Shaheen leads charge to save key federal innovation funding for small business

The U.S. Air Force and the Defense Advanced Research Projects Agency is paying Skypad Tech Inc., a five-person firm in Hampton, $275,000 to look into “innovative personal air mobility system” in order to provide it with “a cutting edge on the battlefield”

The Navy will is funding Creare Inc. – which employs 182 people in Hanover – with about $140,000 for research into setting up a “soft robotics” platform “inspired by creatures of the sea”

And the National Foundation for Science is giving nearly $1 million to Clairways, a four-person company in Lebanon, to develop better respiratory therapeutics.

The three programs are just three recent examples of nearly $900 million in funding provided over the last four decades to for more than 2,400 projects undertaken by 240 New Hampshire companies through the federal Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs.

But both programs will cease to exist at the end of the month unless Congress agrees to continue them. Earlier this week, U.S. Sen. Jeanne Shaheen, D-New Hampshire, introduced a bill to continue the programs permanently to avoid such threats to their existence.

The programs don’t actually fund the projects, but they require most federal agencies (with budgets of more than $100 million) to set aside a small percentage (3.2 percent for SBIR and 0.45 percent for STTR) to fund work being done by U.S. small businesses (fewer than 500 employees).

Funding innovation

The programs don’t just give a leg up for small business, said Jay Rozzi, vice president and principal engineer at Creare, which also gets large defense contracts outside SBIR/STTR.

In those traditional procurement projects, the government knows what it wants and spells it out in painstakingly detail over hundreds of pages, he said.

But SBIR and STTR are the government’s research and development arm. “In these cases, the technologies are so immature, the government can’t state what it doesn’t know it needs,”

Rozzi said. “They don’t know what’s out there. This is the R&D to develop new needs that it can’t articulate.”

For example, the government was procuring those massive machines that reconnect the ends of frayed arresting cables built to hold aircraft immediately after they land on the short runway on an aircraft carrier.

The machines, said Rozzi, were the size of a two-bedroom house, and therefore the reattachment had to be done on land. Creare came up with way to do it with a machine the size of a refrigerator that could be loaded on the carrier. Eventually, Creare received a traditional procurement contract from the Navy, and it has since gone on to sell 30 of the systems, saving the Navy about 500 manhours per deployment.

Such innovations are one of the reasons that Creare won half the SBIR/STTS awards granted in New Hampshire last year, and it is one of the reasons New Hampshire gets more than its share of such contracts. (New Hampshire companies have had nearly five times as many projects funded as their counterparts in Maine and about 10 times that of Vermont, for instance.)

Nationally, the Defense Department funds more than $30 billion of such projects. Health and Human Services was second with $19 billion and Department of Energy third with less than $7 billion.

The figures get a lot smaller when you look to New Hampshire, which received a total $51 million last year. The biggest years were the previous two years, with $57 million awarded in 2020 and $60.6 million in 2019.

With that amount of money going to small businesses, it’s hard to image that the programs will suddenly end in a few weeks. The last time the program faced such a crisis, it got a five-year extension thanks to the 2017 National Defense Authorization Act. Shaheen – as a senior member of the Senate Appropriations and Armed Services Committees – helped lead the way on that in 2016. In 2019, she proposed to make the programs permanent, and earlier this week introduced a bill to do so again.

“These programs are an investment in our local economy, as well as our national defense which is why permanently reauthorizing them is a no-brainer,” the senator said. “We know these programs work, and rather than continued stopgaps on reauthorization, it is time to make them permanent.”

To do so, Shaheen needs bipartisan support, and that’s something harder to achieve now than it six years ago.