Enhancing Small Business Research and Innovation Act of 2009

ENHANCING SMALL BUSINESS RESEARCH AND INNOVATION ACT OF 2009 -- (House of Representatives - July 08, 2009)

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Mr. MARKEY of Massachusetts. Mr. Chair, I rise in opposition to H.R. 2965, the Enhancing Small Business Innovation and Research Act.

I must oppose this bill because I have serious concerns about changes made in the bill to the SBIR program that would allow SBIR awards to go to an unlimited number of businesses owned or controlled by Venture capital (VC) firms. The SBIR program, responsible for over 60,000 patents, has always focused on innovation from truly small businesses for whom commercial capital market funding is typically not an option. However, with the change made in this bill, the SBIR program would be wide open to applicants that already are well-capitalized due to VC participation, crowding out the small businesses that have been the focus of the highly successful SBIR program.

When the Rules Committee met yesterday, I offered an amendment to H.R. 2965 along with my colleagues Representative Tsongas, Representative Welch, and Representative Hodes which would have resolved two major problems with H.R 2965 that undermine the intent of the SBIR program.

The amendment we offered would have:

1. Allowed the National Institutes of Health (NIH) to direct up to 15% of its SBIR budget to majority venture backed businesses and allow every other federal agency to direct up to 5 percent of its SBIR budget to majority venture backed businesses. In this way, our amendment provided a sensible balance between the prohibition on VC participation, which is the current law, and enabling, without limitation, the participation in the SBIR program of businesses that are owned or controlled by VC firms. The safeguards included in our amendment were based on the recommendations from the National Academy of Sciences and Government Accountability Office (GAO).

2. Increased SBIR Phase I and Phase II awards to $150,000 and $1,000,000 respectively. This increase recognized the need to boost award size due to inflation, but did not increase the award size to such an extent that there will be fewer overall awards available.

While I support VC participation in the SBIR program--and our amendment specifically provided for it--enabling an unlimited amount of large VC majority-owned firms to qualify for SBIR funding calls into question whether this program, intended for genuinely small businesses, is, in fact, still focused on these firms.

Our amendment provided a needed compromise that recognized the importance of venture capital and recognized the need to hold central truly small business innovation.

Unfortunately, our amendment was not made in order by the Rules Committee. Without the protections in our amendment, we run the risk of taking the ``Small'' out of the Small Business Research Innovation Program.

At a time when our national unemployment rate is at 9.5 percent, we should do everything in our power to strengthen small businesses that generate 70 percent of new jobs in our country. H.R 2965 does not do enough to ensure that small businesses are the focus of the SBIR program, and therefore I cannot support the bill.

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