House Small Business Committee Hearing on SBIR/STTR


              The Defense Industrial Base (DIB) is an ecosystem made up of several components working together to sustain a fighting force capable of defeating any adversary in any domain.  Like the warfighter it equips, the DIB is at its best when driven by innovation and competition.  Near-peer adversaries such as Russia and China have proven to be pacing threats by their respective investments that drive innovation with the goal of challenging and ultimately supplanting the United States’ global leadership.  Reports have shown a decline in innovation within the DIB, the National Defense Industrial Association’s 2021 Vital Signs report graded innovation conditions a C-, and, more concerningly, revealed a two point drop from previous reports. 

              Innovation and competition are the most prevalent within American small businesses, like the DIB and the warfighter, small businesses are also at their best when driven by motivation and competition.  The Small Business Innovation Development Act of 1982 established the Small Business Innovation Research (SBIR) program, the purpose of SBIR is to promote a highly competitive awards-based process allowing small businesses the opportunity to work with Federal Research/Research Development (R/R&D) with the goal of commercializing their products through a process of three phases. 

              The SBIR program has allowed for several small businesses to contribute to the DIB and the overall American economy; unfortunately, the program is set to expire in 2022.  To assess the overall strengths and weaknesses of SBIR, the United States House of Representatives Small Business Committee held a hearing on Thursday, May 13, 2021.  Hearing witnesses were Dr. Joyce Tung, Vice President of Research, 23andMe, Inc., Ms. Pat Keady, Founder, CEO, and President, Aerosol Devices Inc., Ms. Rebecca Todd, Innovation Consultant, Arkansas Small Business and Technology Development Center, and Mr. Jere Glover, Executive Director, Small Business Technology Council.

              To fully understand the relevance of the SBIR program, it is important to concentrate on the state of the DIB without SBIR, should the program expire.  Mr. Jere Glover noted that without the program, 7,000 individuals and firms across the country would lose the opportunity to advance their technology and contribute to the health of the DIB.  Losing this connection to the innovative potential of small business would be crippling to the warfighter, and considering the advancements from adversaries, this would result in a loss before a battle is even fought.

              A successful program is often one that can constantly improve and adapt to new challenges, and the SBIR program is no different.  The features of the SBIR program allow for constant improvement to its processes which ultimately lead to more effective results. A great improvement to the SBIR program would be advancing Technical and Business Assistance programs to businesses in all three levels of the SBIR program to ensure their product is still relevant and aligned with the needs of the warfighter by the time it reaches the final phase.  Another area in need of improvement is the time gap between phase 1 and phase 2 awards.  Delays between Phase 1 and Phase 2 funding range from four to twelve months or even longer, these delays have the potential to kill small businesses, who tend to work on tight schedules and pay rolls, and have a harmful impact on the final product sent to the warfighter. A streamlined, more communicable program will allow for more participation from other small businesses seeking partnership with Federal Research/Research Development (R/R&D).

              In recognition of the potential of small businesses and the challenges they face, NDIA and its Small Business Division constantly work to provide a line of communication between small businesses and the DIB.  NDIA’s Legislative Policy team recently submitted its legislative priorities to lawmakers on Capitol Hill for the upcoming fiscal year, one of these proposals is an extension and permanency for the SBIR program.  A permanent program would support a standard Phase III contracting approach, providing a contract vehicle for follow-on work from Phase I & II aligned with the pilot program authorized in Sec. 1710 of the FY18 NDAA.

              NDIA’s Legislative Policy team and its Small Business Division leadership, along with other stakeholders, also worked to pass an amendment to extend Section 3610 of the CARES Act.  The amendment, cosponsored by Senators Mark Warner (D-VA) and Marco Rubio (R-FL), passed the Senate on a 93-6 vote on 6 March.  The Section 3610 extension passed the House of Representatives as a part of the American Rescue Plan Act of 2021 on 10 March, and was signed into law by President Biden on March 11th.  NDIA’s Legislative Policy Team co-leads the multi-association Acquisition Reform Working Group (ARWG) submission to support measures in the FY22 National Defense Authorization Act (NDAA) that benefit the Defense Industrial Base (DIB). ARWG will review all acquisition-related provisions of both the House and Senate bills to determine support, support with modification, or oppose.  These efforts allow NDIA to remain at the heart of the mission to harness the innovation of small business to allow for a more effective fighting force. 

For more on the efforts of NDIA’s Strategy & Policy team, you can join the conversation on NDIA Connect or follow the team on Twitter @NDIAPolicy.

Topics: Small Business

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