An innovative programme to support small businesses

The growth principle behind PlaTCOM Ventures’ programme to support small businesses. © shutterstock
The growth principle behind PlaTCOM Ventures’ programme to support small businesses. © shutterstock

KUALA LUMPUR, May 26 — Government procurement, or public procurement, is the procurement of goods and services on behalf of a public authority, such as a government agency.

With 10 to 20 per cent of GDP, government procurement accounts for a substantial part of the global economy. This could mean that small businesses can greatly benefit by being suppliers to the government and two countries have made this a reality; namely, the US and the UK.

In the United States, the Small Business Innovation Research (SBRI) programme has been running successfully for decades since its inception in 1982.

The SBRI programme is a highly competitive programme that encourages local small businesses to engage in government R&D that has the potential for commercialisation and wealth creation.

SBIR enables small businesses to explore their technological potential and provides the incentive to profit from its commercialisation through a competitive awards-based programme.

By including qualified small businesses in the nation’s R&D landscape, high-tech innovation is stimulated and the country gains entrepreneurial spirit as it meets its specific research and development needs.

The mission of the SBIR programme is to support scientific excellence and technological innovation through the investment of public research funds in critical national priorities to build a strong national economy.

The programme’s goals are fourfold:

  1. Stimulate technological innovation;
  2. Meet federal research and development needs;
  3. Foster and encourage participation in innovation and entrepreneurship by socially and economically disadvantaged persons;
  4. Increase private-sector commercialisation of innovations derived from public research and development funding.

Currently, 11 federal agencies are participating in the SBIR programme. Each government agency with external R&D budgets that exceed US$100 million (RM408 million) are required to allocate 2.8 per cent of their R&D budget to these programmes.

The 11 participating government agencies include Department of Agriculture, Department of Defence, Department of Education, Department of Energy, Department of Homeland Security, Department of Transportation, Environmental Protection Agency, National Aeronautics and Space Administration, National Science Foundation, Department of Commerce’s National Institute of Standards and Technology and National Oceanic and Atmospheric Administration.

The mechanics

Each of the aforementioned government agencies administers its own individual programme within the guidelines of the programme. The agencies designate “problems to be solved” and publish R&D topics and accept proposals from small businesses. Awards are made on a competitive basis after proposal evaluation by subject matter experts.

As per the SBIR programme administrators, the programme is structured into three phases as follows:

Phase I. The objective of Phase I is to establish the technical merit, feasibility, and commercial potential of the proposed R/R&D efforts and to determine the quality of performance of the small business awardee organisation prior to providing further federal support in Phase II. SBIR Phase I awards normally do not exceed US$150,000 total costs for 6 months.

Phase II. The objective of Phase II is to continue the R/R&D efforts initiated in Phase I. Funding is based on the results achieved in Phase I and the scientific and technical merit and commercial potential of the project proposed in Phase II. Only Phase I awardees are eligible for a Phase II award. SBIR Phase II awards normally do not exceed US$1,000,000 total costs for two years.

Phase III. The objective of Phase III, where appropriate, is for the small business to pursue commercialisation objectives resulting from the Phase I/II R/R&D activities. The SBIR program does not fund Phase III. Some federal agencies, Phase III may involve follow-on non-SBIR funded R&D or production contracts for products, processes or services intended for use by the US Government.” — Source: www.sbir.gov

The programme focuses on the entrepreneurial sector because most innovation and innovators thrive here. Having said that, the risk and expense of conducting serious R&D efforts are often beyond the means of many small businesses and they may lack much of the technological as well as manufacturing capabilities as opposed to large businesses.

But by preserving a percentage of government R&D funds for small businesses, the programme protects the small businesses and enables it to compete on the same level as larger businesses.

SBIR funds the critical start-up and development stages and it encourages the commercialisation of the technology, product, or service, which, in turn, stimulates the national economy. The many contributions made by these small businesses have enhanced the nation’s defence, protected their environment, advanced health care, and improved the country’s ability to manage information and manipulate data.

Taking from the SBIR programme in the US, the national innovation agency in the UK (called Innovate UK) runs a very similar programme — the Small Business Research Initiative (SBRI). The background and the mechanics of the programme are very similar to that of the US.

The UK SBRI programme has also produced many successes by deploying this innovative programme. All participating government agencies collaborate with Innovate UK in running the programme and helping their small businesses to flourish to create solutions to existing public issues and creating wealth for the nation.

More information on the UK programme can be found on www.sbri.innovateuk.org

Your feedback is welcome at [email protected]

*  Dr Viraj Perera is the CEO of PlaTCOM Ventures Sdn Bhd, the national technology commercialisation platform of Malaysia which is a wholly-owned subsidiary of Agensi Inovasi Malaysia (AIM) formed in collaboration with SME Corp Malaysia.

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