Short title

This Act may be cited as the

Encouraging Small Business Innovation Act

Inclusion of testing and evaluation in the definition of research and development

Section 9(e)(5) of the Small Business Act (15 U.S.C. 638(e)(5)) is amended— (1)by redesignating subparagraphs (A), (B), and (C) as clauses (i), (ii), and (iii), respectively (and conforming the margins accordingly); (2)by striking means any activity which is and inserting the following:

means— (A)any activity which is—

; and

(3)in clause (iii), as so redesignated, by adding and after the semicolon at the end; and (4)by adding at the end the following new subparagraph:

(B)any testing or evaluation in connection with such an activity;

Inclusion of small business investment companies in SBIR and STTR

Section 9 of the Small Business Act (15 U.S.C. 638) is amended— (1)by striking or private equity firm investment each place such term appears and inserting private equity firm, or SBIC investment; (2)by striking or private equity firms and inserting private equity firms, or SBICs; (3)in subsection (e)— (A)in paragraph (12)(B), by striking and at the end; (B)in paragraph (13)(B), by striking the period at the end and inserting ; and; and (C)by adding at the end the following new paragraph:

(14)the term SBIC means a small business investment company as defined in section 103 of the Small Business Investment Act of 1958.

; and

(4)in the heading for subsection (dd), by striking

or Private Equity Firms

and inserting

Private Equity Firms, or SBICs

Calculation of leverage of small business investment companies that invest in SBIR or STTR participants

Section 303(b)(2) of the Small Business Investment Act of 1958 (15 U.S.C. 683(b)(2)) is amended by adding at the end the following new subparagraph:

(E)

Investments in SBIR and STTR participants

(i)

In general

Subject to clause (ii), in calculating the outstanding leverage of a company for purposes of subparagraph (A), the Administrator shall exclude the amount of any investment made in a SBIR or STTR participant, if such investment is made in the first fiscal year after the date of enactment of this subparagraph or any fiscal year thereafter by a company licensed during the applicable fiscal year. (ii)

Limitations

(I)

Amount of exclusion

The amount excluded under clause (i) for a company shall not exceed 33 percent of the private capital of that company. (II)

Maximum investment

A company shall not make an investment in any one SBIR or STTR participant in an amount equal to more than 20 percent of the private capital of that company. (III)

Other terms

The exclusion of amounts under clause (i) shall be subject to such terms as the Administrator may impose to ensure that there is no cost (as that term is defined in section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a)) with respect to purchasing or guaranteeing any debenture involved. (iii)

Definitions

In this subparagraph, the term SBIR or STTR participant means a small business concern that receives contracts or grants pursuant to section 9 of the Small Business Act.

Encouraging participation in the mentor-protege program

Section 9 of the Small Business Act (15 U.S.C. 638) is amended by adding at the end the following:

(tt)

Encouraging participation in the mentor-Protege program

The Administrator shall provide an increase to the past performance rating of any small business concern that has participated in the SBIR or STTR program that serves as a mentor under section 45 to a small business concern that seeks to participate in the SBIR or STTR program.

Annual meeting for Federal agencies with a SBIR or STTR program

(a)

In general

Section 9 of the Small Business Act (15 U.S.C. 638), as amended by section 3, is further amended by adding at the end the following new subsection:

(uu)

Annual meeting

(1)

In general

The head of each Federal agency required to have a program under this section (or a designee) and the Administrator (or a designee) shall meet annually to discuss methods— (A)to improve the collection of data under this section; (B)to improve the reporting of data to the Administrator under this section; (C)to make the application processes for programs under this section more efficient; and (D)to increase participation in the programs under this section. (2)

Reporting

Not later than 60 days after the date on which an annual meeting required under paragraph (1) is held, the Administrator shall submit to the Committee on Small Business and Entrepreneurship of the Senate, and the Committee on Small Business and the Committee on Science, Space, and Technology of the House of Representatives, a report on the findings of such meeting and recommendations on how to implement changes to programs under this section.

(b)

Funding for annual meeting

Section 9(mm)(1) of the Small Business Act (15 U.S.C. 638(mm)(1)) is amended— (1)in subparagraph (I), by striking the and at the end; (2)in subparagraph (J), by striking the period at the end and inserting ; and; and (3)by adding at the end the following new subparagraph:

(K)the annual meeting required under subsection (uu).

Increasing participation of underserved populations in the SBIR and STTR programs

(a)

In general

Section 9(mm)(2) of the Small Business Act (15 U.S.C. 638(mm)(2)) is amended to read as follows:

(2)

Outreach and technical assistance

A Federal agency participating in the program under this subsection shall use a portion of the funds authorized for uses under paragraph (1) to carry out the policy directive required under subsection (j)(2)(F) and to increase the participation of States with respect to which a low level of SBIR awards have historically been awarded.

(b)

Conforming amendment

Section 9(mm)(6) of the Small Business Act (15 U.S.C. 638(mm)(6)) is amended by striking paragraph (2)(A) and any use of the waiver authority under paragraph (2)(B) and inserting paragraph (2).