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Implementing the SBIR and STTR Reauthorization: Our Plan of Attack

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Implementing the SBIR and STTR Reauthorization: Our Plan of Attack

By esrobins
Published: February 21, 2012 Updated: April 30, 2012

We are tremendously excited by the recent reauthorization of the Small Business Innovation Research and Small Business Technology Transfer (SBIR/STTR) program.  The program is an important one to small businesses, each year providing more than $2 billion of R&D funding to innovative small business across a broad range of technologies.  After a long series of temporary reauthorizations, Congress voted to reauthorize the program and the President signed the bill into law on December 31, 2011.

At SBA, we are now laser-focused on implementing the reauthorization. I thought it would be helpful for the small business community and other stakeholders to lay out our basic plan of attack for implementation.

Apologies if the post runs a bit long, but I thought it would be helpful to lay out the specifics of the SBIR program in the context of how the process works in general.

Regulations 101

Remember the Schoolhouse Rock cartoon about how a bill becomes a law? Unfortunately, they never did the sequel on “How a law gets implemented.”  In this case, we’re focused less on hoping and praying and more on rolling up our sleeves and getting to work.

The quick story is that the responsible agency (in this case SBA) must translate the law (statute) into more detailed regulations and directives that govern how the program will work and will be administered.  As you can imagine, there are a very precise set of rules and procedures about how this rule-making should be done.  For the wonks reading this, the general process works in the following way:

  • The Agency drafts a proposed rule or amendments to a directive, and includes consulting the the SBA Office of Advocacy.
  • The proposed rule and amendments to the directive are published in the Federal Register and posted on Regulations.gov for a 60-day public comment period.
  • The Agency reviews and considers all comments and modifies rule or directive as appropriate.
  • The final rule or directive is published, including SBA’s response to comments and an effective date.

There aren’t a lot of short cuts here – by law the process is set up to have consistency and safe guards for all regulations across all agencies.

There are two governing bodies of rules for SBIR/STTR that we need to modify before the changes can take effect.

  • SBA size and eligibility regulations. These are broader SBA regulations that define what constitutes a small business, and the eligibility requirements for the SBIR and STTR programs. Here we will address the provisions in the reauthorization relating to venture capital participation, domestic ownership, and affiliation by modifying these regulations as they relate to the SBIR and STTR programs.
  • The SBIR and STTR policy directives.  The policy directive is not a regulation, but is a directive that provides specific guidance to the agencies on how to administer the program.  We will amend the directive to further define how the provisions of the statute will be implemented.

SBA has responsibility for both the regulations and directive.

Timeframes

Congress has given us an aggressive schedule for delivering the changes, including publication of a revised policy directive within six months.  We are doing everything within our power to deliver on those time frames.  While there are more specific timetables for different provisions and reports, broadly speaking we are working on three paths.

First, we have just issued guidance to the agencies that for fiscal year 2012, per the statute, agencies should raise the set aside to 2.6% for SBIR and .35% for STTR.  For all other provisions, agencies should continue to work within the existing regulations and policy directive, until those regulations are amended and the policy directive is updated.

Second, for changes in the size regulations relating to venture capital participation etc., Congress tasked us with getting proposed regulations out within 120 days (end of April), and a final rule done within one year (end of 2012). 

Third, for the policy directive the target is 180 days (end of June). Technically we should use the plural since the policy directives for SBIR and STTR are distinct. 

In the case of the size regulations, the revised rules won’t take effect until the regulations are published (statutory target - end of 2012).  For the policy directive, the new rules will take effect when we publish the revised policy directive.

Process and Public input

A critical component is getting public input from all stakeholders in the program.  For both the proposed size regulations and the policy directive, our plan is the following: 

  • After we publish the proposed regulations and the policy directive, we will conduct an open, 60 day public comment period in which anyone can submit comments, suggested revisions, or other information via Regulations.gov.  Since we expect the timing of the two to be different, we expect that each will have its own separate comment period.
  • We plan to maintain a fully open and transparent process.  So during the rulemaking process we are not taking closed door meetings with different groups.
  • In an ideal world, we would have been able to set up opportunities for public input/discussion before we even started drafting (with an Advanced Notice of Proposed rulemaking). Unfortunately, the tight statutory timelines made this difficult.
  • Consistent with that principle of transparency, as we publish the proposed rules, we will cite alternatives that we considered for different provisions, and tee up specific places where getting public input is particularly important.

A few more thoughts on the process as a whole and the future:

  • SBA is not doing this alone.  SBIR program managers will have meaningful opportunity to provide input.  We also intend to have a robust, proactive outreach program to encourage the public and stakeholders to comment and participate in the process.
  • Our philosophy is “Don’t let the perfect be the enemy of the good”.   We aim to get out very good rules relatively quickly, then get meaningful input from the public, and then improve and iterate from there.
  • We also need to build in a process for ongoing iterations and improvement in the policy directive.  We intend to  update the policy directive as often as needed.

I hope this is helpful to the small business community.  Now it’s time to go and get back to work on the rules.  The clock is ticking.

Related

Sean Greene is the Associate Administrator for Investment and Special Advisor for Innovation at the U.S. Small Business Administration

About the Author:

Sean Greene
Sean Greene is the Associate Administrator for Investment and the Special Advisor for Innovation at the U.S. Small Business Administration.

Comments:

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SBIR began with Congressional act in 1982. There are currently 11 federal agencies participating. In FY 2008, there will be at least 5500 awards granted totaling over 2.5 Billion Dollars. The purposes include stimulating technological innovation, strengthen the role of small business, increase the commercialization of the research results and encourage participation of socially disadvantaged groups.
From my 20+ years experience with SBIR/STTR, if there is one are that requires tighter rules it is the Phase-III. This is where we, small biz, really can reap the fruits of success (and hard work on Phases I/II). But the DoD often exhibited disregards for what Phase-III means, bypassing the small biz and going straight to the Primes. The PD should create a higher bar to pass before the DoD can ignore the small biz. For example -- purchasing SBIR-related technology from the Primes can be equated to the DoD "dealing with stolen property." There has to be personal accountability before program managers will pay attention (i.e., the law needs teeth).

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