Funding Small Business Research And Development Through Federal Agency Budgets

2016-06-24T12:13:01+00:00 June 24, 2016|
Funding small business research and development through federal research agency budgets may be changing (Credit: Pixabay)

(Click to enlarge) Funding small business research and development through federal research agency budgets may be changing (Credit: Pixabay)

Away from earth’s atmosphere, every aspect of an astronaut’s life and mission must be engineered perfectly; there is no room for error in the vastness of space. Among the multitude of technologies ensuring astronauts’ survival, Giner, Inc. has designed a smaller, cleaner, and more reliable system for breaking water molecules into the oxygen required for breathing, which was made possible by a grant from the Small Business Innovation Research (SBIR).

SBIR and Small Business Technology Transfer (STTR) grant programs are designed to help small businesses commercialize new technologies by providing research and development (R&D) funding. Currently, funding for these small business-oriented programs comes from federal agencies whose contribution is tied to their extramural R&D budget. Agencies whose extramural R&D budget tops $100 million contribute 3.2 percent of their budget to SBIR, and agencies whose extramural R&D budget exceeds $1 billion devote 0.45 percent to STTR. SBIR and STTR allocation percentages are wide reaching; National Science Foundation and National Aeronautical and Space Agency contribute to both, with another nine agencies adding to SBIR and three agencies to STTR. These programs are set to expire in September 2017.

The House and Senate Small Business Committees have passed legislation to reauthorize the programs and to increase SBIR and STTR funding levels through H.R. 4783 and S. 2812, respectively, following three hearings this year. Both bills would increase funding from its current levels and both would require reauthorization again in 2028. The House bill would increase agency contributions to both programs until 2022; rates would then remain flat until 2028. Contributions to SBIR would rise to 4.5 percent by 2022 while contributions to STTR would increase to 0.6 percent in the same time frame. The Senate bill would see agency contributions rising past 2022, with SBIR increasing to 4.5 percent by 2022 and 6 percent by 2028, while STTR would increase to 0.6 percent by 2022 and 1 percent by 2024 and then remain flat until 2028.

H.R 4783 was also referred to the House Committee on Science, Space, and Technology. During a hearing last week, committee members from both parties expressed concern over increasing SBIR and STTR funding at the expense of other science programs. Committee Chairman Lamar Smith (TX-21), while lauding the work of SBIR and STTR companies, described the arrangement as a tax on basic research and held the hearing, in part, to determine if this tax is hurting fundamental scientific research. Representative Katherine Clark (MA-5) added that more research funds are needed, saying, “We need to increase the pie, not reallocate the slices.” Witnesses at the hearing all praised the benefits of SBIR and STTR programs and noted that more funding for these programs would increase innovation. However, the witnesses recommended increasing science agency funding overall while holding the percentage allocations for SBIR and STTR steady at the current level to avoid cuts to basic research.

Changes to the SBIR and STTR funding percentages could have a large effect on science budgets in the upcoming years since federal agencies contributed $2.1 billion from their budgets to SBIR and $254 million to STTR in 2013.