Snowe Co-Sponsors Bill to Reverse Policy Blocking SBIR Grants to Small Biotechnology Firms

5/5/2004

From: Craig Orfield of the Senate Committee on Small Business and Entrepreneurship, 202-224-5175; Web: http://sbc.senate.gov

WASHINGTON, May 5 -- U.S. Senator Olympia J. Snowe (R-Maine), Chair of the Senate Committee on Small Business and Entrepreneurship, has signed on as co-sponsor of a bill introduced today to restore the eligibility of certain small biotechnology firms for the Small Business Innovation Research (SBIR) Program.

The bill, S.2384, would reverse a decision by the Small Business Administration (SBA) that has barred many promising biotechnology firms with venture capital backing from receiving SBIR grants, a primary investment capital source for the biotech industry.

"Adoption of this bill is essential to ensure that venture capital continues to flow to the biotech industry" Snowe said Wednesday. "Unfortunately, the SBA's interpretation of current rules is restricting SBIR grant awards and stifling innovation in the biotech industry."

The bill Snowe is co-sponsoring was introduced today by Senator Kit Bond (R-Mo.) and Senator Ted Kennedy (D-Mass.) and directs the SBA Administrator to issue regulations to ensure that an SBIR award is not given to a business that is majority-owned by: another business concern that is ineligible to participate in the SBIR Program; a venture capital operating company, an employee benefits plan, or a pension plan controlled by another business concern that is ineligible to participate in the SBIR Program.

Bond, a senior member of the Small Business Committee, said: "We must work together to avoid stifling innovation. Our impact today will foster cures and medicines tomorrow that were once thought to be inconceivable. The biotech industry cannot do it alone. We must nurture biotechnology and help the industry grow for the future of our economy and for our well-being."

An opinion issued in 2000 by the SBA's General Counsel has prevented many innovative small companies from participating in the SBIR Program because it erroneously assumes that all biotech firms with a majority of venture capital backing are controlled by big businesses. Current SBA regulations require that, to be eligible for a grant, a small company must be at least 51 percent owned by one or more individuals.

"I believe this bill will strengthen the SBIR Program by restoring the eligibility of innovative biotech firms without undermining the original intent of the program," Snowe added.