Why is the NIH not talking about SBIR/STTR stimulus?

February 27, 2009

Or if it is I’ve been deaf to it. The Small Business Innovation Research program and the Small Business Technology Transter program would appear to be tailor made for stimulus. The NIH participates in these programs.

The Small Business Innovation research (SBIR) program is a set-aside program (2.5% of an agency’s extramural budget) for domestic small business concerns to engage in Research/Research and Development (R/R&D) that has the potential for commercialization.

by Congressional mandate:

Federal agencies with extramural R&D budgets over $1 billion are required to administer STTR programs using an annual set-aside of 0.30%. Currently, five Federal agencies participate in the STTR program: DOD, DOE, DHHS (NIH), NASA and NSF. In fiscal year (FY) 2006 (October 1, 2005-September 30, 2006), the NIH made SBIR grant and contract awards totaling over $572 million and STTR grant awards totaling over $68 million.

Okay, so that sounds promising. What are these funding programs supposed to be?

Objectives . The SBIR Program includes the following objectives: using small businesses to stimulate technological innovation, strengthening the role of small business in meeting Federal R/R&D needs, increasing private sector commercialization of innovations developed through Federal SBIR R&D, increasing small business participation in Federal R/R&D, and fostering and encouraging participation by socially and economically disadvantaged small business concerns and women-owned business concerns in the SBIR program. The STTR and SBIR programs are similar in that both programs seek to increase the participation of small businesses in Federal R&D and to increase private sector commercialization of technology developed through Federal R&D. The unique feature of the STTR program is the requirement for the small business concern applicant organization to formally collaborate with a research institution in Phase I and Phase II.
Differences between SBIR and STTR. The SBIR and STTR programs differ in two major ways. First, under SBIR Program, the Principal Investigator must have his/her primary employment with the small business concern at the time of award and for the duration of the project period, however, under the STTR Program, primary employment is not stipulated. Second, the STTR Program requires research partners at universities and other non-profit research institutions to have a formal collaborative relationship with the small business concern. At least 40 percent of the STTR research project is to be conducted by the small business concern and at least 30 percent of the work is to be conducted by the single, “partnering” research institution.

Reading this it kinda surprises you that they didn’t include some extra demands to route stimulus money into the SBIR/STTR programs doesn’t it?

No Responses Yet to “Why is the NIH not talking about SBIR/STTR stimulus?”

  1. Oh boy… Are you ready for this? Not only did they not “include some extra demands to route stimulus money into the SBIR/STTR programs” but they SPECIFICALLY EXCLUDED SBIR AND STTR FROM THE NIH’S STIMULUS FUNDING! For the full story on this, see my Blog posting of February 21st at http://sbircoach.blogspot.com/2009/02/hidden-in-fine-print-sbir-explicitly.html
    The bottom line is that this was a deliberate attempt to avoid giving small businesses a piece of the NIH’s Stimulus money to compete for on a level playing field. No legislator would have come up with this on his or her own. We’re digging deep on this, and we will find out who perpetrated this outrage. See my web site (http://www.sbircoach.com) for a template letter to send to protest this outrage.
    We also have to make sure that the SBIR and STTR programs don’t expire this year, as they’re scheduled to do without reauthorization — SBIR on March 20th and STTR on Sept 30th. SBIR and STTR are important to our ability to create jobs and provide some REAL stimulus, and we can’t let them die. Lots of info on my website on what to do. We need all the support you can give, so pitch in, make calls, and write letters. Thanks in advance!
    Fred Patterson – The SBIR Coach


  2. Those programs already fund so deep percentile-wise, maybe they realized that putting stimulus funds into those programs would just be funding horseshit?


  3. Cashmoney Says:

    So far as the stimulus is concerned there is no such thing as horseshit if it puts someone to work..


  4. william Says:

    It is ridiculous for the person to indicate that SBIR grants are substandard to academic grants. SBIR grants are reviewed by a very similar process as other NIH grants and are generally reviewed by university faculty persons. To get a fundable score a person needs to get all three reviewers enthusiastically endorse the proposal.
    As far as SBIR grants being excluded, the issue becomes a political one. But, it certainly could be a stimulus. There are many, many SBIR grants from 2008 that have been deemed meritorious with no funding. So, is the Obama Administration friendly to business in the least? What do you think?


  5. qaz Says:

    William #3, I’m sorry, but our dear Comrade (CPP #1) is correct. SBIR and STTR grants are much easier to get than R01s or R21s. (I say that having both applied for many and gotten several of both recently in the last 5 years.) The issue with SBIR and STTR grants is that there aren’t that many projects that can actually fit into the rubric of an SBIR or STTR project. So there are a lot fewer SBIR/STTR proposals submitted overall. I’m not at all sure that there are very many SBIR grants from 2008 that are “meritorious” but not funded. Certainly, while there may be some, I’m pretty sure it won’t make much of a dent in the $10B.


  6. DrugMonkey Says:

    Fred, your blog post highlight would seem merely to suggest that the requirements of the law mandating SBIR/STTR expenditure are suspended. I see nothing that automatically excludes ICs from putting stimulus funds into such a grant though. What am I missing?


  7. druceratops Says:

    I would agree that SBIR/STTR grants are easier to get than R01/ R21, but not by as wide a margin as the comrade implies. It should also be noted that there are important differences in the review criteria for R01/R21 and SBIR/STTR, including the need to justify a commercial application of the research in the relative near term.
    Right now, I would guess that the funding line is typically in the range of a new investigator R01 (15-20%) for Phase I (typcially ~6 month duration and $100K). Contingent on the successful completion of a Phase I, Phase II (~ 2 years and $750K) success rates are higher.
    As one might expect, my experience has been that the quality of the proposals and competitiveness of the program seems to be inversely proportional to the availability of VC funding / private funding for companies.
    Certainly qaz is right that at $100-750K there is not a sufficient backlog of meritorious projects to make a dent. That being said, I think the program is a good one and there should be a clear explanation of why SBIR/STTR are good enough to receive a set aside for regular appropriations but are excluded from the stimulus (especially in light of the goals of the stim package).
    Perhaps something to do with the recent disputes over eligibility for the program?


  8. LittleJ Says:

    The Recovery Act exempts funding included for NIH from the SBIR/STTR set-aside requirements (see bill and report language. If you blink, you’ll miss the bill language, but the report is clear).
    That means NIH does not *have* to spend the minimum set-aside amount on SBIR/STTR. However, they may do it if they choose to. They probably won’t.


  9. william Says:

    My small company is SBIR-funded. At this present time, I alone have three grants from 2008 that were given priority scores (fundable scores), but have yet to be told about funding. It is nonsense that there is no backlog of SBIR grants. These grants are “shovel ready” and if they were funded would involve us employing at least three new Masters level people. But, unlike the R01 grants that are not being supported by this administration, we have been given no additional support. It is very difficult to come up with any explanation other than the Obama administration has a bias against business.


  10. The wording in the Stimulus bill that excludes SBIR was, according to a lawyer I consulted, very carefully crafted. It says: “Provided further, That the funds provided in this Act to the NIH shall not be subject to the provisions of 15 U.S.C. 638(f)(1) and 15 U.S.C. 638(n)(1): The codes specify the existing law. The key words are SHALL NOT. It’s a mandatory exclusion from that law.
    What the NIH is really going to about how it funds grants to small businesses with this extra money has yet to be determined. The supposition is that it was someone high up at the NIH who decided that this exclusion was a good idea, so it’s unlikely that that we’ll see much from them that will really be small business friendly. They’d much rather deal with universities and large companies.
    And the comment about many meritorious NIH SBIR and STTR projects being in backlog is very true. Every year, many excellent proposals for truly innovative work don’t get funded because their funds for these projects are limited. This extra pop would have allowed many of those proposals to be dusted off and funded IMMEDIATELY, providing a true stimulus effect.
    But, then again, this Bill isn’t really about providing stimulus, is it?


  11. qaz Says:

    Everyone – no one is denying (at least I don’t think anyone is) that there are some SBIR/STTR grants that are “shovel ready” and didn’t get funded. But (1) there are very few SBIR/STTR proposals relative to the number of R01 proposals (very very few if you start counting other R__ mechanisms) and (2) because there are fewer SBIR/STTR proposals submitted in the first place but NIH has set-aside money for SBIR/STTR proposals, it has historically been much easier to get SBIR/STTR proposals funded than R01s. Because there are fewer SBIR/STTR proposals in the first place and more of the really good ones are funded, there are fewer shovel ready proposals.
    In my reviewing experience, I would say that 2/3+ of R01, R21, and training grant proposals submitted are meritorious and shovel ready, while only 1/3 of SBIR/STTR are. Given the vastly larger universe of R01, R21, and training grant proposals, funding excess SBIR/STTR proposals is not going to make much of a dent.
    I don’t think it’d be a problem to include the meritorious SBIR/STTR proposals in the mix. It just isn’t that many proposals, and I don’t think their stimulus effect would really be any different from R01s (which also create jobs for students and techs and equipment purchases) or training grants (which directly create jobs for students). [And both of which come with indirect costs that fund administrators. (Right, Dave? 🙂 ]


  12. Dave Says:

    “(Right, Dave? :)”
    You betcha.
    Of course, they could just bring back the draft and put all the scientists to work in defense department research and auto-workers slapping armor onto humvees. No peer review involved. And the phrase ‘shovel-ready’ actually means “Get a shovel and start moving dirt before I kick your sorry ass, Private!”
    Wasn’t that what got us out of the depression?
    Unfortunately all we have is this low intensity Iraq and Afghanistan crap. We need to get into it with someone really big. But not the Chinese. We still need them to loan us money.


  13. Greg Says:

    Well, I’m not a lawyer, but I don’t understand how the terminology “shall not be subject to the provisions…” in the bill results in a “mandatory exclusion” that would forbid the use of stimulus money to fund R43 and R44 grants. Essentially, this is what LittleJ also posted. It seems to me that NIH is simply not obligated to fund them.
    Just to be clear, I find this situation to be as underhanded and inappropriate as you do. It seems to be a direct attack on the program. However, I just don’t see anything preventing an IC from funding SBIR/STTR grants with this money if they wanted to. Whether they actually WANT to is another question altogether. The program manager I have dealt with at NIH has always been very supportive of SBIR/STTR grants, and he personally find them to often be more interesting and valuable than many of the R01 grants that his institute funds. I have no idea if his view is shared by the people at the top of the institute.


  14. PGC Says:

    1. Job creation. R01/R21/R03s create jobs mainly for foreign students. SBIRs – for US citizens and residents. Not that I have anything against foreign scholars, but the spirit of the stimulus law suggests what should be prioritized…
    2. Commercialization. “Academic” grants usually fund research, which will benefit the economy in the long run. SBIR is intended for research that may be commercialized within a few years. Again, the purpose of the stimulus money should prioritize SBIRs.


  15. PGC Says:

    The NIH Acting Director, Raynard S. Kington, M.D., Ph.D., is soliciting opinions: NIHKingtonDirect@mail.nih.gov


  16. Dr. Feelgood Says:

    SBIRs in my experience, at least as it relates to potential pharmacotherapeutics, are generally crappy. I have reviewed many and the quality is poor. I have been an academic partner on 3 of them, and they were easily the worst experiences of my collaborative career. Their data for their proposals are based upon working with three separate companies, was misleading at best. The studies were a total clusterfuck. I have been approached many times since for similar proposals from these “companies” and I have uniformly declined to participate. Its not worth my reputation to be part of projects that fail to deliver. I say most of these lil startups that want this money should go the way of the “bad banks”.
    Doc F


  17. cashmoney Says:

    Dr. “Feelgood”? More like Dr. Buzzkill…


  18. Greg Says:

    There is a good chance that some of the instrumentation used in Dr. Feelgood’s laboratory uses technology developed with NIH SBIR/STTR funding. He may be correct about pharmatherapeutics specifically–I have no knowledge in area. However, this is far from the complete picture regarding small business grants with NIH. Few academic researchers are interested in developing the tools that they need to accomplish their work. They just want to be able to place a P.O. and get it delivered. The SBIR/STTR program has a good track record with this crucial need.


  19. Dr. Strangelove Says:

    Dr. Feelgood:
    As for crappiness, I have this very feeling after receiving some critiques from your illustrious colleagues. Prepare for a big shock, because examples are coming:
    – “Every possible configuration and combination thereof, for peptide/peptoids of size 5-50 were made. These now reside comfortably in vials in the catacombs of compound inventories”
    This illustrious colleague of yours has not yet learned high school combinatorics, I am afraid…
    – A Reviewer discusses a proposal involving Monte Carlo approach, and happily classifies the algorithm as molecular dynamics…
    – A Reviewer simply LIES, alleging that the approach does not account for effects of solvation, while the said effects are in fact accounted for and duly referenced.
    – A Reviewer having no clue what the proposal is about, and pitifully “evaluating” a proposal based on do novo approach with the following absurdity:
    “Innovation: It is very unclear that what is innovative about this method. Docking methods (sic!!!!!) and
    molecular modeling has been used in drug discovery for a long time.”
    Et caetera… I have the impression that panels evaluating SBIRs are composed of people too ignorant to be useful in any other area of the NIH activities…


  20. Dr. Strangelove Says:

    P.S. Sorry for the typo. Should be “de novo”, of course.
    P.S. 2 The last quote is provided in its original form. The Reviewer had little clue not only with respect to computational chemistry, but also with respect to the English language…


  21. Dr. Feelgood Says:

    As I mentioned, I am specifically talking about drug discovery or delivery based applications. Thats my area and thats where I evaluate or participate. FYI, for all those fancy machines in my laboratory, I doubt that big biotech needs a 100K per year seed grant to develop machines they charge 500K for. In addition, the R&D costs which you so lovingly attribute to the major success of the SBIR STTR programs, dont seem to result in a reasonable price for said instruments for academics. We pay for that R&D every time we buy. Thats where industry should get its NIH funds: from my grants when I buy shit at a huge markup.
    Dr. Strangelove:
    Yeah we are all idiots. Lets just get some corporate suits in there to decide on scientific merit. fabuloso!!!!
    Doc F.


  22. Dr. Strangelove Says:

    Dr. F:
    I never suggested letting “corporate suits” decide scientific matters. However, I put your (and many of your colleagues) dislike of SBIRs in a perspective: this dislike is so far reaching that it compromises your criticism, and you (plural) too often make fools of yourselves while evaluating proposals, because you FIRST decide that you dislike, and only THEN struggle to rationalize (because SOMETHING needs to be put in the summary statement). My biased view? Perhaps, but I provided troubling examples of absurdities in the critiques. Want one more? Here, have some good laugh too:
    “Weaknesses: It seems likely that a malevolent group engineering a disease vector would adopt as a first stratagem enabling it to resist the current antibiotics and this would largely bypass the stratagem being developed
    in this proposal.”
    The very same Alice in the Wonderland, in the very next paragraph:
    “Strengths: This approach would be antibiotic independent.”
    No, not all of you are idiots. But many of you think that SBIR applicants are, and you can afford writing any idiocy you want.


  23. DrugMonkey Says:

    Dr. Strangelove @#22: What you are describing is by no means limited to the review of SBIR/STTR grants. Not by a long shot. Everyone on the R-mech side of things has stories like this. You knew that, right?


  24. Dr. Strangelove Says:

    Actually, I can’t completely agree. My academic colleagues usually have a very high opinion regarding the quality of the peer review process. My own experience is limited, but I have an R01 pending, and I have received two critiques. These critiques are meritorious. There were minor issues, but nothing even remotely comparable to the amount and ‘quality’ of nonsense spewing out from SBIR reviews.


  25. Alex Terrazas, Ph.D. Says:

    I have to take exception to the writer who says that SBIR grants are not as high quality as R01s. SBIR grants are written by investigators with NO INSTITUTIONAL SUPPORT. The small business concerns have to do everything. I am affraid that most of the R01 recipients I now would fall flat on their faces if they had to start a business from scratch. They think they are mini-entrepreneurs but they are very sheltered by the universities.


  26. Christopher Says:

    I dispute the notion that university based grants are better quality work that SBIR. Think of SBIR as the bridge between university type reserach and the real world. It does fulfill that purpose. What other mechanisms exist?
    These days, we ought to be asking about the performance of large public companies and for that matter, VC type investors. As the credit bubble washes out, what about the performance of those big organizations? Why is small business on the defensive?
    50% of scientists and engineers in the U.S. are employeed by small businesses eligible for SBIR.
    Why do these businesses receive only 4% of the Federal R&D budget?
    To me, it seems like a great idea to outsource Federal R&D from big labs to small, focused, independent businesses. That allows reserach to happen in a cost effective manner. And, the business owners have incentives to drive commercialization (not true of academics – their incentive is mostly to talk to other academics.)
    Here’s another thought. Stanford university receives hunderes of millions of Federal R&D every year. Their tech licensing department takes in about $50 million for everything ever invented in the universities history… In this sense, the ROI on those Federal R&D dollars is awful.


  27. whimple Says:

    Not Stanford’s business model, obviously.


  28. scott Says:

    Sorry guys but, while not as eloquent as desired, #2 hits it on the head. SBIR and STIR funding percentiles have been outrageously generous over the years (possibly at the expense of R01 and other mechanisms). One has to acknowledge that throwing stimulus money at a funding mechanism where percentiles on the order of 30-40%ile will get funded prior to all this stimulus talk while outstanding R01 apps scoring in the


  29. Greg Says:

    NIH doesn’t even give percentiles for SBIR/STTR applications! I don’t know where you got this information about 30-40%, but that is nonsense. The vast majority of SBIR and STTR proposals are generally reviewed in special study section that only look at these type of applications. There are a few “hybrid” study sections that combine SBIR and RO1, but this is the exception. Priority scores are the only figure of merit given. These days, very few are awarded with scores above 200, and I have known applications that were not awarded with a score of around 150. Getting awards is now very competitive, and I suspect the success rate is less than R01 applications.


  30. eric Says:

    FYI: I think Christopher must be thinking of a different university. Stanford receives more than $50 milion each year in licensing fees and has generated over 1 billion dollars through direct technology licensing or equity stakes (see http://lokey.stanford.edu/cores/administrative.html)
    Moreover, this does not include the donations from former faculty/grad students who go on to found some well recognized technology companies (e.g. hewlett-packard, google, cisco,etc)
    More importantly, let us not forget that Stanford is an academic institution devoted to research & education, not a for-profit enterprise. That is its business model.
    (BTW: if it were a busniess it would would still be more profitable than many zombies traded on the NYSE or NASDAQ)


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