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Congress Approves Six-Year SBIR Reauthorization

After 14 short-term continuing resolutions and years of negotiations, the federal Small Business Innovation Research (SBIR) and Small Business Technology Tranfer (STTR) programs have been reauthorized through 2017. The legislation changes a number of features of SBIR/STTR, including making it possible for companies that are majority-owned by venture capital firms to receive awards. President Obama is expected to sign the bill in the near future.

Last week, the House of Representatives passed the National Defense Authorization (HR 1540) conference report, which had incorporated the SBIR reauthorization. The six-year term of the conference agreement was a compromise between the three-year reauthorization approved by the House in April and the eight-year term passed by the Senate earlier this month. Funding for awards will increase gradually over the six-year period. Federal science agency set-asides for SBIR will increase from 2.5 percent of their budget in the first year to 3.2 percent by 2017. STTR set-asides will grow from 0.3 percent to 0.45 percent.

The increase in agency set-asides will contribute to a significant boost in the size of awards. Phase I SBIR and STTR awards will increase from $100,000 to $150,000. Phase II will increase from $750,000 to $1 million. Up to 25 percent of the awards made by the National Institutes of Health, the Department of Energy and the National Science Foundation can be invested in companies that are majority-owned by venture capital firms, including hedge funds or other private equity firms. Other agencies can make up to 15 percent of their awards in venture firm-controlled companies.

A new pilot program will allow agencies to use three percent of SBIR funds for administration, oversight and outreach. This program helps carry out required data collection on awards and investigate abuses. It also will be used to encourage participation of companies in states that receive few awards.

Once signed by the President, the Small Business Administration will have 180 days to implement the revised rules, during which time the public will have a change to offer comments and recommendations.

Read HR 1540 and check its status at:

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