation through the system encourages those less familiar with the ramifications of a particular piece of legislation to vote without their having had time to find out more. This is very clever strategy - which could be disastrous in a community which tends to have limited political involvement. YOUR MEMBER NEEDS TO HEAR FROM YOU - NOW! - that this bill is not what it seems, Encourage them to support an open discussion into how SBIR needs to be supported towards remaining entirely relevant to the radically changed conditions in which you must now do business. The world is a very different place from what it was the last time in which SBIR was seriously examined .... in 1992. This is the discussion we need to be having - not how to give privileged access to any particular segment of the technology based small business community.

What better time to be having that discussion than now when in a few months we will soon have a new President facing the challenge of needing to tackle a range of serious economic problems and concerns and all committed to the notion of change?

Options:

• Introduce amendments to HR 5819 - but this had to have been by submission to the Rules Committee before 10AM Tuesday. Introduction on the floor is not likely by Members not previously active in SBIR legislative efforts and who may not want to be seen as challenging house leadership.
• After the main vote by the full House, offer a "Motion to Commit" i.e. request that the bill be sent back to the initiating committee - in this case House Small Business for further consideration. Probably our best than at this point
• Vote against HR 5819.

  Requesting that Members seriously consider voting against SBIR is devastating for those of us who have been lead advocates for the program from its earliest days. That we would even consider this now is testament to the seriousness of the situation. Nonetheless, it will not something easily done by those Members who appreciate the longtime importance of SBIR to the small business and technology innovation community and - critically - to the US economy. HOWEVER, for reasons briefly discussed, passage of HR 5819 could have major adverse effects on continuing access to SBIR support

  • by early stage and very small firms and
  • by those who are likely never to be candidates for serious venture capital consideration

    - in other words, most of you to whom this letter is addressed.

    Even if not successful, enough no-votes would strengthen the Senate hand where cooler heads seem currently to prevail re. addressing more appropriate SBIR reauthorization than that which has been developed in the House.

Let it be made very clear -
if HR 5819 as proposed by
the powerful lobby of the Venture Capital and Biotech industries
is allowed to stand, that diversity of talent access
will be a thing of the past. The lion's share of SBIR support
will be taken ONLY by firms which meet the criteria of the VC.

Proponents for this very important business and economic development program - almost all of whom energetically oppose HR 5819 - have every right to be very proud of the extraordinary range of technical achievement and profound economic impact by what are now over 17,000 firms which have participated in almost 75,000 projects over these twenty-five years. With the SBIR Community arguably now the largest concentration of technical talent and with over 85,000 issued patent already in place and a rate of issuance now at 4-5 patents a day - a population base and technology development record which far exceeds any ther segment of the research community - by almost any measure, SBIR can be judged an extraordinary achievement. Ironically at a time when the integrity of the program is under attack, SBIR is an approach to supporting the all-important technology development which almost every other major economy now seeks to emulate.

The primary criteria of selection for SBIR support have always been the validity of the technical and scientific approach, the perceived ability of the applicant to do the job and the all-important focus on, by whatever appropriate means, getting the project to use-condition.

At a time when the economy is in serious trouble and the need has never been greater for the continued effective functioning of SBIR as a critical economic impact resource, it is profoundly disturbing that a very few extremely well-heeled players representing a very small sub-set of the diversity that is SBIR are pushing very hard radically to limit who will receive SBIR support from now on. That they have made it this far and have gained the support of powerful Members of Congress is even more discouraging.