Congressional
Record Statement of U.S. Senator Russ Feingold
Strengthening Our Economy Through Small Business Innovation Act of
2009
January 8, 2009
Mr. President, we are all aware of the serious challenges our economy faces in the short term and the urgency of our need to promote job creation and economic development. I am committed to engaging in this broad effort with my colleagues on both sides of the aisle. But it is essential that our efforts not just be short term fixes—they must not only aim to create jobs and investment opportunities in the short term, they must be part of strategic efforts to strengthen our Nation’s innovation capabilities and sustain long term economic development in a changing and competitive global environment. There is no better way to do this than by stimulating and supporting small business innovation, especially in areas of national priority. As part of this effort, today I am introducing the Strengthening Our Economy Through Small Business Innovation Act of 2009.
Job growth, innovation and economic development are driven by our small businesses. Small businesses also tend to be based in our cities and communities and so they are major contributors to our local economies. Half of our county’s payroll jobs and most of our new job opportunities are provided by small businesses. Small businesses are proven innovators and drive commercialization of cutting edge technologies. Not only are small businesses our major source of employment, they employ about one third of our country’s scientists and engineers and generate more patents on a per capita basis than large businesses and universities. They also are effective partners with universities to enhance product creation, develop university income and attract university graduates and faculty through increased innovative job opportunities.
Over the last 25 years, through the Small Business Innovation and Research program, SBIR, and, more recently, the Small Business Technology Transfer program, STTR, up to 2.5 percent and 0.3 percent, respectively, of Federal R&D funds from 11 Federal agencies have been specifically allocated to our Nation’s small businesses to fund innovation. These small business allocations are not sufficient. We must diversify and strengthen innovation capabilities and our economic base, and to accomplish this we must extend and increase R&D allocations to our Nation’s innovative small businesses.
My bill does 3 things. First, it extends the SBIR and STTR programs for a further 14 years so that small businesses, as well as universities and non-profit research organizations that collaborate with small businesses, can continue to leverage Federal research and development funding.
Second, it significantly increases the allocation of funds and the awards from large Federal research and development budgets to small businesses through the SBIR and STTR programs. It would increase the SBIR allocation from its current 2.5 percent to 10 percent and the STTR allocation from 0.3 percent to 1.0 percent over a 3-year period. It would increase SBIR phase I awards from $100,000 to $300,000 and phase II awards from $750,000 to $2.2 million. Third, it identifies specific funding priorities for energy innovation; safe and secure water; domestic security; and transportation.
The SBIR program is tested, successful and worthy of extension. In its comprehensive study of the SBIR program, the National Research Council found that the program “is sound in concept and effective in practice”; was “stimulating technological innovation”; “linking universities to the public and private markets”; “increasing private sector commercialization of innovations” at an “impressive” rate; and “providing widely distributed support for innovation activity.” The study concluded that:
[T]he program is proving effective in meeting Congressional objectives. It is increasing innovation, encouraging participation by small companies in R&D, providing support for small firms owned by minorities and women, and resolving research questions for mission agencies in a cost effective manner. Should the Congress wish to provide additional funds for the program in support of these objectives, those funds could be employed effectively by the nation’s SBIR.
The NRC’s study also found that universities and other non-profit research institutions would benefit significantly from the increase in both the SBIR and the STTR programs. In particular, the STTR allocation increase will directly benefit universities and efforts to bring university-based research into the commercial marketplace, as a partnership with a non-profit research institution, such as a university, is a requirement of all STTR award recipients. Many of the small businesses that receive SBIR funding are rooted in the university infrastructure so investigators and graduates from universities will have opportunities to be part of commercial developments. More than two-thirds of SBIR companies report that at least one founder was previously an academic. About one-third of SBIR company founders were most recently employed as academics before founding the company. Over a third of SBIR projects cite direct university involvement with 27 percent of projects having university faculty as contractors on the project, 17 percent using universities themselves as subcontractors, and 15 percent employing graduate students.
In its report accompanying reauthorization legislation, the Senate Small Business and Entrepreneurship Committee recently concluded that:
increases in the SBIR allocation will invest money in research, contracting, internships, and other collaborative activities done with universities, with the contracting and patenting activities with SBIR companies being a sizable source of revenue for universities as well. The university-industry partnerships that SBIR creates are crucial in that they provide an applied research and commercialization focus that otherwise likely would not be present in university research. More specifically, the partnerships are important in exposing faculty and the next generation of scientists and engineers to commercial research and development. SBIR businesses provide graduate and undergraduate students with hands-on experience and job opportunities that universities would be unable to provide alone.
Our country not only faces immediate economic and employment challenges, it faces major challenges in transportation, energy, domestic security and water quality and safety. Targeted research and development will be critical. Congress, with non-partisan expert guidance, has a role to play in guiding our national research and development priorities and, in this case, stimulating small business innovation and job creation in specific areas of critical national need. The National Academies of Science and other independent government research organizations provide us with carefully researched and considered recommendations on how we can address these priorities, so my bill draws on their recommendations to develop innovative energy technologies; enhance water quality and security; strengthen domestic security; and address transportation priorities. This is not only a good investment in short term job creation; it is an imperative investment in our Nation’s long term innovation prospects and economic development.
The costs of my bill would be fully offset by cancellation
of the airborne laser program. CBO estimates that cancelling that program
will produce savings of over $2.6 billion.