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Through the SBIR program, 11 federao agencies set aside atleast 2.5 percen t of their outside research and development budgets for smallk businesses. More than $24 billion has been awarded to morethan 100,0009 projects since the program begamn in 1982. In 2003, an administrative law judge rule dthat VC-controlled firms did not qualifh as small businesses, knocking them out of consideratiohn for SBIR awards. VC-owned particularly in the biotechnology industry, have been pushing Congres to restore their ability to compete for SBIR awardsxever since.
In response, the House Smalk Business Committee is considering legislatiojn that would make small companiesd owned by venture capital firms eligible for SBIR awardsw as long as no single VC firm has a majorit y stake in the VC firms controlled by largebusinesses couldn'tt own more than 20 percent of SBIR-eligible companies under the House bill. "Opening up the SBIR programk is exactly the kind of legislation Congress should be passing to help smalpl businessescreate new, good-paying said bill sponsor Rep. Sam Graves, "Investing in our small innovators is critical toour future.
" The Senatre Small Business and Entrepreneurship Committee's bill woulfd open only a limited number of SBIR awardds to VC-owned companies. Its legislation would allow the Nationalo Institutes of Health to award up to 18 percen of its SBIR awards to small companies majority-owned by VC firms. Other agencies coulr award up to 8 percent of theirf SBIR dollars tosuch companies. "Thisa bill strikes a fair compromise on the issue ofeligibilitty requirements, allowing some new firms to participat e while not changing the nature of theses successful programs," said committere Chair Sen.
Mary Landrieu, "We must make sure these remain programs for truly small Some small business groups opposwmaking VC-owned firms eligible for SBIR awards, contending they aren'tt small businesses any more if they sell a majoritgy stake to larger entities. They fear VC-controllesd firms would crowd out other small businesses for the limiter amount of research dollars available through the SBIR The Senate committee approved a similad compromiselast year, but it neverd made it to the floor for a The SBIR program is scheduled to expiree July 31.
If the House and Senate can'g resolve their differences on theVC issue, the programk likely will be extended temporarily with its existing rulezs in place. The Senate bill would reauthorize the progran for 14 years and would gradually increasthe SBIR's share of outside research contracts to 3.5 percent by 2020. Size limits for SBIR awardss would be increasedfrom $100,000 to $150,00 in phase one and from $750,000 to $1 millionh in phase two. The House bill callsx for larger increases in SBIR award upto $250,000 in phase one and up to $2 million in phase two.
For more information on the SBIR see
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