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SBIR Reauthorization

This page was last updated on 28 July 2012.
(Updates are made only when there's something significant to report.)


7/27/2012   SBA Publishes SBIR and STTR Policy Directives for Review

To the SBIR Community:


The SBA put three SBIR/STTR Policy Directive documents up on the Federal Register Public Inspection page today.  These are pre-publication PDF files.  Actual publication date will be August 6th.


See the links at .  Scroll down to the SBA section.


Here’s what’s there and a quick link to the documents:

  The SBIR Policy Directive (175 pgs) -  

  The STTR Policy Directive (191 pgs) -

  Notice of Webinars (3 pgs) -


Comments will be collected up through October 5, 2012.


Guess we all have some reading to do!


Fred Patterson

The SBIR Coach


Rick Shindell posted a new issue of his SBIR Insider this morning. 
See it at:

Read his open letter to the SBA here:

An Open Letter to The Small Business Administration

Dear Ms. Mills, top level bureaucrats, the good people in the SBA trenches, and my valued readers:

I offer this open letter to you because the web site failed to take my comments on the SBA's proposed rule, RIN: 3245-AG46 (I received many complaints from my readers with similar experience). Consequently, I am writing this to you in a manner by which it will get read, even if not considered by SBA as a comment.

The SBA has been serving the U.S. small business community for more than 59 years, many of which were of supreme importance to the growth and well being of our American small businesses.

The ebb and flow of SBA's effectiveness has varied throughout the years, often affected by the mood and wishes of congress, the administration, the President and his appointees who lead the SBA. I have been a supporter of SBA for more than 25 years, even during the "dark periods" of the SBA's Hector Barreto administration. You may remember that the Washington Post once called Barreto "the next Michael Brown."

That being said, the SBA is now proposing something so bad and harmful, that they are making Barreto look good!. Of course you know I'm referencing the complex, obfuscating and unnecessary language in your proposed rule that defines a "domestic business concern." This is done in such a manner that would allow a Creaton such as Iran's Ahmadinejad to easily establish a U.S. domestic business concern and structure it in a way that you wouldn't even know it was allowing him to get SBIR business.

Admittedly that example is melodramatic, but can you explain to our community why you even brought this "ill defined" term "domestic business concern" into the SBIR program? The SBIR program has always had its own size standard rules (see 13 CFR 121.701 through 13 CFR 121.705) and the term "domestic" has never been used!

SBA brings up 13 CFR 121.103 "How does SBA determine affiliation?" which is appropriate as the code defines this as "Provisions of General Applicability", (to all SBA programs) and again there is no "domestic business concern" but there is a mention of determining the concern's size (not overall eligibility) by counting receipts and number of employees of domestic and foreign affiliates.

To add insult to injury, the same loophole that could be used by a foreign concern, could be used by a large U.S. concern thereby allowing them "hidden" majority ownership of a small business that is still eligible for SBIR/STTR awards, and not be counted against the 25%/15% VC, Hedge Fund, Private Equity ownership allowance (winning SBIR awards).

In spite of congressional language that states: " the SBIR program is "… a program for small business concerns in the United States by prohibiting large businesses or large entities or foreign-owned entities from participation in the program., " the SBA language enables the opposite.

In a recent NY Times article, journalist Robb Mandelbaum interviewed an SBA official, Sean Greene, who commented: "As for domestic business concerns, Mr. Greene said the agency had to make an exception to the ban on majority foreign ownership so funds with overseas investors could participate under the new law."

I've lauded Mr. Greene in the past but if the quote is accurate (Mandelbaum is an excellent reporter), Greene is dead wrong and in my opinion, out of line on this action. This is contrary to the 59 year mission and goals of the once proud Small Business Administration. I see no directive that gives SBA (or anyone else) the statutory authority to make a company that is majority owned by a foreign entity, to be eligible for SBIR.

On the other hand, SBA has one big supporter who thinks they've done a marvelous job with the language changes. Yes, the Biotechnology Industry Organization (BIO) lauds SBA's efforts in their 17 page diatribe. Why shouldn't they? SBA's language gives them most of what they wanted for years, unlimited large business access to small business SBIR funding, not to mention the foreign ownership angle as well. Many of BIO's largest members (their version of "one percenters") are international companies who sell their drugs at big time prices in the states, while at reduced prices in the rest of the world.

Some in the small biz community have been asked by SBA how to fix what they don't like. The fact is that they shouldn't have to fix what congress didn't give SBA the authority to change. Many of us have fought long and hard, in and out of congress (more than 6 years) to get a reauthorization that we all (small biz, VCs primes and universities) could live with.

That was accomplished, but now the SBA is acting like legislators rather than an agency governed by legislators. Unfortunately the SBA proposed rule obliterates the most important compromises (creating an easy work around to the 25% and 15% VC ceilings) while adding provisions totally contrary to the mission of SBIR/STTR.

The SBA's Chief Counsel for Advocacy, Dr. Winslow Sargeant, who once built and owned an SBIR small business, was an SBIR program manager at NSF, and later became a VC, has a unique perspective on these issues. He gave comments on 3 items: For Eligibility, and Domestic Business Concern, he advised "SBA give full consideration to reviewing the comments of the stakeholders…." For Size Protest he suggested greater clarity for the final rule, and for size eligibility, a return to the current SBA standard (eligibility at time of award) .

In closing, my language is very strong in this letter because I (and others) have reason to believe that SBA will do what they want, and only listen to comments that reinforce some of SBA's desires. I hope I'm wrong and we can work together to make SBIR/STTR a continued success for our small businesses, the agencies, universities, the investment community, and last but not least, our country.

Closing Thoughts

Well now you know it was the intent of SBA to open things up to foreign ownership, and other large business. I encourage you to read the two excellent news articles:

1. NY Times - In Proposed Small-Business Rules, Big Seems to Be the New Small
(Robb Mandelbaum)

2. Business Journal - New SBA proposal could open R&D funds to foreign-owned firms
(Kent Hoover)

Please consider leaving a comment on either of these two articles. Mandelbaum at the NY Times actually got the scoop.



Rick Shindell
SBIR Gateway
Zyn Systems
40 Alderwood Dr.
Sequim, WA 98382


1/2/2012    It's Official - SBIR Reauthorized with the signing of HR.1540

My SBIR Coach's Playbook of January 2, 2012, has the following:

On New Year's Eve, just as 2011 was running out, President Obama signed HR.1540, the bill that contains the SBIR reauthorization provisions, into law. Whew! Not that I thought he wouldn't, but...

Here's the White House Press Release on the signing: . SBIR wasn't mentioned, of course. Sigh...

I do want to read the bill that was signed, just to make sure no Federal Agency sneakily weaseled out of their SBIR obligation. Not that I'd think that any of them would be so callous as to do that, but...

The next step if for the SBA to revise the Policy Directive to incorporate the changes into policies for the Agencies to administer. We're going to help them with that. They have 180 days to get the revision done, but we'd like to see it done a whole lot faster - especially since some of the provisions (e.g., eligibility) must be implemented within 120 days!!

The coordination of that help will be through the Small Business Technology Council (SBTC), an arm of the National Small Business Association (NSBA). Jere Glover, Executive Director of the SBTC, will be at the point. White papers will be submitted to each Agency with suggestions for productive implementation.

If you'd like to get involved, especially with regard to a particular Agency with whom you do (or would like to do) business, join one of the committees being formed by (a) joining the SBTC, and (b) contacting Alec Orban ( at the SBTC and letting him know of your interest.

[Note: it's not necessary to join the SBTC to get involved, but it's the right thing to do. They are the voice of the SBIR advocacy in DC. Please support them.]

I will be making the rounds on the lecture circuit during 2012, talking about capitalizing on non-dilutive funding opportunities via strategic implementation of the new SBIR and STTR laws and policies. If you'd like to arrange to have me speak to your organization, please contact Brenda Keefer ( at Willow Mist Professional Services to discuss details.

My SBIR Coach's Newsletters for 2012 will focus on the new SBIR/STTR Laws and Policies, so be sure to subscribe. They're free, of course.

Well, at this point, all that's left is to wish you a ...


Fred Patterson - The SBIR Coach®


12/16/2011       SBIR REAUTHORIZED!

Rick Shindell's SBIR Insider dated 12/15 tells the story:

Dear SBIR Insider,

I am pleased (a gross understatement) to inform you that SBIR HAS NOW BEEN REAUTHORIZED for a period of 6 years, ending September 30, 2017, and that includes STTR, and what was the Commercialization Pilot Program (CPP), now to be known as the Commercialization Readiness Program (CRP).

This was all done under the National Defense Authorization Act of 2012 (NDAA) HR.1540. All that's left is for the President to sign the bill into law, and he has said he would.

There are many changes and additions to these programs, many you will probably like, some, perhaps "not so much. What you won't read in press releases or the main stream press is that the SBIR program was a stone's throw from being laid to rest.

The fatigue factor from several years of battling for reauthorization, and fighting for 14 continuing resolutions led some powerful forces to question the validity of a program that can't be reauthorized. "If it can't be passed, let it die" was the word from one source. And die it would, had there not been serious compromises.

Although reauthorization has passed, your role is not done. It is vital that our SBIR community stay "tuned in" and active because your input will be requested relating to the changes and how the program is working for you. Although we have a six year reauthorization, I can assure you that some SBIR issues will be revisited by congress during this period.

Rather than giving you a laundry list of changes, we are in the process of creating a detailed technical document explaining the new legislation (sans legalese) and how it will most likely effect small business, the agencies, and academia. That will be in our next issue.

The legislation gives the SBA 180 days to implement new policy directives for SBIR and STTR. As those are being developed, public comments will be solicited. We'll let you know about those when they happen. Your input will be critical! The new eligibility regulations must implemented within 120 days.

For those of you who want the bill's language, we have created a PDF of the SBIR legislation from the conference report that was passed. It is 107 pages from the 1844 page NDAA document. You'll find it at

At this point you have "certainty" that the SBIR/STTR programs will continue, but uncertainty as to how the agencies will handle the changes (even the agencies will need to get up to speed on the details).

On the other hand there may very well be another CR if congress is unable to pass the omnibus appropriations bill before they go home for the holidays. The CR would be to keep the agencies funded for a short period (having nothing directly to do with SBIR authorization).

The Real Story of SBIR Reauthorization

Regardless of what you may see in the press about people taking credit for SBIR reauthorization, one person, Senator Mary Landrieu (D-LA), chair of the Senate Committee on Small Business & Entrepreneurship, towers over all others. I guarantee you that without Senator Landrieu and her extraordinary efforts in this political climate, SBIR would not have survived.

Jere Glover, SBTC executive director, who has been a keystone in SBIR since its inception and has been an important participant in every SBIR reauthorization, stated : "There has never been a Senator that has done more for the SBIR community, and spent more personal time and personal involvement than Senator Landrieu." On the reauthorization process Glover stated "SBIR reauthorization has always been tough, but never like this."

Landrieu worked closely with her committee's ranking member Olympia Snowe (R-ME), who has been an important supporter of SBIR since the beginning, and several others also played important supporting roles. On the Senate Armed Services Committee, Senators Carl Levin (D-MI), and John McCain (R-AZ) made it possible to include SBIR reauthorization language in the National Defense Authorization Act of 2012.

In fact, this morning shortly before passage of the NDAA, Senator Levin stated: "The conference report includes Senator Landieu's bill to extend the small business [innovation] research, the SBIR program for an additional six years. It's been about six years since we reauthorized this vitally important program which provides a huge benefit to our small businesses so that they can effectively participate in research programs that are funded by the federal government. In the defense arena, SBIR has successfully invested in innovate research and technologies that have contributed significantly to the expansion of the defense industrial base in the development of new military capabilities."

On the House side, we have Buck McKeon (R-CA) chair of the House Armed Services Committee (HASC), and ranking member Adam Smith (D-WA) to thank. But they needed persuasion and support to do this, and that came from a dedicated SBIR champion, Congresswoman Niki Tsongas (D-MA) who worked hard to get a lot of congressionals and the House leadership on board to support the Senate's bill over the House's (not an easy or politically popular feat). Traditionally there's not a lot of "love" between House and Senate.

HASC may not have been able to include SBIR without the support that Congresswoman Tsongas was able obtain. She is a true SBIR champion, and is very considerate of her constituents, as well as grateful for the support that many of you gave to signing on to the SBTC's SBIR letter to congressional leadership. That made a huge difference!

In a conversation with Ms. Tsongas, I thanked her for all her hard work and dedication to the SBIR program. She said, "Rick, it took a village."

Villages can be quaint but they can also be troublesome. On the Senate side, Landrieu had things under control, but on the House side she ran into some,,, lets say trolls and grouches. SBIR reauthorization was always problematic in the House due to some of the trolls in the form of House Small Business Committee chair Sam Graves (R-MO) and ranking member Nydia Velazquez (D-NY), and the grouch in the form of House Science Committee chair Ralph Hall (R-TX). They tried to block SBIR inclusion in the NDAA and it was looking bleak for SBIR.

This behavior has been going on for years, and the trolls continued to block SBIR from being reauthorized (unless it was their way). Ms. Landrieu, in what may have been a Howard Beale moment, was mad as hell and wasn't going to take it anymore, went over to the House, and had a talk with these people face-to-face, allegedly in a language they could understand (terminology by Harry Truman).

That, along with your efforts, and those of some other groups in contacting the leadership and other congressionals, helped sway things in a manner we have not seen in the SBIR world. Velazquez backed off, and Graves & Hall finalized a compromise with Landrieu that the Senate and House could live with. Both House & Senate leadership played an important role in getting this done.


In the next issue we will have detailed analysis of the changes to the program and we'll let you know who all the hero's were to help make this possible. There are lots!

Of course none of this would be possible without staff, and one staffer stands out from all the rest. Nobody, be it government or private sector has been more dedicated to SBIR, or has fought harder or longer for you and small businesses, than Ms. Kevin Wheeler. Kevin has been a warrior, and has often times been vilified because she wouldn't cave in to the ridiculous demands of high rolling, high pressure lobbyists, or the House Small Biz and S&T staffers doing their bidding. They did not appreciate Ms. Wheeler's protecting the interests of small business.

That's all for now and we can get some rest. Congratulations and thanks to all of you who helped make this happen!

Here's wishing you a Merry Christmas, Happy Chanukah, Kwanzaa, Yontif, Festivus and Gafe Gake.

We'll be back before the New Year.



Rick Shindell
SBIR Gateway
Zyn Systems


SBIR Advocists, Terry Bibbens and Les Bowen, provided the following postscripts to Rick's announcement:

Rick, you are an amazingly good journalist. What a delightful, wonderfully concise and insightful story of the process, champions and I love the use of the words "trolls" and "grouches" (and I would add in the holiday spirit, "grinches"). You have written this tale in a way that even the trolls won't try to get their revenge for you shining the spotlight of truth on this messy "Congressional sausage."

Between us kids I'd like to add my admiration for Alec Orban, the new champion on Jere [Glover]'s team. And, of course, as discussed in the call today, Jere and Bob Weiss deserve elevation to sainthood along with our revered Saint Kevin [Wheeler]. Getting Alex [Hecht] of MLS on board was a stroke of genius and is so typical of Jere to share the fun of "white washing the picket fence" in his Tom Sawyer fashion. Fred [Patterson], our stalwart SBIR Coach also deserves major credit for his long-term support over these past 4 years. And of course, our fearless WWII Navigator helped guide us through these challenging times -- to him this was nothing compared to getting shot at during bombing runs -- thanks Roland [Tibbetts] for setting the decades-long path for us to follow. And, finally, a quiet champion of American technology policy is our esteemed author of the NRC report, Charles Wessner.

All I can say is that I'm sure glad all of you are on the side of truth for small high-tech businesses, not universities. You are formidable foes and wonderful champions. We in the small business community are lucky to have such a dedicated team.

You all deserve a happy holiday season -- cause we are going to ask you to hit the trail in early Jan!

Best regards,

Terry Bibbens
Temecula, CA

Well, folks, I thought I would just forward Rick Shindell’s newsletter to you unadulterated because he has already told it all the way it really is. He is right – with all of the forces arrayed against us, we are fortunate to have a really good SBIR and STTR reauthorization outcome. There are few negative changes and some positive ones too.

Our job now is to make the best use of these SBIR $ and deliver innovative technologies and products to the taxpayers who funded the research to create new jobs and increase American competitiveness.

We need to create a network of SBIR companies so that the large group that has participated in this reauthorization of the SBIR program can be quickly called into action again in future to defend and protect the program when it next comes under fire, as it will. It was a lot of work to get everyone spun up on this, but the response was truly magnificent.

I know that many members of Congress supported SBIR reauthorization, but am really proud of our New England congressional delegation, especially Niki Tsongas.

Thank you all.
Leslie J. Bowen
Materials Systems Inc.
Littleton, MA  01460

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