Small Business Innovation Research Program Policy Directive, 48004-48006 [E8-18914]
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Federal Register / Vol. 73, No. 159 / Friday, August 15, 2008 / Notices
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[FR Doc. E8–18797 Filed 8–14–08; 8:45 am]
BILLING CODE 8025–01–M
SMALL BUSINESS ADMINISTRATION
RIN 3245–AF61
Small Business Innovation Research
Program Policy Directive
U.S. Small Business
Administration.
ACTION: Notice of proposed amendments
to Policy Directive.
AGENCY:
SUMMARY: The U.S. Small Business
Administration (SBA) proposes to adjust
the Small Business Innovation Research
(SBIR) Program award threshold
amounts to offset the effect of inflation
that has occurred since the amounts
were last set in 1992. Current threshold
amounts were set by Congress in 1992
at $100,000 for Phase I awards and
$750,000 for Phase II awards. SBA is
authorized by statute to adjust the
award amounts once every 5 years to
reflect economic adjustments and
programmatic considerations. SBA
proposes to increase the award amounts
to $150,000 and $1,000,000,
respectively, to account for increases in
the costs of performing research and
development.
Comments must be received on
or before September 15, 2008. SBA
intends to make these comments
available to the public.
ADDRESSES: You may submit comments,
identified by RIN 3245–AF61 by any of
the following methods: (1) Federal
Rulemaking Portal: https://
www.regulations.gov, follow the
instructions for submitting comments;
(2) Mail: Office of Technology, 409
Third Street, SW., Washington, DC
20416; or (3) Hand Delivery/Courier:
Edsel Brown, Assistant Director, Office
of Technology, 409 Third Street, SW.,
Washington, DC 20416.
FOR FURTHER INFORMATION CONTACT:
Edsel Brown, Assistant Director, Office
of Technology, at (202) 205–7343. You
may also e-mail questions to
technology@sba.gov.
DATES:
SUPPLEMENTARY INFORMATION:
PO 00000
Frm 00129
Fmt 4703
Sfmt 4703
A. Background
The statutory purpose of the SBIR
program is to stimulate innovation in
the economy through a stronger role for
innovative small business concerns in
Federally-funded research and research
and development (R/R&D). The SBIR
program is a competitive program
wherein agencies offer solicitations for
proposals and award-phased funding
agreements for R/R&D to meet stated
agency needs or missions. Phase I and
Phase II agreements are funded through
the portion of agency budgets reserved
by statute for the program. Phase III
funding comes from other Federal or
non-federal sources.
At the inception of the SBIR program
in 1982, award guideline, or threshold,
amounts were established at $50,000 for
Phase I and $500,000 for Phase II. SBA’s
first SBIR policy directive required
agencies to notify SBA within 30 days
after award of any funding agreement
exceeding these amounts, and to justify
the award. 48 FR 38794, 38802 (Aug. 26,
1983). In the program’s 1992
reauthorization legislation, Congress
established award thresholds of up to
$100,000 for Phase I and up to $750,000
for Phase II. SBA has statutory authority
to increase these award amounts to
adjust for inflation or other economic or
programmatic considerations once every
five years. 15 U.S.C. 638(j)(2)(D).
The regulatory guideline for the SBIR
award amounts can be found in § 7(h)(1)
of the SBIR Policy Directive. 67 FR
60072, 60088 (Sept. 24, 2002).
Participating agencies are to keep the
majority of their awards close to these
amounts; however, they may exceed
them occasionally, provided they
submit to SBA a written justification for
doing so. SBIR Policy Directive,
§ 7(h)(2), 67 FR 60088. In addition,
agencies have the flexibility to make
awards at levels below these amounts.
As the costs of conducting R&D have
increased over time, along with general
price level increases and increases in
wages and salaries, the real value of a
typical, guideline amount, SBIR award
has declined. Since 1992, the general
price level has increased by almost 39
percent. SBA has determined that to
restore the average economic value of
the SBIR awards, the award threshold
amounts should be increased at this
time. SBA’s analysis is explained in
further detail below.
B. Proposed Amendments
SBA proposes to amend Sections 7(h)
and 10(b) of the current SBIR Policy
Directive to raise SBIR Phase I award
threshold amounts from $100,000 to
$150,000, and Phase II award threshold
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Federal Register / Vol. 73, No. 159 / Friday, August 15, 2008 / Notices
amounts from $750,000 to $1,000,000.
SBA believes these changes will cover
general increases in the costs of
conducting SBIR-funded projects that
have occurred since 1992 due to
inflation.
SBIR awards fund cutting-edge
research and technology design and
development. They are used to cover the
costs of performing innovative R&D
activity. Therefore, when assessing the
effect of inflation on SBIR award
amounts over time, the most appropriate
index to use is one that tracks the prices
of R&D inputs (e.g., researcher salaries,
cost of equipment and materials, etc.).
The U.S. Department of Commerce’s
Bureau of Economic Analysis (BEA), an
entity charged with producing economic
accounts statistics that enable the
Federal Government and others to
understand the performance of the
Nation’s economy, has developed an
R&D Satellite Account that includes a
set of R&D output price indexes that are
based on input costs, and thus present
a good proxy for the costs of performing
innovative R&D activity. Estimates are
now available covering the years 1959–
2004 (see Survey of Current Business:
Research and Development Satellite
Account Update, Estimates for 1959–
2004: New Estimates for Industry,
Regional, and International Accounts,
October 2007; https://www.bea.gov/scb/
pdf/2007/10%20October/
1007_rd_text.pdf).
BEA’s R&D Satellite Account
estimates for the Aggregate Input Price
Index for R&D Investment show costs of
Federal Extramural R&D investment
increasing by 24 percent from 1992 to
2004 (see https://www.bea.gov/scb/pdf/
2007/10%20October/
1007_rd_tables.pdf; Table 4.1).
Although this index was estimated only
through 2004, it closely tracks the
implicit Gross Domestic Product (GDP)
price index for the economy as a whole
which is currently estimated through
2006 (see NIPA Table 1.1.4, at https://
www.bea.gov/bea/dn/nipaweb).
The U.S. GDP implicit price index,
which provides an aggregated measure
of inflation for the national economy,
increased by 38.5 percent from 1992 to
2007 (NIPA Table 1.1.9). Using the GDP
price index, $100,000 in 1992 is
equivalent to about $138,500 in 2007,
and $750,000 in 1992 is equivalent to
about $1,039,000 in 2007.
When comparing the R&D and GDP
price indexes, SBA found that the R&D
index showed lower rates of price
increase in the early 1990s, and similar
rates thereafter. Over the 1992–2004
period, the R&D index shows a 24
percent inflation rate while the GDP
index shows a rate of 27 percent. As a
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19:03 Aug 14, 2008
Jkt 214001
result, SBA considers the GDP estimate
of 39 percent to be an upper bound
aggregate estimate for SBIR-related R&D
work, with the actual change in SBIRrelated R&D input costs likely lying
somewhat below that.
SBA recognizes that the costs of R&D
and innovative activity vary
considerably by industry and
consequently by Federal agency. R&D
costs have risen faster in some
industries than in others during this
period. For example, according to the
Biomedical Research and Development
Price Index (BRDPI) developed by BEA
and used by National Institutes of
Health, biomedical research input prices
increased by 68 percent from 1992 to
2007 (available at https://
officeofbudget.od.nih.gov). By
comparison, another available price
index for R&D-related activity is the
index for National Defense
Consumption Expenditures for R&D
services. This price index rose by just
under 40 percent over this period,
closely tracking the overall inflation rate
for the period (see BEA NIPA Table
3.11.4).
Taking into account the broad range
of industries active in the SBIR program,
SBA feels that adjusting the award
threshold amounts to $150,000 for
Phase I and $1,000,000 for Phase II
adequately offsets the general effects of
inflation, maintains a degree of stability
and simplicity to the threshold levels,
and continues to provide participating
agencies with an appropriate degree of
flexibility in award size.
SBA welcomes comments on these
proposed changes.
Paperwork Reduction Act
SBA has determined that this rule
imposes no additional reporting or
recordkeeping requirements under the
Paperwork Reduction Act, 44 U.S.C.,
chapter 35.
Regulatory Impact Analysis
The Office of Management and Budget
(OMB) has determined that this rule
constitutes a ‘‘significant regulatory
action’’ under Executive Order 12866.
Therefore, a general discussion of the
need for this regulatory action and its
potential costs and benefits follows.
I. Need for the Regulatory Action
SBA has specific statutory authority
to increase the award amounts to adjust
for inflation or other economic or
programmatic considerations once every
five years. 15 U.S.C. 638(j)(2)(D). Based
on the rise in the general level of prices
and the rise in R&D costs, SBA believes
that an inflation adjustment to the
award amounts is needed.
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Fmt 4703
Sfmt 4703
48005
II. The Potential Benefits and Costs of
This Regulatory Action
The SBIR Phase I and II threshold
amounts appear to have served well
during the 1990s. SBIR program
managers did not express concern over
the effects of inflation to SBA during
that time period. In recent years,
however, some of the participating
agencies have increasingly felt the need
to make larger awards to cover the
higher nominal value of research costs.
SBA has received no information
indicating that the real value of SBIR
awards should be intentionally reduced,
or allowed to diminish, from the levels
set in 1992.
One effect of maintaining the nominal
value of the award thresholds since
1992 has been that, as total SBIR
obligations increased with the sizes of
agency budgets, the number of awards
made increased faster than if frequent
inflation adjustments had been made.
Adjusting the threshold levels to restore
the real value of the awards may offset
to some extent this expansion in the
number of awards. If the threshold
levels reflect the average amount per
award, the increase in Phase 1 award
amounts from $100,000 to $150,000
could result in one-third fewer awards
and the increase in Phase 2 award
amounts from $750,000 to $1,000,000
could result in one-fourth fewer awards.
However, SBA expects the resulting
changes in award numbers to be less
significant than described above
because (1) The size of agency SBIR
budgets are likely to continue to
increase in proportion to their
extramural R&D budgets; (2) some SBIR
agencies will likely continue to make
awards below the threshold amounts;
and (3) for those agencies that adjust
their average award size proportionally
to the new threshold amounts, this
adjustment is likely to be made over
several years.
SBA notes that the SBIR program has
experienced considerable growth since
its inception in 1983. In that first year
of awarding activity, the program made
686 Phase I awards for $44.5 million to
small high technology firms. In FY
2006, the program produced 3,835
Phase I awards and 2,026 Phase II
awards for approximately $2.1 billion
dollars. With each year, the number of
awards and total value of awards has
increased, primarily as a result of an
increase in the agencies’ SBIR budgets
and utilization of the program.
Because some costs of administering
SBIR awards are fixed, any decrease in
the number of awards resulting from the
proposed increase in award threshold
amounts may tend to reduce the costs to
E:\FR\FM\15AUN1.SGM
15AUN1
48006
Federal Register / Vol. 73, No. 159 / Friday, August 15, 2008 / Notices
the Federal Government associated with
the awarding and monitoring of SBIR
funding agreements.
As a result, SBA believes there will be
negligible costs to the Federal
Government with respect to the award
and monitoring of SBIR funding
agreements as a result of this rule. In
addition, the potential decrease in the
number of SBIR awards is not enough to
significantly affect current small
businesses.
SBA expects the increase in award
amount guidelines to allow
participating agencies to more
effectively cover the costs of some SBIR
projects. This could increase the
likelihood of success for some SBIRfunded projects.
III. Alternatives to Regulatory Action
In determining the appropriate
adjustment to the threshold amounts,
SBA considered the past changes in
prices for the economy as a whole and
for inputs into R&D activity. While
different technology sectors have
increased at different rates, SBA
identified the general rise in prices of
R&D inputs and decided to adjust the
program-wide threshold amounts
accordingly. SBA also determined that
there are program advantages and
efficiencies to maintaining the threshold
amounts as relatively stable and
rounded figures. SBA therefore rounded
the inflation-adjusted amounts.
mstockstill on PROD1PC66 with NOTICES
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA)
requires agencies to analyze the
economic impact of proposed
regulations on small entities and
consider alternatives that would
minimize the burden on these entities.
5 U.S.C. 603. This RFA requirement
only applies to regulations that are
subject to notice and comment under
the Administrative Procedure Act (APA)
or any other law. 5 U.S.C. 533(b).
Generally, the notice and comment
requirement does not apply to
interpretive rules, general statements of
policy, or rules of agency organization,
procedure and practice. Id at
§ 553(b)(A). The SBIR Policy Directive is
not a rule for RFA purposes. The Policy
Directive is issued under authority of
the Small Business Act (Act), which
provides that the SBA shall ‘‘issue
policy directives for the general conduct
of the SBIR program within the Federal
Government * * * ’’ 15 U.S.C. 638(j)(1).
Therefore, no RFA analysis is required.
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19:03 Aug 14, 2008
Jkt 214001
Notice of Proposed Amendments to the
Policy Directive; Small Business
Innovation Research Program
To: The Directors, Small Business
Innovation Research (SBIR) Program
Subject: Proposed Revisions to the SBIR
Program Policy Directive concerning
Phase I and Phase II Threshold
Amounts
1. Purpose. Section 9(j)(3) of the Small
Business Act (Act) (15 U.S.C. 638(j)(3))
requires the Administrator of the U.S.
Small Business Administration (SBA) to
modify the SBIR Program Policy
Directive as required for the general
conduct of the SBIR Program within the
Federal Government. Specifically,
§ 9(j)(2) of the Act requires the SBA to
increase the award amounts for Phase I
and II to adjust for inflation or other
economic or programmatic
considerations once every five years.
2. Authority. These proposed
amendments to the Policy Directive are
issued under the authority of 15 U.S.C.
638(j).
3. Procurement Regulations. The
Federal Acquisition Regulations may
need to be modified to conform to the
requirements. Regulatory provisions
that pertain to the areas of SBA
responsibility will require approval of
the SBA Administrator or designee. The
SBA’s Office of Technology is the
appropriate office for coordinating such
regulatory provisions.
4. Personnel Concerned. All Federal
Government personnel who are
involved in the administration of the
program, including those involved with
the issuance and management of
funding agreements of the SBIR Program
and the establishment of goals for small
business concerns in research or
research and development
procurements or grants.
5. Distribution. Federal Government
agencies and departments participating
in the SBIR Program and those required
to establish small business research
development goals as directed by § 9 of
the Act (15 U.S.C. 638(j)).
6. Originator. Office of Technology,
SBA.
7. Dates. The SBIR Program is
authorized through September 30, 2008.
These proposed amendments will be
effective when issued as final in the
Federal Register.
Authorized By: Edsel Brown, Jr.,
Assistant Director, Office of
Technology, U.S. Small Business
Administration.
For the reasons set forth in the
preamble, SBA proposes to amend the
SBIR Policy Directive as follows:
1. Amend § 7(h)(1) by removing
‘‘$100,000’’ and adding in its place
PO 00000
Frm 00131
Fmt 4703
Sfmt 4703
‘‘150,000’’ and by removing ‘‘$750,000’’
and replacing it with ‘‘$1,000,000’’.
2. Amend § 7(h)(2) by removing
‘‘$100,000’’ and adding in its place
‘‘150,000’’ and by removing ‘‘$750,000’’
and adding in its place ‘‘$1,000,000’’.
3. Amend § 10(b)(7) by removing
‘‘$100,000’’ and adding in its place
‘‘150,000’’ and by removing ‘‘$750,000’’
and adding in its place ‘‘$1,000,000’’.
Jovita Carranza,
Acting Administrator, U.S. Small Business
Administration.
[FR Doc. E8–18914 Filed 8–14–08; 8:45 am]
BILLING CODE 8025–01–P
SMALL BUSINESS ADMINISTRATION
Rustic Canyon Ventures SBIC, L.P.
License No. 09/79–0450; Notice
Seeking Exemption Under Section 312
of the Small Business Investment Act,
Conflicts of Interest
Notice is hereby given that Rustic
Canyon Ventures SBIC, L.P., 2425
Olympic Blvd., Suite 6050 West, Santa
Monica, CA 90404, a Federal Licensee
under the Small Business Investment
Act of 1958, as amended (‘‘the Act’’), in
connection with the financing of a small
concern, has sought an exemption under
Section 312 of the Act and Section
107.730, Financings which Constitute
Conflicts of Interest of the Small
Business Administration (‘‘SBA’’) Rules
and Regulations (13 CFR 107.730
(2008)). Rustic Canyon Ventures SBIC,
L.P. proposes to provide equity security
financing to Fulcrum BioEnergy, Inc.,
2425 Olympic Blvd., Suite 560 East,
Santa Monica, CA 90404. The financing
is contemplated for development and
expansion of production facilities and
for general corporate purposes.
The financing is brought within the
purview of § 107.730(a)(l) of the
Regulations because US Renewables
Group HoldCo III, LLC (‘‘USRG’’), an
Associate of Rustic Canyon Ventures
SBIC, L.P., owns more than ten percent
of Fulcrum BioEnergy, Inc. Therefore,
Fulcrum BioEnergy, Inc., is also
considered an Associate of Rustic
Canyon Ventures SBIC, L.P., as defined
at 13 CFR 107.50 of the SBIC
Regulations.
Notice is hereby given that any
interested person may submit written
comments on the transaction to the
Associate Administrator for Investment,
U.S. Small Business Administration,
E:\FR\FM\15AUN1.SGM
15AUN1
Agencies
[Federal Register Volume 73, Number 159 (Friday, August 15, 2008)]
[Notices]
[Pages 48004-48006]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-18914]
-----------------------------------------------------------------------
SMALL BUSINESS ADMINISTRATION
RIN 3245-AF61
Small Business Innovation Research Program Policy Directive
AGENCY: U.S. Small Business Administration.
ACTION: Notice of proposed amendments to Policy Directive.
-----------------------------------------------------------------------
SUMMARY: The U.S. Small Business Administration (SBA) proposes to
adjust the Small Business Innovation Research (SBIR) Program award
threshold amounts to offset the effect of inflation that has occurred
since the amounts were last set in 1992. Current threshold amounts were
set by Congress in 1992 at $100,000 for Phase I awards and $750,000 for
Phase II awards. SBA is authorized by statute to adjust the award
amounts once every 5 years to reflect economic adjustments and
programmatic considerations. SBA proposes to increase the award amounts
to $150,000 and $1,000,000, respectively, to account for increases in
the costs of performing research and development.
DATES: Comments must be received on or before September 15, 2008. SBA
intends to make these comments available to the public.
ADDRESSES: You may submit comments, identified by RIN 3245-AF61 by any
of the following methods: (1) Federal Rulemaking Portal: https://
www.regulations.gov, follow the instructions for submitting comments;
(2) Mail: Office of Technology, 409 Third Street, SW., Washington, DC
20416; or (3) Hand Delivery/Courier: Edsel Brown, Assistant Director,
Office of Technology, 409 Third Street, SW., Washington, DC 20416.
FOR FURTHER INFORMATION CONTACT: Edsel Brown, Assistant Director,
Office of Technology, at (202) 205-7343. You may also e-mail questions
to technology@sba.gov.
SUPPLEMENTARY INFORMATION:
A. Background
The statutory purpose of the SBIR program is to stimulate
innovation in the economy through a stronger role for innovative small
business concerns in Federally-funded research and research and
development (R/R&D). The SBIR program is a competitive program wherein
agencies offer solicitations for proposals and award-phased funding
agreements for R/R&D to meet stated agency needs or missions. Phase I
and Phase II agreements are funded through the portion of agency
budgets reserved by statute for the program. Phase III funding comes
from other Federal or non-federal sources.
At the inception of the SBIR program in 1982, award guideline, or
threshold, amounts were established at $50,000 for Phase I and $500,000
for Phase II. SBA's first SBIR policy directive required agencies to
notify SBA within 30 days after award of any funding agreement
exceeding these amounts, and to justify the award. 48 FR 38794, 38802
(Aug. 26, 1983). In the program's 1992 reauthorization legislation,
Congress established award thresholds of up to $100,000 for Phase I and
up to $750,000 for Phase II. SBA has statutory authority to increase
these award amounts to adjust for inflation or other economic or
programmatic considerations once every five years. 15 U.S.C.
638(j)(2)(D).
The regulatory guideline for the SBIR award amounts can be found in
Sec. 7(h)(1) of the SBIR Policy Directive. 67 FR 60072, 60088 (Sept.
24, 2002). Participating agencies are to keep the majority of their
awards close to these amounts; however, they may exceed them
occasionally, provided they submit to SBA a written justification for
doing so. SBIR Policy Directive, Sec. 7(h)(2), 67 FR 60088. In
addition, agencies have the flexibility to make awards at levels below
these amounts.
As the costs of conducting R&D have increased over time, along with
general price level increases and increases in wages and salaries, the
real value of a typical, guideline amount, SBIR award has declined.
Since 1992, the general price level has increased by almost 39 percent.
SBA has determined that to restore the average economic value of the
SBIR awards, the award threshold amounts should be increased at this
time. SBA's analysis is explained in further detail below.
B. Proposed Amendments
SBA proposes to amend Sections 7(h) and 10(b) of the current SBIR
Policy Directive to raise SBIR Phase I award threshold amounts from
$100,000 to $150,000, and Phase II award threshold
[[Page 48005]]
amounts from $750,000 to $1,000,000. SBA believes these changes will
cover general increases in the costs of conducting SBIR-funded projects
that have occurred since 1992 due to inflation.
SBIR awards fund cutting-edge research and technology design and
development. They are used to cover the costs of performing innovative
R&D activity. Therefore, when assessing the effect of inflation on SBIR
award amounts over time, the most appropriate index to use is one that
tracks the prices of R&D inputs (e.g., researcher salaries, cost of
equipment and materials, etc.). The U.S. Department of Commerce's
Bureau of Economic Analysis (BEA), an entity charged with producing
economic accounts statistics that enable the Federal Government and
others to understand the performance of the Nation's economy, has
developed an R&D Satellite Account that includes a set of R&D output
price indexes that are based on input costs, and thus present a good
proxy for the costs of performing innovative R&D activity. Estimates
are now available covering the years 1959-2004 (see Survey of Current
Business: Research and Development Satellite Account Update, Estimates
for 1959-2004: New Estimates for Industry, Regional, and International
Accounts, October 2007; https://www.bea.gov/scb/pdf/2007/10%20October/
1007_rd_text.pdf).
BEA's R&D Satellite Account estimates for the Aggregate Input Price
Index for R&D Investment show costs of Federal Extramural R&D
investment increasing by 24 percent from 1992 to 2004 (see https://
www.bea.gov/scb/pdf/2007/10%20October/1007_rd_tables.pdf; Table 4.1).
Although this index was estimated only through 2004, it closely tracks
the implicit Gross Domestic Product (GDP) price index for the economy
as a whole which is currently estimated through 2006 (see NIPA Table
1.1.4, at https://www.bea.gov/bea/dn/nipaweb).
The U.S. GDP implicit price index, which provides an aggregated
measure of inflation for the national economy, increased by 38.5
percent from 1992 to 2007 (NIPA Table 1.1.9). Using the GDP price
index, $100,000 in 1992 is equivalent to about $138,500 in 2007, and
$750,000 in 1992 is equivalent to about $1,039,000 in 2007.
When comparing the R&D and GDP price indexes, SBA found that the
R&D index showed lower rates of price increase in the early 1990s, and
similar rates thereafter. Over the 1992-2004 period, the R&D index
shows a 24 percent inflation rate while the GDP index shows a rate of
27 percent. As a result, SBA considers the GDP estimate of 39 percent
to be an upper bound aggregate estimate for SBIR-related R&D work, with
the actual change in SBIR-related R&D input costs likely lying somewhat
below that.
SBA recognizes that the costs of R&D and innovative activity vary
considerably by industry and consequently by Federal agency. R&D costs
have risen faster in some industries than in others during this period.
For example, according to the Biomedical Research and Development Price
Index (BRDPI) developed by BEA and used by National Institutes of
Health, biomedical research input prices increased by 68 percent from
1992 to 2007 (available at https://officeofbudget.od.nih.gov). By
comparison, another available price index for R&D-related activity is
the index for National Defense Consumption Expenditures for R&D
services. This price index rose by just under 40 percent over this
period, closely tracking the overall inflation rate for the period (see
BEA NIPA Table 3.11.4).
Taking into account the broad range of industries active in the
SBIR program, SBA feels that adjusting the award threshold amounts to
$150,000 for Phase I and $1,000,000 for Phase II adequately offsets the
general effects of inflation, maintains a degree of stability and
simplicity to the threshold levels, and continues to provide
participating agencies with an appropriate degree of flexibility in
award size.
SBA welcomes comments on these proposed changes.
Paperwork Reduction Act
SBA has determined that this rule imposes no additional reporting
or recordkeeping requirements under the Paperwork Reduction Act, 44
U.S.C., chapter 35.
Regulatory Impact Analysis
The Office of Management and Budget (OMB) has determined that this
rule constitutes a ``significant regulatory action'' under Executive
Order 12866. Therefore, a general discussion of the need for this
regulatory action and its potential costs and benefits follows.
I. Need for the Regulatory Action
SBA has specific statutory authority to increase the award amounts
to adjust for inflation or other economic or programmatic
considerations once every five years. 15 U.S.C. 638(j)(2)(D). Based on
the rise in the general level of prices and the rise in R&D costs, SBA
believes that an inflation adjustment to the award amounts is needed.
II. The Potential Benefits and Costs of This Regulatory Action
The SBIR Phase I and II threshold amounts appear to have served
well during the 1990s. SBIR program managers did not express concern
over the effects of inflation to SBA during that time period. In recent
years, however, some of the participating agencies have increasingly
felt the need to make larger awards to cover the higher nominal value
of research costs. SBA has received no information indicating that the
real value of SBIR awards should be intentionally reduced, or allowed
to diminish, from the levels set in 1992.
One effect of maintaining the nominal value of the award thresholds
since 1992 has been that, as total SBIR obligations increased with the
sizes of agency budgets, the number of awards made increased faster
than if frequent inflation adjustments had been made. Adjusting the
threshold levels to restore the real value of the awards may offset to
some extent this expansion in the number of awards. If the threshold
levels reflect the average amount per award, the increase in Phase 1
award amounts from $100,000 to $150,000 could result in one-third fewer
awards and the increase in Phase 2 award amounts from $750,000 to
$1,000,000 could result in one-fourth fewer awards.
However, SBA expects the resulting changes in award numbers to be
less significant than described above because (1) The size of agency
SBIR budgets are likely to continue to increase in proportion to their
extramural R&D budgets; (2) some SBIR agencies will likely continue to
make awards below the threshold amounts; and (3) for those agencies
that adjust their average award size proportionally to the new
threshold amounts, this adjustment is likely to be made over several
years.
SBA notes that the SBIR program has experienced considerable growth
since its inception in 1983. In that first year of awarding activity,
the program made 686 Phase I awards for $44.5 million to small high
technology firms. In FY 2006, the program produced 3,835 Phase I awards
and 2,026 Phase II awards for approximately $2.1 billion dollars. With
each year, the number of awards and total value of awards has
increased, primarily as a result of an increase in the agencies' SBIR
budgets and utilization of the program.
Because some costs of administering SBIR awards are fixed, any
decrease in the number of awards resulting from the proposed increase
in award threshold amounts may tend to reduce the costs to
[[Page 48006]]
the Federal Government associated with the awarding and monitoring of
SBIR funding agreements.
As a result, SBA believes there will be negligible costs to the
Federal Government with respect to the award and monitoring of SBIR
funding agreements as a result of this rule. In addition, the potential
decrease in the number of SBIR awards is not enough to significantly
affect current small businesses.
SBA expects the increase in award amount guidelines to allow
participating agencies to more effectively cover the costs of some SBIR
projects. This could increase the likelihood of success for some SBIR-
funded projects.
III. Alternatives to Regulatory Action
In determining the appropriate adjustment to the threshold amounts,
SBA considered the past changes in prices for the economy as a whole
and for inputs into R&D activity. While different technology sectors
have increased at different rates, SBA identified the general rise in
prices of R&D inputs and decided to adjust the program-wide threshold
amounts accordingly. SBA also determined that there are program
advantages and efficiencies to maintaining the threshold amounts as
relatively stable and rounded figures. SBA therefore rounded the
inflation-adjusted amounts.
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) requires agencies to analyze
the economic impact of proposed regulations on small entities and
consider alternatives that would minimize the burden on these entities.
5 U.S.C. 603. This RFA requirement only applies to regulations that are
subject to notice and comment under the Administrative Procedure Act
(APA) or any other law. 5 U.S.C. 533(b). Generally, the notice and
comment requirement does not apply to interpretive rules, general
statements of policy, or rules of agency organization, procedure and
practice. Id at Sec. 553(b)(A). The SBIR Policy Directive is not a
rule for RFA purposes. The Policy Directive is issued under authority
of the Small Business Act (Act), which provides that the SBA shall
``issue policy directives for the general conduct of the SBIR program
within the Federal Government * * * '' 15 U.S.C. 638(j)(1). Therefore,
no RFA analysis is required.
Notice of Proposed Amendments to the Policy Directive; Small Business
Innovation Research Program
To: The Directors, Small Business Innovation Research (SBIR) Program
Subject: Proposed Revisions to the SBIR Program Policy Directive
concerning Phase I and Phase II Threshold Amounts
1. Purpose. Section 9(j)(3) of the Small Business Act (Act) (15
U.S.C. 638(j)(3)) requires the Administrator of the U.S. Small Business
Administration (SBA) to modify the SBIR Program Policy Directive as
required for the general conduct of the SBIR Program within the Federal
Government. Specifically, Sec. 9(j)(2) of the Act requires the SBA to
increase the award amounts for Phase I and II to adjust for inflation
or other economic or programmatic considerations once every five years.
2. Authority. These proposed amendments to the Policy Directive are
issued under the authority of 15 U.S.C. 638(j).
3. Procurement Regulations. The Federal Acquisition Regulations may
need to be modified to conform to the requirements. Regulatory
provisions that pertain to the areas of SBA responsibility will require
approval of the SBA Administrator or designee. The SBA's Office of
Technology is the appropriate office for coordinating such regulatory
provisions.
4. Personnel Concerned. All Federal Government personnel who are
involved in the administration of the program, including those involved
with the issuance and management of funding agreements of the SBIR
Program and the establishment of goals for small business concerns in
research or research and development procurements or grants.
5. Distribution. Federal Government agencies and departments
participating in the SBIR Program and those required to establish small
business research development goals as directed by Sec. 9 of the Act
(15 U.S.C. 638(j)).
6. Originator. Office of Technology, SBA.
7. Dates. The SBIR Program is authorized through September 30,
2008. These proposed amendments will be effective when issued as final
in the Federal Register.
Authorized By: Edsel Brown, Jr., Assistant Director, Office of
Technology, U.S. Small Business Administration.
For the reasons set forth in the preamble, SBA proposes to amend the
SBIR Policy Directive as follows:
1. Amend Sec. 7(h)(1) by removing ``$100,000'' and adding in its
place ``150,000'' and by removing ``$750,000'' and replacing it with
``$1,000,000''.
2. Amend Sec. 7(h)(2) by removing ``$100,000'' and adding in its
place ``150,000'' and by removing ``$750,000'' and adding in its place
``$1,000,000''.
3. Amend Sec. 10(b)(7) by removing ``$100,000'' and adding in its
place ``150,000'' and by removing ``$750,000'' and adding in its place
``$1,000,000''.
Jovita Carranza,
Acting Administrator, U.S. Small Business Administration.
[FR Doc. E8-18914 Filed 8-14-08; 8:45 am]
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