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  • Funding reauthorization will stabilize SBIR programs

Photonics Spectra
Feb 2012
Laura S. Marshall,

BELLINGHAM, Wash. – The US House committee leaders and the Senate recently reached an agreement to reauthorize funding for the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs for another six years, which will help to stabilize and boost the photonics industry.

Legislation to reauthorize the programs – which are designed to spur technology innovation within the small-business R&D community – will be included as an amendment to the National Defense Authorization Act (NDAA), which sets the annual budget for the US Department of Defense.

“The SBIR and STTR programs are two of government’s most effective programs for spurring innovative ideas,” said House Small Business Committee Chairman Sam Graves (R-Missouri). “This deal not only gives the program stability, but it also improves the program by opening it up to more companies regardless of their financial structure, it increases the Phase I and II award sizes, and it puts a stronger emphasis on commercialization.”

Key points of the agreement include increasing venture capital participation to 25 percent for the National Institutes of Health, the US Department of Energy and the National Science Foundation, and 15 percent for the other participating federal agencies; raising Phase I and Phase II award levels for the first time since 1982; more access for small businesses to compete for R&D funds; greater coordination between the Small Business Administration and the participating agencies; and performance-based standards that encourage companies to focus on commercialization through Phase III of the program.

House Science, Space and Technology Committee Chairman Ralph Hall (R-Texas) said the agreement “will ensure the greatest return on taxpayer investment by helping us combat waste, fraud and abuse.”

The news was warmly received by photonics industry professionals, including SPIE CEO Eugene Arthurs, who pointed out that the programs are admired around the world.

“Many of our 180,000-person constituency work in small companies engaged in the high-technology business of photonics, and will greatly benefit from the stabilization and expansion of this program,” said Robert Lieberman, chair of the SPIE Engineering, Science and Technology Policy committee. “The industry as a whole – and the world economy – will benefit as well.”

The six-year extension will provide needed stability for companies wanting to participate, Lieberman added. “SBIR-initiated projects create photonics jobs and products for applications ranging from defense and security to biomedical diagnostics,” he said.

“Participating companies partner with other industry and academia in developing innovations that improve quality of life everywhere.” The House and Senate conference committee finished its work on the NDAA in mid-December, and it passed with a final vote of 283-186 in the House and 86-13 in the Senate before heading to the White House to await approval by President Obama, who already had committed to signing it.

“Because of this deal, businesses will have peace of mind for the next six years,” said Sen. Mary Landrieu (D-Louisiana), chair of the Senate Small Business and Entrepreneurship Committee and a longtime advocate of SBIR programs. “The nation’s innovators will have more access to federal research dollars, and the process by which they get the funding will be more efficient because we cut down the time for final decisions and disbursements.”

Government support of technological innovation and job creation through small businesses is important, lawmakers said. “We should be doing what we can to foster a vibrant small-business community and give our small businesses the tools that they need to succeed,” said Ranking Member Eddie Bernice Johnson (D-Texas), who was appointed as a member of the conference committee of lawmakers selected to reconcile the House and Senate versions of the NDAA. “The SBIR and STTR programs are such tools – they have been critically important programs for fostering innovation by small businesses.

“As we continue our efforts to keep our economy on the path to recovery, it is more important than ever that we make these programs more efficient, effective, and more responsive to the ever-changing high-tech sector and the demands of the global economy. I think the provisions we have included in the NDAA will have a positive impact on both programs.”


A business must qualify as a small business, as defined by the federal government, to participate in the SBIR program. A small business is eligible if:

• It has 500 or fewer employees.

• It is a for-profit and is independently owned and operated.

• Its principal place of business is in the US.

• It is at least 51 percent owned by US citizens.

The following criteria also must be met:

• The proposing firm must be the primary employer of the principal investigator involved in the research.

• All work on the project must be done within the US.

• Joint ventures and limited partnerships are permitted, but two-thirds of Phase I and one-half of Phase II work must be accomplished by the proposing firm.


For an STTR award:

• The small business must qualify as a small business. (Joint ventures and limited partnerships are permitted for the small business, provided that the entity so created qualifies as a small business.)

• The research institution must be a nonprofit university or college; a nonprofit institution owned and operated exclusively for scientific or educational purposes; or a contractor-operated FFRDC (federally funded R&D center).

• The small business must carry out at least 40 percent of the STTR project.

• The research institution must perform at least 30 percent of the effort.

• The business and the research institution must negotiate a written agreement apportioning intellectual property.

• Research work in Phase I and Phase II must be performed by the small business and the research institution in the US. Source: An Explanation of SBIR, Jade Research Corp.,

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