WHEN A BILL passes the Senate by a 90 to 0 vote you can conclude that one of two things happened: either the measure was viewed as essential to the republic, or no one was paying attention. In the case of the Small Business Innovation Development Act--now working its way through the House--no one in the Senate seemed to be on deck.
Small businesses have accounted for most of the job growth and a large part of the technological progress over the last decade. That being the case, you might ask why more help is needed--especially since the tax bill passed last year was designed to encourage investment and risk-taking. The proponents of the measure argue, however, that small business could contribute still more if it were assured a larger share of federal research and development money. Hence the proposed legislation.
The more generous House Small Business Committee bill would earmark 3 percent of the R&D budgets of the 13 largest federal agencies for small business. This would be more than $1.5 billion annually after the program had been phased in.
The whole dismal history of government procurement preferences and set-asides would suggest that, despite the program sponsors' good intentions, the desired boost to innovation is far more likely to end up as a prop for shaky ventures. In many agencies the program would quickly degenerate into another pesky set-aside for firms that can, by means fair or foul, become eligible--not a hard thing to do in a program that covers firms with as many as 1,000 workers.
Most government R&D--particularly in the large domestic agencies--is simply not the sort of thing that sustains unrecognized geniuses. As a result, it is also likely that the burden of meeting an agency's 3 percent quota for innovative research would fall heavily on that sometimes small part of the budget that funds basic research. This worries the universities and medical schools.
The American Electronics Association--whose predominantly small-firm membership is presumably just the sort of beneficiary the program has in mind-- says that the last thing it needs is another complication in the already Byzantine government procurement process. The electronic firms aren't against government help--they'd like more tax breaks instead. But they are right in insisting that government could help worthy small businesses a lot more by streamlining its procurement process, speeding up its bill-paying and increasing--not reducing--the amount of open competition.