UK’s SBIR campaign gathers steam, but still a long way to go
Top tier scientists, academics and venture capitalists have joined forces with Kitty Ussher, Labour MP for Burnley, to lobby the government to pass legislation that will ensure that 2.5 percent of all government and federal research programme budget is spent with small and micro businesses by law rather than a voluntary goal, similar to the US SBIR programme.
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The campaign is headed by David Connell (see article) founder of TTP Ventures, and is backed by Hermann Hauser of Amadeus Capital, Professor Chris Snowden, vice-chancellor, Surrey University and ex-CEO of Filtronic Integrated Products, Sir Derek Roberts, former vice-chancellor of University College London, Professor Andy Hopper, head of Cambridge Computer Laboratory, Professor Rod Combs, vice president of Innovation and Economic Development at Manchester University, Walter Herriott, managing director of St John Innovation Centre in Cambridge.
Previous lobbying effort by David Connell and Ann Campbell (ex MP for Cambridge) had resulted in the Chancellor of the Exchequer (minister of finance and economy) incorporating some element of this provision, but without a specific law, the goal remains voluntary.
The Chancellor, Gordon Brown, had announced in his last budget the intention of introducing a requirement that 2.5 percent of all extra mural research (i.e. that is externally contracted out) will be reserved for SMEs (small and medium sized enterprises).
We haven’t seen further details on exactly how this will work and whether the procurement policy for this will be as simple, or if it will be riddled with so much bureaucracy that SMEs won’t be able to access it because they don’t necessarily have the resources to go through both the red tape and the costs of consultants fees to get them the contract. We await further details during the next pre-budget speech.
New champion: Kitty Ussher MP, Private Members Bill
Kitty Ussher was previously a special advisor to Patricia Hewitt, the ex-DTI minister. Previously, Ann Campbell, ex member of parliament for Cambridge, had set the ball rolling but had failed to secure enough government time to bring the issue to a head. Now, Kitty Ussher has tabled an early day motion (see later, for an explanation) to call on the government to make the necessary changes and introduce a Private Members Bill.
In a written answer, Kitty Ussher gave TheChilli the following comments via her assistant. In response to our query about the early day motion and private members bill, she commented:
“An Early Day Motion never becomes law, it is a form of petition MPs sign to try to make the Government aware of issues. A Private Members Bill is a piece of legislation introduced by an individual member of parliament rather than the Government, but they rarely become law as they are not given the same priority.”
TheChilli: What level of support have you got so far? When will you introduce the Bill?
She commented: “I think we have around 80 signatures so far, which is very good for something that is not particularly a well known subject. We have time to introduce our bill as a 10 Minute Rule Bill (a form of Private Members Bill) on 7 February.”
TheChilli: Can we see the details of the Bill, and what assurance can we have that it is not going to burden the SMEs with over-bureaucratic procurement process, which will make this proposal still-born, as SMEs do not have the necessary resources to carry out complicated bid procedures and compliance.
She responded: “It is designed to help SMEs by opening up more opportunities for them to bid for government contracts. It is not a burden because it is not compulsory. We have a small number of bills published. If it gets into committee stage, they’ll be publicly available for scrutiny.”
TheChilli: The DTI has been talking about public procurement for over five years, but we still have to see concrete plans. Is your Bill part of the DTI effort or a separate exercise?
She responded: It is a separate exercise. I’m keen for the DTI to move quickly on their plans but you’ll have to ask them about their timescales!
The SBIR programme: the devil is in the details
For those who are not familiar with the Small Business Innovation Research Programme, below is a brief summary that was published in TheChilli’s Speaker’s Corner by Adrian Horne of Cambridge Technology Transfer in March 2005.
The UK programmes should borrow from the US SBIR programme
One of the positive aspects of the SBIR program is that it avoids the tempting opportunity to create a morass of bureaucratic red tape to manage this investment.
The method has elegant simplicity. The Small Business Administration is the coordinating agency. It collects from participating federal research agencies the SBIR solicitation information and publishes it quarterly in the ‘Pre-Solicitation Announcement’ (PSA). Annually it reports on the operation of the SBIR program to Congress. In other words, it is a ‘hands-off’ process, as far as possible.
The PSA is a single source for the research topics and provides information on each agency’s solicitations and on the individuals responsible. These are the individuals who defined the requirement. These individuals also assess proposals, award contracts, evaluate implementation and authorise payment. Billions of dollars of R&D investment are managed with a minimum of administrative cost.
Key words that illustrate the difference between the SBIR Program and UK government funded research programmes aimed at stimulating the SME sector include:
• Mandatory expenditure;
• Topics chosen by technical personnel within the funding department;
• Wide publicity of the bidding opportunity;
• No opportunity for political influence on contract awards or amount invested;
• Direct contact between personnel defining the requirement and the principal researcher;
• No financial contribution required from the SME.
For the full article, click here.
David Connell’s, white paper on this subject was summarized and published in TheChilli in June 2005; below is brief extract, highlighting the basic premise.
In his section on what needs to be done in the UK, Connell highlights why the UK failed to produce major new technology companies on a scale to match the US; and how the UK and European venture capital industries have also consistently struggled to produce returns to match those of either the UK buyout sector or US venture capital industry. “Early stage technology has probably been the worst performer of all,” he says.
He also comments on why the difference between the US approach and the UK approach is simple. In the US, participation in the SBIR programme is compulsory for all larger Federal Government agencies. And the user-friendly way in which it is operated is largely defined by legislation. Government agencies are required to report regularly on progress.
The UK approach is one of inter-departmental consultation and persuasion. There is no obligation to participate in the SBIR programme and no ‘template’ to which departments are required to design their approach. “Anyone with any experience of Government or the Civil Service knows that this is a recipe for inaction. Compared with other priorities, it is just too small an issue to grab the attention of senior officials,” Connell comments.
David Connell has been closely involved with the UK technology sector for over twenty years. He was founder of TTP Venture Managers Ltd and its CEO and executive chairman until 2004. He continues to be an advisor to the company and works closely with many of its portfolio companies.
The full paper can be viewed by clicking here (PDF download).
To support this campaign, you can fax/e-mail your support to your own MP via: www.writetothem.com. The site allows you to identify your MP via post code, open a window in which to type in your personalized comments, and get it to your MP, free of charge, with a click on your computer screen. Please be polite and be brief, but ensure you support this with background information such as a link to this research note that you have just read on this page.
Comments on this story? Send an email to the editor at Editor@TheChilli.com
