Hearing of the House Small Business Committee - "Spurring Innovation and Job Creation: The SBIR Program"

Statement

"The development of life-changing products, from cancer-fighting drugs to advanced electronics, drives our nation's economy. However, without adequate funding for research and development, small businesses cannot expand and even the best ideas wither and die in what is has come to be known as a "Valley of Death" between startup and commercialization.

"Congress established the Small Business Innovation Research program with the intent of funding small, innovative companies conducting research and development with commercial potential. Since the first grants were awarded in 1983, more than $24 billion has been awarded to small research companies, funding in excess of 100,000 projects. In fiscal year 2009, the SBIR program made over 6,400 awards totaling $2.5 billion, an all-time high. By all measures, the SBIR program is among the federal government's largest research and development programs.

"The public-private partnerships that SBIR awards facilitate encourage entrepreneurs to start new businesses and enable existing businesses to expand their operations. SBIR awards spur innovation and create and retain jobs in all fifty states, the District of Columbia and Puerto Rico.

"According to a National Academies of Science survey, over 20 percent of applicants open a new business upon receipt of an SBIR award. This translates to nearly 1,500 new businesses each year and an estimated 80,000 jobs created over the next decade.

"While SBIR awards provide small businesses with some research funding, most high-tech and pharmaceutical firms need resources beyond what is available through SBIR to take their ideas from the drawing board to the marketplace. If firms are ever going to reach their full potential, the gaps between what SBIR provides and what is needed to develop a product must be addressed. This is hindering promising researchers and entrepreneurs from commercializing their discoveries. To help foster innovation and bring life-changing products to market, the SBIR program should be available to all small firms without barriers or cost prohibitive requirements.

"Review of the SBIR program shows that it has succeeded in funding high-quality research, encouraging competition, and increasing successful commercialization. However, areas of weakness have been identified, particularly with lax oversight which held lead to waste, fraud, and abuse of the program. Most troubling are findings of duplicative awards by agencies for the same research, and the serial funding of firms that continually fail to produce marketable technologies.

"Such examples of fraud have become a serious problem, especially with the increasing numbers of proposals submitted to the SBIR program. It is critical that we bolster oversight and curb the waste, fraud, and abuse that prevent SBIR and STTR programs from functioning as intended.

"In advance of the testimony, I want to thank all the witnesses who traveled here for their participation and insights into this important topic. Thank you and I yield back."

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