SBIR funding is set to expire this fall. One of the more worrisome proposed changes in new legislation: SBIR awards would be capped at $75 million for total competitive awards per recipient, as a lifetime limit on SBIR funding.
Hemmelgarn said that years ago, CRG leaders made the strategic decision to move away from SBIR funding, focusing on products and solutions for military users.
He declined to offer a figure when asked what the financial impact may be on CRG, but said: “We do understand what the impacts look like.”
About a dozen federal agencies use SBIR awards as a way to bring expertise on board, said Bryan Bender, a vice president with Washington, D.C.-based SBI, which is helping CRG and other companies navigate the proposed changes. The Department of Defense is the biggest department to rely on this kind of expertise, he said.
“For a company like Cornerstone, that basically means the end of the road,” he said, referring to the proposed funding limits.
The $75 million lifetime maximum cap on SBIR funding would affect company subsidiaries and spinoffs, Hemmelgarn noted. Also proposed is a $40 million cap for the most recent fiscal year or calendar year, and a step further — a limit on how many SBIR proposals companies may submit.
“It’s pretty extensive,” Hemmelgarn said of the caps.
Credit: JIM NOELKER
Credit: JIM NOELKER
He estimates that such limits could affect about 50 companies nationally, essentially unwinding a “merit-based system” and driving away some of the top innovators, companies that spent decades thriving in the SBIR arena, in CRG’s view.
Last week, U.S. Rep. Roger Williams, R-Texas, chairman of the House Committee on Small Business, introduced into the House his version of the legislation, dubbed the “Investing in National Next-Generation Opportunities for Venture Acceleration and Technological Excellence (INNOVATE) Act.”
“We must pass the INNOVATE Act and reauthorize SBIR and STTR to provide small businesses with the resources to develop cutting-edge technologies, many of which are vital to our national security,” Williams said in a statement. “This legislation will prevent China and other foreign adversaries from infiltrating these programs, create opportunities for private investments to bolster R&D, and ensure that Main Street continues to lead the way for economic growth.”
It’s unclear how much traction the bill has. The House page for the legislation listed no co-sponsors, as of Monday afternoon. Thousands of bills are introduced that often languish, with most not even getting out of committee, congressional observers have long noted.
Similarly, Sen. Joni Ernst’s version of the bill was listed as having no co-sponsors recently.
Still, the change would mean “punishing winners,” Jere Glover, executive director of the Small Business Technology Council, said in a recent interview with Congressional Quarterly.
CRG, the former Cornerstone Research Group, recently rebranded as CRG Defense, focusing on developing services and solutions for the warfighter, re-orienting away somewhat from research and SBIR funding.
Hemmelgarn emphasized that his company is not moving away from research altogether.
In its recent reorganization, CRG divided the company into four main divisions, keeping research “about where it is,” while focusing anew on product sales and refining products.
“We’re trying to grow on top of research but not eliminate research entirely,” he said.
Hemmelgarn said he has met with with U.S. Rep. Mike Turner, R-Dayton, who is a senior member of the House Armed Services Committee, and Ohio Sen. Bernie Moreno, about his concerns. The company is also working with the Small Business Technology Council.
Questions about the proposed changes were sent to representatives of Turner and Moreno. Moreno’s office did not respond.
“Congressman Turner is aware of the legislation proposed and is reviewing its implications locally and on innovation with respect to national security,” a spokesman for Turner said.
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