///How Government procurement spurs local industry in the US

How Government procurement spurs local industry in the US

From AAMC Executive Director, Jennifer Conley.

We can learn a lot in Australia from one of the most successful schemes in government-industry cooperation worldwide.

The Small Business Innovation Research (SBIR) Scheme has been running successfully in the United States for 40 years – and the scheme is a model well worth emulating.

The Turnbull Government’s recent National Innovation and Science Agenda gave welcome encouragement to the notion of “Government as Exemplar” on innovation. Government procurement was targeted, and $19 million allocated to a “Business Research and Innovation Initiative” expected to launch on 1 July 2016.

While the concept is borrowed from SBIR, its structure would seem to miss critical elements that form the backbone of the US program.

As the Agenda notes, the Australian Government spends about $50 billion on procurement annually but ranks just 70th out of 140 countries on how well its procurement fosters innovation.

The Academy of Technological Sciences and Engineering (ATSE) has often pointed out that the lack of an SBIR-like scheme is a gaping hole in the Australian innovation ecosystem.

Chief Executive of the Cooperative Research Centres Association, Dr Tony Peacock, makes a strong case for the full implementation of an SBIR scheme in Australia.

The SBIR  supports and endorses scientific excellence and technological innovation through the simple but effective investment of Federal research funds into critical research and development areas.


Mandating a percentage of procurement spend to small business

Participating government agencies are required to allocate 2.8% of their R&D budget into SBIR programs, in which any small business can bid to undertake the projects.

This is necessary work producing real outcomes for government and society – which at the same time aids small business growth.

A live example is the US Navy, which uses 1.4 billion tonnes of fuel per year, funding small business research into energy efficiency and sustainability solutions.

Charles Wessner, Professor at Georgetown University and director of the Global Innovation Policy unit, believes the SBIR scheme triggered a fundamental shift in attitudes in American universities when it was introduced in 1982.

According to Wessner, before SBIR, the Dean of a faculty would ask young academics how many publications were going to come out of their latest piece of research.

Thirty years on, the Dean is now asking whether the research can be converted into a product or service, and whether they should spin it out of the university to access SBIR funding. It has been a profound change of mindset, says Wessner.

Professor Wessner will be in Australia to speak at the CRCs Association Business of Innovation 2016 event, March 7 – 9, in Brisbane.

Tony Peacock has rightly pointed out that for a scheme to work here, it will need to enjoy bipartisan support, the support of the bureaucracy and the support of business.

Government policy has been prone to change in Australia – especially in terms of industry policies which require stability to work.

As government and media focus on growth opportunities and short-term election cycles, we see continual turnover of schemes and incentives.

The “Business Research and Innovation Initiative” is likely aimed at setting an example that will build broader and wider acceptances for the much bigger concept. But with no requirement for government agencies to spend a percentage of their budget on research and development with small business, and a current focus on developing only “new ways to deliver government services”, it may be doomed to yet another policy overhaul.

February, 2016. 

2018-01-09T11:59:20+11:00 February 12th, 2016|