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Congress has passed a budget for FY 2017 that largely continues support for federal innovation programs and R&D investments. Among the highlights are $17 million for Regional Innovation Strategies (a $2 million increase over FY 2016), level funding of $130 million for the Hollings Manufacturing Extension Partnership and $5 million for SBA’s clusters program. In reviewing dozens of line items, offices that had received significant cuts in the White House’s skinny budget appear to receive some of the largest funding increases (such as the Appalachian Regional Commission, Community Development Block Grant and ARPA-E). However, with the exception of multi-billion dollar increases for Department of Defense R&D, many increases are rather small in terms of overall dollars. This is, at least in part, a reflection of non-defense spending caps rising by only $40 million for FY 2017, limiting the availability of new funds. In this context, science and innovation gains are particularly impressive, with a five percent overall increase for federal R&D that particularly benefits NASA and NIH.

The House Appropriations Committee began releasing FY 2018 “markup” budget bills this week, and the proposals would cut billions in non-defense spending. EDA would lose $100 million* in funding, SBA’s entrepreneurial development programs would lose $34 million, NIST’s Manufacturing Extension Partnership would lose $30 million, and Energy’s ARPA-E would be eliminated, among other cuts.

The SBIR program has been a legislated requirement of the Department of Defense, an agency responsible for roughly 40 percent of all federal extramural R&D spending, for more than three decades. One might expect that over that amount of time, the Department of Defense would have developed a system to become compliant with SBIR’s fundamental provision that a minimum threshold of innovation research spending be directed toward small businesses. Yet, a new report from the Government Accountability Office concludes DOD couldn’t say if it was meeting the threshold because, DoD did not submit the required obligations data. The report states “DOD officials told [the GAO] that obtaining obligations data would require requesting information from more than 10 individual program offices that, in turn, would have to request the information from various DOD comptrollers, which would be a major effort.”