• Limited hearings on SBIR reauthorization have been held and almost the entirety of invited witness lists explicitly excluded those who had expressed concern about provisions at the heart of the bill which will radically limit who is likely to be in receipt of the major percentage of SBIR support. 

      In other words, HR 5819 explicitly give specialized access into SBIR funding to a significantly broadened base of VC funded firms.  Applicant firms which do not meet VC criteria - either at this point in their development or, for many, ever - will effectively be squeezed out. There is a hugely important role and a major connection between SBIR and VC firms which goes back to the earliest days of the program BUT NOT to the exclusion of everyone and everything else.  Important technology development is about much more than projects which target large markets and high ROI to the investment community.

• A tripling of the size of Phase I and Phase II AND an almost entirely unrestrained capacity of agencies to make very large awards outside normal boundaries could have enormous adverse impact.  With most of them in NIH but several in DOD over 200 Phase II awards have been recently made in amounts over $2M per - - some being between $5 and over $8M each.  How many promising Phase Is are not made and quality Phase II rejected when awards on this scale are being made.

      Institutionalizing this large project/large award practice will almost certainly radically reduce the number of awards which any agency can (and will) make.  In a program that is already highly competitive, there is major concern that less experienced firms and those working on projects of smaller scale or of earlier stage in development will inevitably lose out.  Is that you?  

       Reduction in awards totals has already been happening. The number of Phase I awards now made annually is significantly reduced since 2004  Where is that reduction being felt most keenly? 

• Largely among the younger, smaller firms whose numbers in SBIR have been dropping significantly,
• and in those states which were already under-represented in SBIR relative to their population size and which, not inconsequentially, are also the states in which VC is, to say the least, already thin on the ground. 

Do VC advocates really expect anyone to believe that if HR 5819 passes they will increase at all the amount of their investment(s) in firms doing business in states they have largely previously ignored?  Your firm? Your state?  Speak up!

• Efforts by longtime Congressional supporters of SBIR to introduce any modifying amendments to maintain the highly competitive but open-access which has defined SBIR activity to date have been systemically rejected.  Pro- HR 5819 advocates are supported and backed by a powerful lobby which has already spent many millions on this now three-year long effort to capture SBIR.  They are not easily ignored and, for whatever their reasons,  many Members have bought into the idea that the criteria that drive VC investment decisions should be those which define SBIR also.  Flawed reasoning.

• Having been reported out of the small business committee over the objection of other members on committees which also have jurisdiction over SBIR - Science and Armed Services - the bill was pushed through markup last Friday afternoon (April 18) when most Members are heading to their districts and, more importantly,  in the hour or so BEFORE the announced time for mark-up.  When non-supporters of HR 5819 arrived at the posted time to participate in the mark-up process, they were met by proponents leaving the meeting which had actually begun some time earlier. The real time of the meeting had been pushed up without announcement. Business done - fait accompli
• HR 5819 was placed with the Rules Committee for Monday April 21 with provision for any amendments required to be in place by Tuesday 10AM and will be evaluated by Rules by 5PM - a timetable difficult to meet at the best of times; impossible in these positively underhand circumstances.
• The bill is expected to be brought before the Full House for vote on WEDNESDAY afternoon April 23. 

• Introduce amendments to HR 5819 - but must be done to the Rules Committee before 10AM Tuesday.  Not likely by Members not previously active in SBIR legislative efforts.
• After the main vote by the full House, offer a "Motion to Commit" i.e. request that the bill be sent back to the initiating committee - in this case House Small Business for further consideration. Probably our best than at this point
• Vote against HR 5819.  

Requesting that Members seriously consider voting against SBIR is devastating for those of us who have been lead advocates for the program from its earliest days.  That we would even consider this now is testament to the seriousness of the situation.  Nonetheless, it will not something easily done by those Members who appreciate the longtime importance of SBIR to the small business and technology innovation community and - critically - to the US economy.  HOWEVER, for reasons briefly discussed, passage of HR 5819 could have major adverse effects on continuing access to SBIR support

• by early stage and very small firms and
• by those who are likely never to be candidates for serious venture capital consideration

- in other words, most of you to whom this letter is addressed. 

Even if not successful, enough no-votes would strengthen the Senate hand where cooler heads seem currently to prevail re. addressing more appropriate SBIR reauthorization than that which has been developed in the House.

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