OMB: Small-biz bill would hurt federal R&D programs

The Bush administration opposes a bill that would boost funding for a small business-related research and development program because the extra money would come at the expense of essential research activity in several agencies.

The bill, sponsored by Rep. Nydia Velázquez (D-N.Y.), is intended to increase federal funding for the Small Business Innovation Research and Small Business Technology Transfer programs. SBIR funds research for technology that has potential applications in the federal government. STTR provides money for joint projects by small-businesses and nonprofit research laboratories.

The two programs are covered by extramural research budgets, which also cover work by universities and federal laboratories.

Beginning in fiscal 2009, the SBIR/STTR Reauthorization Act would require agencies to set aside 3 percent of their outside research budgets for SBIR, up from 2.5 percent, and 0.6 percent for STTR, up from 0.3 percent.

Those changes "would effectively cut $650 million each year from the core, competitive research activities of the Department of Defense, the National Institutes of Health, NASA, the Department of Energy, the National Science Foundation, and other agencies," the Office of Management and Budget said in an April 22 statement.

OMB said the bill also would enable small businesses that have received substantial investment from venture capital firms to take part in the SBIR program, reversing a policy dating to 2003. According to OMB, the administration believes the bill goes too far in relaxing that policy.

The administration "is reviewing whether venture capital funding of businesses receiving SBIR and STTR funds could be expanded through reforms of Small Business Administration regulations" without providing federal subsidies to well-funded businesses, according to the OMB statement.