Small Business Innovation Research (SBIR) is an important federal program that for 25 years has encouraged small businesses to realize their technological potential and provided incentive for them to profit from its commercialization.
Since its establishment in 1982, as part of the Small Business Innovation Development Act, SBIR has helped thousands of small businesses to compete for federal research and development awards. SBIR has produced results that have contributed to the nation’s defense as well as helped protect the environment, advance health care, and improve information management. It has even helped launch entire sectors such as the nation’s fledgling service robotics industry. And yet the program may be in trouble. Unless Congress acts within the next 15 months, the program will be automatically sunsetted at the conclusion of fiscal year 2008.
Each year, 11 federal departments and agencies, including the Defense Department, are required to reserve a small portion of their research and development funds for awards to U.S.-owned and independently operated, for profit, small businesses, employing less than 500 employees. These small businesses submit proposals on R&D topics designated by each agency. The agencies evaluate the proposals and make SBIR awards based on small business qualification, degree of innovation, technical merit, and future market potential.
The program is highly competitive with only one out of every 10 proposals on average resulting in a contract. David Parish, president of Omnitech Robotics, believes that distributing funding to competitive entities at every level helps ensure the most effective and productive use of SBIR funds.
According to the Small Business Administration website, SBIR targets the entrepreneurial sector because that is where most innovators thrive. In fact, more than 54 percent of the scientists and engineers involved in research and development in the United States are employed by small businesses. Leonard Haynes, president of IAI, believes that the key to the SBIR program is its ability to support the initial stages of high risk/high payoff research that small companies cannot afford and that large companies are often unwilling to undertake.
While some argue that universities are the proper place for early stage research, several factors, including increased restrictions on the export of technology, the expansion of what is defined as restricted technology, and the growing prohibition of publications in restricted areas, are making it difficult for them to pursue such activities in many important areas.
Unencumbered by these factors, small companies are where the vast majority of critical technology transition and innovation is destined to take place. Yet the risk and expense of conducting serious R&D efforts are often beyond the means of these same small businesses. The SBIR program addresses this conundrum by funding the critical startup and early development stages of R&D and encouraging the commercialization of the resulting technology, product or service. Important innovations resulting from the SBIR program have contributed to everything from medicine to materials to homeland security.
The value of the SBIR program is perhaps no better illustrated than in new, early stage industry sectors based on high potential, emerging technologies. A great example of this is the contribution that the SBIR program has made to the emergence of unmanned systems. It further helped spawn the creation of a new “service robotics” commercial market segment expected to grow to be a multi-billion industry within the next decade.
Although the overall SBIR program investment in unmanned systems technology has been relatively nominal, the impact of even this modest of amount of funding has been substantial and serves as a valuable microcosm of the overall effect of the SBIR program.
With support from the SBIR program, many small robotics technology companies have taken good ideas from inception through feasibility determination and subsequently produced applications and solutions now being fielded by the Defense Department. These resulting products of the SBIR program have delivered greatly increased capabilities.
Despite the real and tangible value delivered by the SBIR program during the past 25 years, the program is in danger. Congress must act by September 2008 to reauthorize the program. Because the program has been so successful, many believe that reauthorization of the program will be “automatic.” That does not appear to be the case. In fact, according to Rick Shindell, president of Zyn Systems, the last SBIR reauthorization was a real battle, actually failed for a time, and ultimately got through at the last minute by the skin of its teeth.
There are various factors at work that similarly threaten reauthorization of the SBIR program this time around, including Congress’ attention on other critical issues, increased pressures on the federal budget, and even the simple fact that so many newly elected representatives are not yet familiar with the SBIR program.
Given the proven value of SBIR and its contribution to the nation, NDIA has contacted the administration and members of Congress on the importance of reauthorizing SBIR and will continue to monitor the progress of the program.
William Thomasmeyer is president of the National Center for Defense Robotics, a non-profit organization focused on helping accelerate the transition of unmanned systems technology for our nation’s defenders and vice-chair of the newly formed NDIA Robotics Division.
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