A PLAN to earmark part of all government research and development money for small businesses--having sailed through the Senate on a 90-to-0 vote and emerged in fattened form from the House Small Business Committee--has run into some deserved opposition on its way to the House floor. Several other major committees are concerned that, despite the good intentions of its sponsors, the legislation would impede rather than assist technological development.
Small, technology-oriented businesses already have a good record of scientific innovation. Recent changes in the tax code have also substantially increased the pool of risk capital available to innovative enterprises, so that record should improve. The sponsors of the new plan, however, think that more help should be provided by requiring major agencies to earmark additional funds for small business-- under the House version, 3 percent of all R&D funds would have to be added to the substantial amounts already going to small business.
The House committees directly concerned with defense, intelligence, science and technology and energy and commerce think otherwise. So does the American Electronics Association's small-business committee, which represents most of the innovative small firms that the bill's sponsors want to help. They note that the small-scale experiment run by the National Science Foundation, upon which the bill is patterned, would be hard to replicate on the scale required by the legislation--and the NSF agrees. Government staffs that monitor research have been sharply cut in many agencies. If past experience is any guide, the new set-aside is likely to operate as a simple subsidy for firms otherwise unable to compete for federal contracts.
The set-aside is also likely to hit most heavily on that relatively small amount of federal money that supports basic research. This is because most R&D money is necessarily spent on expensive development and data-gathering activities for which small technological firms are often unsuited.
Streamlining federal research contracting and making sure that all qualified bidders get a chance to compete are important ways to help the government get the most for its research dollars. Earmarking money for a special group of bidders, however, is almost guaranteed to waste money. If the firms selected are the most qualified to do the work, then the set-aside is not needed. If they are not the most qualified, then government money has been wasted.