WASHINGTON – The United States Senate last night unanimously passed legislation to reauthorize the Small Business Administration’s (SBA) Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, set to expire on July 31, 2009, and September 30, 2009, respectively. SBIR and STTR stimulate technological innovation, allow small businesses to meet federal research and development needs and provide seed capital for small businesses to develop ideas until they attract outside investment. The bill, introduced by Senate Committee on Small Business and Entrepreneurship Chair Mary Landrieu, D-La., and Ranking Member Olympia J. Snowe, R-Maine, passed unanimously out of Committee on June 18, 2009.

“SBIR and STTR have been instrumental in fostering breakthrough technological innovation and creating new jobs among America’s more than 27 million small businesses,” Chair Landrieu said. “Recipients of SBIR and STTR awards have produced more than 85,000 patents and have generated millions of well-paying jobs across all 50 states. Now that the Senate has passed SBIR and STTR reauthorization, we are one step closer to strengthening these essential programs and increasing federal opportunities for small businesses. I look forward to working with the House to get a bill to President Obama’s desk before SBIR expires on July 31st.”

“Reauthorizing the SBIR and STTR programs will unleash the ground-breaking innovation potential of our nation’s small businesses, particularly given that these critical initiatives direct more than $2 billion in Federal research and development funding annually to small-tech firms across the nation,” said Ranking Member Snowe. “At a time when the nation is struggling to dig out of the deepest recession since the Great Depression, we must ensure that our country once again brings to bear the kind of ingenuity, creativity, and innovation that made America and our free-market economy the greatest and most powerful on earth. By assisting thousands of pioneering small businesses with the development and promotion of scientific breakthroughs, the SBIR and STTR programs keep America ahead of the curve. I pledge to work expeditiously to ensure that we resolve differences with the House legislation so that President Obama may sign a bill as quickly as possible.”

The SBIR program was established by Congress in 1982, and the STTR program in 1992, to, among other things, help meet the government’s research and development needs through small businesses. Federal agencies with an annual extramural R&D budget of more than $100 million must currently allocate 2.5 percent of their extramural R&D dollars to the SBIR program. Agencies with an annual extramural R&D budget of more than $1 billion must currently allocate an additional 0.3 percent to the STTR program. The bill provides for an important increase to the SBIR program allocation, raising it to 3.5 percent, spread out over eleven years. The SBIR allocation increase includes all agencies, including the NIH. The bill also increases the STTR program allocation from .3 percent to .6 percent over six years.

The last comprehensive reauthorization of the SBIR program occurred in 2000, when the program was reauthorized for eight years, scheduled to sunset on September 30, 2008. The program has since received two temporary extensions – first to March 20, 2009 and now to July 31, 2009. The STTR was last reauthorized in 2001, also for eight years.

The legislation will reauthorize the programs for eight years, giving small businesses and the government the stability they need to plan for and transition important technologies for our country. It amends the eligibility requirements to allow businesses owned and controlled by multiple venture capital firms to compete for a certain percentage of SBIR projects while making sure that there’s a fair playing field for the small businesses that are independently owned and operated. It also adjusts the amount of SBIR and STTR awards to reflect inflation costs while taking a measured approach to increasing the allocation dedicated to these important small business research and development programs. To improve the diversity of the programs, geographically and otherwise, so that more states and individuals can participate in federal research and development for our country, the bill reauthorizes the Federal and State Technology (FAST) program and Rural Outreach Program for five years.