[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]


                                                     
 
 THE SMALL BUSINESS INNOVATION RESEARCH PROGRAM - OPENING DOORS TO NEW 
                              TECHNOLOGY
=======================================================================

                                HEARING

                               before the

      SUBCOMMITTEE ON WORKFORCE, EMPOWERMENT & GOVERNMENT PROGRAMS

                                 of the

                      COMMITTEE ON SMALL BUSINESS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                    WASHINGTON, DC, NOVEMBER 8, 2005

                               __________

                           Serial No. 109-36

                               __________

         Printed for the use of the Committee on Small Business


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
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                      COMMITTEE ON SMALL BUSINESS

                 DONALD A. MANZULLO, Illinois, Chairman

ROSCOE BARTLETT, Maryland, Vice      NYDIA VELAZQUEZ, New York
Chairman                             JUANITA MILLENDER-McDONALD,
SUE KELLY, New York                    California
STEVE CHABOT, Ohio                   TOM UDALL, New Mexico
SAM GRAVES, Missouri                 DANIEL LIPINSKI, Illinois
TODD AKIN, Missouri                  ENI FALEOMAVAEGA, American Samoa
BILL SHUSTER, Pennsylvania           DONNA CHRISTENSEN, Virgin Islands
MARILYN MUSGRAVE, Colorado           DANNY DAVIS, Illinois
JEB BRADLEY, New Hampshire           ED CASE, Hawaii
STEVE KING, Iowa                     MADELEINE BORDALLO, Guam
THADDEUS McCOTTER, Michigan          RAUL GRIJALVA, Arizona
RIC KELLER, Florida                  MICHAEL MICHAUD, Maine
TED POE, Texas                       LINDA SANCHEZ, California
MICHAEL SODREL, Indiana              JOHN BARROW, Georgia
JEFF FORTENBERRY, Nebraska           MELISSA BEAN, Illinois
MICHAEL FITZPATRICK, Pennsylvania    GWEN MOORE, Wisconsin
LYNN WESTMORELAND, Georgia
LOUIE GOHMERT, Texas

                  J. Matthew Szymanski, Chief of Staff

          Phil Eskeland, Deputy Chief of Staff/Policy Director

                  Michael Day, Minority Staff Director

     SUBCOMMITTEE ON WORKFORCE, EMPOWERMENT AND GOVERNMENT PROGRAMS

MARILYN MUSGRAVE, Colorado Chairman  DANIEL LIPINSKI, Illinois
ROSCOE BARTLETT, Maryland            TOM UDALL, New Mexico
BILL SHUSTER, Pennsylvania           DANNY DAVIS, Illinois
MICHAEL FITZPATRICK, Pennsylvania    RAUL GRIJALVA, Arizona
LYNN WESTMORELAND, Georgia           MELISSA BEAN, Illinois
THADDEUS McCOTTER, Michigan          GWEN MOORE, Wisconsin
JEB BRADLEY, New Hampshire

                     Joe Hartz, Professional Staff

                                  (ii)


                            C O N T E N T S

                              ----------                              

                               Witnesses

                                                                   Page
Jenkins, Mr. Calvin, Acting Associate Deputy Administrator, 
  Government Contracting and Business Development, U.S. Small 
  Business Administration........................................     3
Ramos, Mr. Frank, Director, Office of Small and Disadvantaged 
  Business, Office of the Secretary of Defense, U.S. Department 
  of Defense.....................................................     5
Decker, Dr. James, Ph.D., Principal Deputy Director, Office of 
  Science, U.S. Department of Energy.............................     7
Ruiz Bravo, Dr. Norka, Deputy Director for Extramural Research, 
  National Institutes of Health..................................     8
Hefferan, Dr. Colien, Ph.D., Administrator, Cooperative State 
  Research, Education & Extension Service, U.S. Department of 
  Agriculture....................................................    10
Hennessey, Dr. Joseph, Ph.D., Senior Advisor, Industrial 
  Innovation Program, Small Business Innovation Research Program, 
  National Science Foundation....................................    11

                                Appendix

Opening statements:
    Manzullo, Hon. Donald A......................................    20
Prepared statements:
    Jenkins, Mr. Calvin, Acting Associate Deputy Administrator, 
      Government Contracting and Business Development, U.S. Small 
      Business Administration....................................    22
    Ramos, Mr. Frank, Director, Office of Small and Disadvantaged 
      Business, Office of the Secretary of Defense, U.S. 
      Department of Defense......................................    27
    Decker, Dr. James, Ph.D., Principal Deputy Director, Office 
      of Science, U.S. Department of Energy......................    41
    Ruiz Bravo, Dr. Norka, Deputy Director for Extramural 
      Research, National Institutes of Health....................    55
    Hefferan, Dr. Colien, Ph.D., Administrator, Cooperative State 
      Research, Education & Extension Service, U.S. Department of 
      Agriculture................................................    63
    Hennessey, Dr. Joseph, Ph.D., Senior Advisor, Industrial 
      Innovation Program, Small Business Innovation Research 
      Program, National Science Foundation.......................    67

                                 (iii)
      



 THE SMALL BUSINESS INNOVATION RESEARCH PROGRAM - OPENING DOORS TO NEW 
                               TECHNOLOGY

                              ----------                              


                       TUESDAY, NOVEMBER 8, 2005

                   House of Representatives
                        Committee on Small Business
      Subcommittee on Workforce, Empowerment andGovernment 
                                                   Programs
                                                     Washington, DC
    The Subcommittee met, pursuant to call, at 10:30 a.m., in 
Room 2360, Rayburn House Office Building, Hon. Marilyn Musgrave 
[Chairwoman of the Subcommittee] presiding.
    Present: Representatives Musgrave, Westmoreland, and 
Lipinski.
    Chairwoman Musgrave. Good morning to all of you. This 
Committee will come to order.
    Thank you all very much for being here today as we examine 
the Small Business Innovation Research Program, and we will 
refer to that as the SBIR from now on, for short. I also thank 
each one of our witnesses for taking the time to provide their 
testimony to our Subcommittee.
    Established in 1982 via the Small Business Innovation 
Development Act, the SBIR program was established within the 
major federal research and development agencies. The intent of 
this effort was to increase government funding of small, high 
technology companies for the performance of R&D with commercial 
potential.
    Federal departments with and R&D budget of $100 million or 
more are required to set aside 2.5 percent of this amount to 
finance SBIR activity. From its inception, over $15.2 billion 
in awards have been made for more than 76,000 projects.
    The Small Business Administration established broad policy 
and guidelines under which the current 12 individual federal 
agency departments operate their SBIR programs, and today we 
are going to focus on the agencies that we have invited to 
testify.
    The SBIR program is an example of a highly successful 
federal initiative to encourage economic growth and innovation 
within the small business community by assisting in the funding 
of critical start-up and development stages of a company. Not 
only does it spur growth in the individual companies, the 
program stresses the importance of this Committee's and the 
entire federal government's commitment to expand and diversify 
research opportunities to small businesses, not just academic 
institutions and large businesses.
    Small businesses represent the very core of the United 
States competitiveness. The post-World War II technological 
advantage we once enjoyed is certainly not as large as it once 
was. Diversifying federal research dollars through initiatives 
such as SBIR helps foster growth in our economy.
    It is said that nobody holds the patent on good, new ideas. 
While that is true, it can be difficult for a small company 
with limited resources to take that idea and manufacture it 
into a new product or process. Programs like SBIR provide a 
bridge between product conception and marketability, a step of 
vital importance for innovative ideas to become reality.
    The new technologies and discoveries that come out of this 
program go a long way toward keeping our competitive edge in 
the world marketplace. The SBIR program is the kind of public/
private partnership that is essential to the continued growth 
of our economy.
    I am eager to hear your testimony today, but before we 
begin that, I would like to yield to the distinguished 
gentleman from Illinois, our ranking member, Mr. Lipinski.
    [Chairman Musgrave's opening statement may be found in the 
appendix.]
    Mr. Lipinski. Thank you, Madam Chairman. I am glad to be 
here today to discuss the SBIR program and the role it plays in 
keeping our nation at the forefront of technological 
advancement. As a member of the Science Committee and also a 
former university professor, I am especially interested in this 
program, although don't take that last part to mean that I 
oppose the program, because I hear that it is not always the 
most popular program with universities.
    In today's fast paced and highly competitive global 
marketplace, the United States continues to be a leader when it 
comes to technology. In no small part, the success is driven by 
the efforts of our nation's small businesses. Entrepreneurs 
continue to be dominant players in keeping the U.S. ahead, with 
small firms producing 55 percent of all new technological 
advances.
    In order to ensure that our country keeps moving forward in 
science, engineering, and other high tech fields, we need to 
continue investing in small firms. The SBIR program is one of 
the leading tools that empowers small businesses to contribute 
to the nation's technology sector.
    SBIR enables entrepreneurs with bright, groundbreaking 
ideas to receive the valuable seed funding they need in order 
to start and grow their businesses. By opening a door for small 
firms to participate in federal research and development, this 
program is responsible for enabling thousands of small 
businesses to move their ideas from laboratory to the 
marketplace.
    The SBIR program has played a significant role in turning a 
wide variety of innovative dreams into reality, from quick-
frozen foods to personal computers. By harnessing the 
imagination and spirit of small, high tech innovators, we 
strengthen our ability to meet national research priorities 
while laying the groundwork for the next generation of small 
technology firms in the U.S.
    The SBIR program is not merely helpful, but is a critical 
program for spawning research and development in the early pre-
commercial stages. Without the resources offered through SBIR, 
many small business will lack what they need to spur high tech 
innovation and development in order to move this nation forward 
for generations to come.
    I look forward to hearing the testimony of today's 
witnesses, including ideas for improvement that will make the 
SBIR more equitable, efficient and productive. Thank you.
    Chairwoman Musgrave. Thank you, Mr. Lipinski.
    Our first witness is Calvin Jenkins from the Small Business 
Administration, and if the witnesses will observe the five-
minute time limit, I would appreciate it. I will keep you 
honest on that.
    Mr. Jenkins, welcome to the Committee. We look forward to 
your testimony today.

STATEMENT OF CALVIN JENKINS, OFFICE OF GOVERNMENT CONTRACTS AND 
     BUSINESS DEVELOPMENT, US SMALL BUSINESS ADMINISTRATION

    Mr. Jenkins. Madam Chairman, Ranking Member, distinguished 
members of the Subcommittee, thank you for inviting the Small 
Business Administration here today to discuss the Small 
Business Innovation Research program.
    I am Calvin Jenkins, Acting Associate Deputy Administrator 
for the Office of Government Contracts and Business Development 
at the SBA. I oversee the Office of Technology, which 
administers the SBIR program.
    The SBIR program, established in 1982, was designed to 
strengthen the role of innovative small business concerns and 
federally funded research and development, to utilize R&D as a 
base for technology innovation to meet agency needs, and to 
contribute to the growth and strength of the nation's economy.
    The competitive grant program is operated by 11 agencies 
and has awarded more than $16.9 billion to SBIR firms since its 
inception. Each federal agency with an extramural research or 
R&D budget in excess of $100 million is required to set aside 
2.5 percent of that budget for the SBIR program. The 11 
participating agencies are: The USDA, Commerce, Defense, 
Education, Energy, HHS, Homeland Security, Transportation, EPA, 
NASA, and NSF.
    The program is structured in three phases. Phase I awards 
provide up to $100,000 to evaluate the feasibility and the 
scientific and technical merits of an idea. Phase II awards are 
funds up to $750,000 for two years for the further development 
of the ideas proposed in Phase I. Phase III is the 
commercialization phase, and no SBIR funds are utilized. In 
Phase III, the awardee firms must either secure private sector 
investment to bring the innovation to market or obtain follow-
on contracts with federal agencies to meet specific agency 
technology needs.
    SBA's role in the SBIR program can be summed up in four 
main categories: Policy direction, program development; 
oversight of agency for compliance with policy direction; 
reporting program information, as required by statute; and 
outreach and marketing of the program.
    Each of the 11 participating agencies is responsible for 
administering and management of its SBIR program, including: 
Posting SBIR solicitations, receiving and evaluating proposals, 
selecting awardees, monitoring projects, submitting annual 
reports to the SBA containing complete records of their awards.
    Each agency has its own technology needs consistent with 
its mission, as well as its own set of regulations and 
protocol. As a result, the SBIR program as a whole encompasses 
11 very different types of SBIR programs.
    One important distinction is between agencies with clear 
technology needs, such as DoD and NASA, and agencies that do 
not procure technology themselves but, rather, have broader 
public interest missions, such as NSF or NIH. These programs 
are run in very different ways. Yet they all conform to the 
rules and framework we establish in the policy directives.
    The number of awards have grown over time in proportion to 
the extramural R&D budget of the participating agencies. More 
than 82,000 awards have been made over the life of the program, 
totaling $16.9 billion. Minorities, disadvantaged firms have 
received 10,074 awards, representing 12.1 percent of all SBIR 
awards.
    Awards have been made to firms in all 50 states, Puerto 
Rico and the District of Columbia. Today, agencies evaluate 
over 30,000 proposals and make over 6,000 awards to about 3,000 
small, high tech companies each year.
    Let us now address program performance. Past assumptions of 
commercialization rates of the SBIR program conducted by GAO, 
DoD and SBA have found that about 40 percent of Phase II SBIR 
projects have resulted in commercial products.
    We are currently implementing an online reporting system 
through an enhancement of our existing TechNet system to 
collect this information on an annual basis across all 
agencies. This should increase the reliability of the data and 
enable us to develop new measures of commercial success and 
critical program outcomes in the future.
    I would also like to share a case study which demonstrates 
the benefits to small business and our technological growth. 
Sea Sweep, Inc., a Colorado firm, received a SBIR award from 
the Environmental Protection Agency.
    It utilized the award to develop and commercialize an 
innovative absorption called Sea Sweep that functions both on 
land and water to absorb spilled oil and chemicals. The 
absorption is made using a patented process that involves 
heating sawdust to a temperature at which the oil-like product 
renders it very attractive to oil but repellant to water. It 
absorbs the oil or chemical immediately upon contact, and will 
float indefinitely in water, preventing environmental damage to 
marine life and bird species.
    In terms of commercial success, Sea Sweep is marketed in 
the United States, Europe, South America, Australia, New 
Zealand, Japan, Indonesia and the Persian Gulf. It has been 
recognized by R&D Magazine as one of the 100 most 
technologically significant new products of the year.
    Thank you for the opportunity to appear before you today, 
and I will be happy to answer any questions you may have.
    [Mr. Jenkins' testimony may be found in the appendix.]
    Chairwoman Musgrave. Thank you, Mr. Jenkins. I am so sorry 
for the noise. We were like kids about to giggle in church, but 
that is no reflection on your testimony. We are trying to find 
the guy with the chain saw or whatever it is to shut him down. 
But my apologies, and if you want to give any of your testimony 
over--We don't know when it may start again, but if you want to 
venture in, we are happy to have you repeat any of it.
    Mr. Jenkins. No, I think I am fine.
    Chairwoman Musgrave. Thank you. I am so sorry that happened 
to you.
    Mr. Westmoreland said that is a reciprocating saw. So I 
have been corrected. Thank you.
    Mr. Ramos, if you have the nerve, we would be interested to 
hear your testimony. Thank you for coming today.

  STATEMENT OF FRANK RAMOS, OFFICE OF SMALL AND DISADVANTAGED 
          BUSINESS, OFFICE OF THE SECRETARY OF DEFENSE

    Mr. Ramos. Good morning, Chairman Musgrave and Congressman 
Lipinski and Mr. Westmoreland, and other members of the 
Committee. My name is Frank Ramos. I am the Director of the 
Office of Small and Disadvantaged Business for the Office of 
Secretary of Defense.
    I want to thank you for the opportunity to appear before 
you and discuss the health and wellbeing of the SBIR program, 
and wanted to join my colleagues here today. We are working 
hard to ensure that the SBIR program is as effective as it can 
be.
    The broad mission of the Department of Defense Small 
Business Innovation Research Program is to advance technology 
development for the warfighter and the nation. SBIR firms will 
enhance the defense industrial base and assure technology 
dominance by means of seeding technologies to provide materiel 
solutions to our warfighter.
    The DoD SBIR program is a program of programs encompassing 
10 military services and agencies. The DoD represents over 50 
percent of the total federal SBIR budget, which exceeds $2 
billion. The DoD program has doubled in size from Fiscal Year 
1999 to over $1 billion.
    In Fiscal Year 2004, 1,082 topics generated 15,681 
proposals, 2,075 Phase I's; 1,173 Phase II contracts were 
awarded to 1,594 different firms from across the country. Again 
in Fiscal Year 2004, over 50 percent of the Phase I contracts 
were awarded to firms with fewer than 25 employees, and 30 
percent to firms with fewer than 10 employees.
    Many are start-up firms that bring their ``out-of-the-
garage'' innovation to the Department. Again in Fiscal Year 
2004, 39 percent of the SBIR Phase I award winners were first-
time DoD contractors. Forty-eight percent had previously been 
awarded five or fewer Phase II contracts, and 19 percent were 
minority or women-owned firms.
    The high water mark for SBIR success in the Department is 
bringing innovation, leading technology solutions, from small 
business to the warfighter. There is no way to measure the 
monetary value of a technology that saves a life in combat or 
contributes to the success on the battlefield.
    We do, however, measure program output by tracking 
financial commercialization data on all Phase II contracts. We 
also track success stories that demonstrate impact on specific 
customers.
    A vivid example is ceramic armor plates, which I've brought 
forward for you to examine, if you wish, which protect 
warfighters from assault and other small arms fire. Armor 
Works, Incorporated, of Phoenix, Arizona, has developed high-
technology body armor plates for the Interceptor Body Armor 
System using the state of art ceramic materials stemming from a 
Navy SBIR contract that covered from 2000 to 2003 fiscal years, 
for vehicle armor and follow-on research and development.
    The firm has supplied over 300,000 ceramic armor plates for 
use in personal, vehicular and aircraft applications that daily 
save warfighter lives.
    Another success story is the Phraselator--again we would 
like, if you wish, to demonstrate this later--a hand-held 
speech translation device developed by Marine Acoustics, a 
veteran owned small business firm based in Annapolis, Maryland.
    This started from a DARPA SBIR effort. Following the 
terrorist attacks on 9-11 just seven months into the Phase II 
contract, DARPA requested acceleration of prototype Phraselator 
development.
    Within weeks, 200 of the prototypes were delivered to 
military forces in Afghanistan. Over 350 are now deployed in 
Afghanistan and Iraq, and were used exclusively in the tsunami 
relief efforts. Thousands are in use by the military around the 
world, with a large potential commercial market for law 
enforcement and medical applications.
    A third success story is a portable very high bandwidth 
satellite communications antenna developed by Systems 
Technology Group of SRS Technologies, Huntsville, Alabama, 
through an SBIR Phase II contract with the Air Force Research 
Laboratory and with funding from the Office of the Secretary of 
Defense.
    First responders used the antenna system in Biloxi, 
Mississippi, to provide communications in the destructive wake 
of Hurricane Katrina. The antenna systems enabled them to 
establish a law enforcement command post and a refugee 
information center. So impressive were the antenna's 
capabilities that FEMA and the Red Cross are interested in the 
technology.
    In summary, again I thank you, Madam Chairman, for the 
opportunity to testify before you on the SBIR program. I hope 
my testimony has provided you with a summary understanding of 
the DoD SBIR program. Additionally, I hope this has given you a 
sense of its importance to our nation's warfighter.
    I look forward to continuing to work with you and other 
members of the Congress, and I stand ready to answer any 
questions. Thank you so much.
    [Mr. Ramos' testimony may be found in the appendix.]
    Chairwoman Musgrave. Thank you, Mr. Ramos, very much.
    Dr. James Decker is with us from the U.S. Department of 
Energy. Welcome.

 STATEMENT OF JAMES DECKER, OFFICE OF SCIENCE, U.S. DEPARTMENT 
                           OF ENERGY

    Mr. Decker. Thank you. Madam Chairman, members of the 
Subcommittee, thank you for inviting me to speak today about 
the SBIR program at the Department of Energy.
    I am the principal Deputy Director of the Office of 
Science. The Office of Science manages the SBIR program for the 
Department and has done so since the SBIR program started in 
1982.
    In addition to the Office of Science, six other DOE R&D 
programs participate in the SBIR program: Fossil Energy; Energy 
Efficiency and Renewable Energy; Nuclear Energy; Environmental 
Management; Defense Nuclear Nonproliferation; and Electricity 
Delivery and Energy Reliability.
    The DOE SBIR program currently provides over $100 million 
each year to small businesses to help entrepreneurs take their 
ideas from conception to reality. The Department has, since the 
program's inception, made 4,123 Phase I awards and 1,677 Phase 
II awards, with a total value of about $1.4 billion.
    Of the Phase I awards, about 12 percent are awarded 
annually to socially and economically disadvantaged small 
businesses, and about a third are first-time awardees with DOE.
    In return, these companies have earned more than $3 billion 
in sales and additional development funding, created jobs, and 
helped the nation capitalize on its substantial investment in 
R&D.
    The Department manages the SBIR program with nearly the 
same processes that it uses in general for R&D programs. The 
Department issues an annual solicitation for the SBIR program. 
It typically contains approximately 50 topics, including 
renewal energy sources, coal gasification, combustion 
technologies, nanotechnology, biological solutions for 
producing fuels, advanced technologies for nuclear energy, and 
high performance computing, just to name a few.
     Applications are first reviewed by the technical managers 
to ensure the proposals meet the notice requirements. Grant 
applications then go through a peer review process by outside, 
independent, scientific and technical experts. Based on the 
results of these external reviews, each technical program makes 
their selections, and the final decisions are made by the DOE 
SBIR program manager based on these recommendations.
    One aspect of our SBIR program that is different from our 
standard management of R&D programs is our commercialization 
assistance. DOE was the first agency to offer commercialization 
assistance to awardees, beginning in 1990.
    A large majority of SBIR awardees have excellent skills in 
science and engineering research, but lack experience in 
product development, financing, business growth, raising 
venture capital, and marketing. So one of the services provided 
to Phase II awardees for the last 15 years is the 
Commercialization Opportunity Forum Program.
    This program is conducted by Dawnbreaker, a private 
organization under contract to the Department. In workshops and 
one-on-one sessions, Dawnbreaker works with small businesses 
over a period of eight months to develop and refine a business 
plan.
    During a two-day Opportunity Forum, Dawnbreaker brings 
these small businesses together with respective entrepreneurs, 
investors, and potential strategic allies. Other 
commercialization services offered through the Department's 
SBIR program help small businesses to develop roadmaps for 
commercialization and to assess potential applications for 
their technologies.
    We have worked diligently to make this program a success, 
and we believe it is. The quality of the research selected for 
awards has remained very high. We are pleased that at least 25 
of our projects have received R&D 100 awards from Research and 
Development Magazine that selects the 100 most significant 
technical products each year.
    Some examples of the technologies that have been 
successfully commercialized as a result of the Department's 
SBIR program include: Photovoltaic power systems for more cost 
effective solar power generation; catalytic combusters that 
reduce pollution from gas turbine engines; web-based search 
engine software that optimizes desired search results from 
multiple database Internet searching; automated blood purifiers 
for faster DNA purification and genome analysis; shock 
resistant, temperature tolerant ceramic components for an 
improved energy efficiency of diesel engines; and fuel cell 
technologies that improve efficiency.
    In conclusion, I believe that the Department's SBIR program 
has successfully met the purposes of the program established in 
the Small Business Innovation Development Act. In addition to 
the benefits to the participants and to the nation from 
commercialization of new products resulting from the SBIR 
program, the Department of Energy has benefitted from small 
business participation in its R&D programs, and small business 
continues to contribute innovative solutions to difficult 
technical problems.
    The Department of Energy will certainly continue to support 
SBIR, and continue to look to small business innovators and 
entrepreneurs to help keep our nation at the cutting edge of 
science and global competitiveness.
    Again, thank you, Madam Chairman, for inviting me to 
testify today, and I would be happy to answer any questions you 
or members may have.
    [Dr. Decker's testimony may be found in the appendix.]
    Chairwoman Musgrave. I appreciate your testimony.
    We have Dr. Norka Ruiz Bravo now from the National 
Institutes of Health. Welcome to the Committee.

   STATEMENT OF DR. NORKA RUIZ BRAVO, NATIONAL INSTITUTES OF 
                             HEALTH

    Dr. Ruiz Bravo. Good morning, Madam Chairwoman and members 
of the Committee. I am Dr. Norka Ruiz Bravo, Deputy Director 
for Extramural Research at the National Institutes of Health.
    The NIH is a component of the Department of Health and 
Human Services, and it is the principal health research agency 
of the federal government.
    Our mission is the conduct of biomedical, behavioral and 
clinical research to improve the health of the American people, 
and I am pleased to appear before you today to testify about 
the NIH's SBIR program and the role that it plays in opening 
new doors to new technologies.
    Specifically, I am going to focus on two areas, first the 
role that SBIR plays in the NIH research agenda and, second, 
several benefits of the program within our agency and across 
the country.
    The SBIR program is fully integrated within the scientific 
programs and goals of the NIH by contributing to the 
translation of scientific findings into tangible products and 
services that benefit public health. Across the NIH, there are 
24 Institutes and Centers with SBIR programs, each of which has 
well defined scientific research priorities.
    Through a competitive phased award system, the SBIR program 
supports a wide array of innovative biomedical and public 
health projects that are designed to encourage 
commercialization of promising technologies. I would like to 
highlight just two of the many technological advances that I 
feel exemplify the kind of SBIR research that NIH supports.
    The first is funded by the National Heart, Lung, and Blood 
Institute, AVANT Immunotherapeutics. This company used the SBIR 
program to demonstrate the feasibility and then advance a 
revolutionary vaccine that is designed to enhance the clinical 
management of atherosclerosis. That is the hardening and 
narrowing of arteries.
    Second, the National Eye Institute funded IntraLase 
Corporation through the SBIR program to develop a safer, more 
precise laser for creating the corneal flap. Many of us have 
heard about LASIK. This relates to that. The fentosecond laser 
pulse virtually eliminates the severe sight threatening 
complications that are often seen or sometimes seen with the 
microkeratome.
    To grow this long line of successes, the NIH has initiated 
several steps to increase the efficiency and effectiveness of 
our SBIR program. These enhancements, such as flexibility in 
time and dollars and the Fast Track mechanism as well as others 
described in my written testimony arise, from and respond to 
many of the needs of the small business research community. 
Those needs are varied, and the challenges are great in trying 
to accommodate multiple industries, different technology 
sectors, and diverse product outcomes.
    The journey through the innovation pipeline for many 
biomedical products is a long and complicated one. Progress in 
biomedical research cannot always be considered a simple linear 
process, though the phased structure of the SBIR program 
construes it as such.
    For the majority of the companies that we support whose 
major business focus is biotechnology, pharmaceutical--for 
example, drug discovery and drug development--and diagnostic, 
the phased SBIR program process is a cyclical process that is 
met with unique challenges. Phase I plus Phase II does not 
automatically translate to Phase III commercialization.
    Additional SBIR funding is often needed to pursue lines of 
feasibility research related to the development of products to 
benefit human health.
    In conclusion, the NIH is very pleased with its involvement 
in the SBIR program, and believes that flexibility is critical 
to the continued success of the program.
    This concludes my statement today. I would be happy to 
answer any questions from the Committee.
    [Dr. Ruiz Bravo's testimony may be found in the appendix.]
    Chairwoman Musgrave. Thank you very much.
    We have Dr. Colien Hefferan next. Thank you for coming from 
the Department of Agriculture. My district back home has 75 
percent of the population along the front range, and then 25 
percent over this vast rural area where the whole economy is 
based on agriculture. So I am happy to hear your remarks today.

   STATEMENT OF COLIEN HEFFERAN, COOPERATIVE STATE RESEARCH 
EDUCATION AND EXTENSION SERVICE, U.S. DEPARTMENT OF AGRICULTURE

    Ms. Hefferan. Thank you. Well, good morning, Madam 
Chairman, and Congressman Lipinski. I am Colien Hefferan, the 
Administrator of the Cooperative State Research Education and 
Extension Service at the U.S. Department of Agriculture, the 
agency charged with administering the SBIR program on behalf of 
USDA.
    I would like to give you a brief overview of the program, 
the way we administer the funds, and the focus areas that we 
look to.
    Within USDA we have eight agencies which provide support 
for the program. Eighty percent of the funding comes from my 
organization, 12.5 from the Agricultural Research Service, and 
five percent from the Forest Service, with smaller amounts 
coming from each of a series of other agencies.
    As with other agencies, we provide two types of awards. We 
provide up to $80,000 for eight months for Phase I feasibility 
studies, and for Phase II research and development grants, we 
provide up to $300,000 for 24 months. Approximately 90 Phase I 
feasibility grants and 35 to 40 Phase II development grants are 
awarded annually.
    The successful completion of a Phase I study is a 
prerequisite to receipt of a Phase II grant. Of the 
applications that we receive, 15 to 17 percent of the Phase I 
and 50 to 60 percent of the Phase II applications have been 
funded each year.
    Our program addresses 12 research topics which cover the 
range of issues addressed by the U.S. Department of 
Agriculture, including enhancing economic opportunities for 
producers, increasing the quality of life in rural America, 
enhancing protection and safety of the nation's food supply, 
improving the nation's nutrition and health, and protecting and 
enhancing the natural resource base.
    Within these topics, over the years we have added topics, 
including this year for the first time a program focused on 
small and mid-size farms.
    Proposals are evaluated through a confidential peer review 
system similar to that used by our National Research 
Initiative, which is the flagship competitive research program 
at USDA and which is modeled after the National Science 
Foundation peer review system. Our panels meet in Washington, 
and the most meritorious applications are recommended for 
funding.
    Also, when there are areas of specific expertise that we 
need to address, we use ad hoc reviewers from all over the 
world.
    A very important aspect of our SBIR program is post-award 
management. Most of the effort is directed toward Phase II 
projects that have demonstrated technical feasibility in their 
first phase. A commercialization assistance program is offered 
to new Phase II winners in which they work with a contractor 
who helps identify commercialization partners and markets, 
which are often the most critical issue, and new business 
opportunities.
    In addition, our program leaders for the SBIR program 
conduct many site visits and work very closely with our 
recipients.
    The successful commercialization often takes several years 
beyond the actual award of programs and projects by USDA, but 
surveys of our past Phase II winners indicate that about 50 
percent of those projects ultimately realize success in the 
form of commercialization and sales.
    I would like to briefly mention just one or two examples of 
successful SBIR projects. The first is Embrex from Research 
Triangle Park in North Carolina. Chickens used to be vaccinated 
on the first day after hatching for a variety of diseases, and 
you can imagine, that is not an easy job. USDA scientists 
showed it was possible to vaccinate chickens by injecting the 
vaccine directly into the egg three days prior to hatching.
    To make this ``in ova'' vaccination approach, Embrex 
received an SBIR support to develop an automatic egg injection 
machine. Their technology is capable of vaccinating 30,000 eggs 
per hour, and they now vaccinate over 90 percent of the 9 
billion broiler chickens raised in this country every year. 
They are also vaccinating chicken eggs in more than 30 foreign 
countries.
    This technique has been shown to be effective with viral 
diseases and, should we be successful in developing, for 
example, a vaccine that can address avian influenza, this 
technology is available and could be used for that purpose.
    We have a number of other examples of success, including 
the Nitrate Elimination Company in Lake Linden in Michigan's 
Upper Peninsula. This project focuses on nitrogen fertilizer 
leaching from soil into water supplies.
    Traditionally, nitrogen in those areas has been measured by 
using cadmium, but cadmium is very toxic and poses a threat to 
human health. So the testing for nitrogen was a toxic process 
in itself. The Nitrate Elimination Company has produced a very 
sensitive test kit for nitrate that is based on the activity of 
an enzyme nitrate reductase and, therefore, reduces the cadmium 
that is used in this process.
    We have many other examples of success from the 1600 
projects that we have supported since 1982 when the program 
began, and we will be very pleased to provide those and other 
examples to you.
    Thank you for this opportunity.
    [Dr. Hefferan's testimony may be found in the appendix.]
    Chairwoman Musgrave. Thank you for your testimony.
    We now have Dr. Joseph Hennessey from the National Science 
Foundation. We look forward to hearing from you.

   STATEMENT OF JOSEPH HENNESSEY, NATIONAL SCIENCE FOUNDATION

    Dr. Hennessey. Thank you, Madam Chairman and Mr. Lipinski. 
I am Jose Hennessey. I am Senior Advisory in the NSF SBIR 
program.
    This morning I would like to share some information with 
you on our Phase IIB program. The details of that are 
summarized on page 3 of our written testimony. To do that, I 
want to tell you a story, and I have entitled the story ``Save 
the Plant.''
    It turns our last week I was talking to Tom Knight, who is 
one of our Phase IIB awardees. Just a little background: Tom is 
the CEO of a small company in Georgia called Invistics, and 
before he started Invistics Tom was a manufacturing manager in 
a number of large companies. While he was doing that, he was 
very disappointed with the quality of the software that was 
available to reduce cycle time and to improve manufacturing 
performance.
    Tom started his company and got a Phase I and subsequently 
got a Phase II from NSF, and while he was doing that, he also 
partnered with professors from MIT and Georgia Tech to develop 
with him the algorithms that were required for this software.
    During the Phase II, he also secured investments from 
angels as well as local venture capitalists, and that really 
served as the matching funds for securing a Phase IIB from the 
National Science Foundation.
    As they developed this web-based modules for planning, 
scheduling, delivery and inventory, Invistics also began to 
consult with a number of major potential customers. Within 
about three years, Invistics systems have been adapted by a 
number of those companies.
    One of Tom's customers is Bristol-Myers Squibb. I am sure 
you recognize them, a major pharmaceutical manufacturer. They 
had a plant in Evansville, Indiana, that was scheduled to be 
closed, and basically as a last ditch effort, they implemented 
the lean manufacturing techniques that were supported by Tom's 
software, along with a team management concept.
    In 2005, the same plant received the Team of the Year Award 
from Pharmaceutical Manufacturing Magazines, and is now 
recognized as one of the highest performing pharmaceutical 
plants in the industry.
    Why did I select Invistics to share with you this morning? 
We are doing this, because we believe they exemplify what we 
are looking for in successful small businesses. They understood 
what their customers needed. They used the SBIR funds to carry 
out the appropriate research.
    While they were carrying out this research, they attracted 
appropriate investments during Phase II. They recognized they 
needed that to move on toward commercialization. They leveraged 
academic research. They also learned how to sell, to market and 
sell, systems to large companies, and particularly in this 
case, these systems had to be compatible with many of the 
systems that were already in place in these companies.
    What we are looking for is we would like to see more of our 
small business clients be more like Invistics. NSF is trying to 
expand significantly what we call our awards management and 
mentorship activities with these small businesses. We see many 
small companies who have great technologies. However, they are 
really lacking in the business skills necessary for successful 
commercialization.
    Madam Chair, that concludes my testimony, but I will be 
happy to answer any questions.
    [Dr. Hennessey's testimony may be found in the appendix.]
    Chairwoman Musgrave. Thank you very much to all of you. 
Very interesting testimony.
    Mr. Ramos, I am going to start with you. You've got a 
couple of things that you brought. Could you tell us about 
them, please?
    Mr. Ramos. Sure. i would like to start with the 
Phraselator. This company--and one of the gentlemen that's in 
the room here, a former Navy Seal, is one of the principals in 
the company. I am not sure if you want to see a demonstration 
or you just want to speak to it.
    Chairwoman Musgrave. If it is all right with Mr. Lipinski, 
I would love to see a demonstration.
    Mr. Lipinski. I actually was going to say that I had heard 
about this on the news and was going to ask you, Mr. Ramos, for 
a demonstration.
    Mr. Ramos. Here is the owner of the company. He is better 
at doing this.
    Chairwoman Musgrave. All right. Imagine that. He brought 
his own. Okay.
    Mr. Ramos. While he is going up there, I want to mention, 
because, Ms. Chairman, this is one of our veteran-owned firms. 
I know you had a panel before on the veteran-owned businesses. 
This exemplifies what Department of Defense is doing using our 
own to develop products for the warfighter.
    Chairwoman Musgrave. Very good.
    Mr. Sarich. What this did is I spoke to it, and it matched 
my input speech with a recorded output translation. So when we 
first started on this, we ran it on a notebook PC, and we 
needed to find a way to get it down to something that the 
warfighters could use, and through the SBIR program--You know, 
I didn't even know it existed. I was brand new to it, but we 
were able to come up with this.
    It has multiple languages. That was Iraqi. If I wanted to 
switch to another language: Switch to Italian. This is a 
computer translator.
    So it works for anybody. It works for my voice, but it 
would also work for most anybody in the room after a couple of 
tries so you could get used to it. We have been developing this 
now--The first working prototype had worked--was ready in 
September of 2001, and then shortly thereafter I found myself 
in Afghanistan the first time in 2002.
    From that time, we have been refining and iterating on it, 
and I just have to tell you, I'm just--I am a total believer in 
this program, you know.
    I would be glad to answer any questions you might have.
    Chairwoman Musgrave. Well, very interesting demonstration. 
Mr. Lipinski, did you have any question?
    Mr. Lipinski. What languages can you do?
    Mr. Sarich. Well, right now, because it is--we could have 
multiple languages, in fact, for this particular set of phrases 
we have--you take a look at it--probably about 15 different 
translations, and we have the toolkit so that we can add new 
translations.
    We can also have the warfighter. We have a toolkit and, in 
fact, we have been training the warfighters to be able to add 
their own content with their own linguists. They have their own 
linguists or we build the content for them.
    As I said, we recently have--Just out at Camp Pendleton 
where they are actually institutionalizing this in their 
training at the 1st Marine Division, as the Marines get ready 
to go overseas there, a certain portion were trained in how to 
use this device.
    We've got about 5,000 or approaching 5,000 of the 
Phraselators out in the field now.
    Chairwoman Musgrave. Does it have a battery in it, and what 
is the life of the battery?
    Mr. Sarich. My background is--I have a military background 
and engineering background, and from my SEAL background one of 
the things I realize is that batteries are big, you know, 
because we've got so many batteries. So what we did is we have 
a custom lithium polymer battery, which is good for about 20 
hours-plus of normal use, which in its sleep mode is good for 
weeks or better.
    Also, it will take four AA batteries, because, you know, 
warfighters don't always have a place to charge the battery, 
but usually they can find AA's.
    Chairwoman Musgrave. That's what I was wondering. What is 
your name again, please?
    Mr. Sarich. My first name is Ace, and last name is Sarich, 
S-a-r-i-c-h.
    Chairwoman Musgrave. Thank you so much, Mr. Sarich. Did you 
have anything else, Mr. Lipinski? Thank you very much.
    Mr. Lipinski. No. Thank you very much.
    Mr. Sarich. Thank you.
    Chairwoman Musgrave. All right. The second thing that you 
brought with you, the armor? Could we have your name, sir? You 
can come up to a microphone.
    Mr. Cervantes. Charles Cervantes. I am Special Assistant to 
the Director.
    Mr. Ramos. This device, again, I'm sure, is saving numerous 
lives. What is really impressive about it--and this goes to the 
credit for the young men and women that are out there in the 
field of harm--is the weight. These weigh about six pounds, and 
they carry anywhere from five around their body, and they carry 
that in the heat and the other equipment that they carry.
    So if anybody was to criticize those young men and women, 
I'm sure I am going to stand up and say try one of these on and 
carry it around all day.
    Chairwoman Musgrave. Tell us how it withstands, Mr. 
Cervantes or Mr. Ramos, whichever.
    Mr. Ramos. I'm sorry? What was the question?
    Chairwoman Musgrave. You have told us about the weight. How 
is it made?
    Mr. Ramos. Well, it is a ceramic material that has been 
developed through the SBIR program, as I mentioned earlier, and 
it is inserted into panels like a vest that they wear around 
their body. You have probably seen them on television, and they 
protect them in the vital parts of their body, particularly in 
the chest area.
    So that is the intent of this. A story is: My nephew was in 
Vietnam, and they used to steal manhole covers and put them on 
the bottom of the helicopter. These are the type of devices now 
that are replacing the manhole covers to protect them, which is 
a state of the art, again.
    Chairwoman Musgrave. Is it put on equipment as well as 
soldiers?
    Mr. Ramos. Yes. As I mentioned, it is put on the--Personnel 
protection is put on vehicles and put on aircraft as well.
    Chairwoman Musgrave. How is it attached to a vehicle?
    Mr. Ramos. Well, I don't know in detail, but what I 
understand is that they are put into the panels, and they are, 
if you will, bolted onto the side of the vehicle so that they 
are given some protection, and they are also laid in the bottom 
of the vehicle so that, in case there is some concussion, it 
protects them.
    Particularly in the aircraft, very possibly like in the 
helicopter where my nephew was on, they get fire from 
underneath, and it penetrates them where they are sitting. So 
this then would protect them in some form.
    Chairwoman Musgrave. Mr. Lipinski?
    Mr. Lipinski. For questions, questions for Mr. Ramos?
    Chairwoman Musgrave. Whichever you would like.
    Mr. Lipinski. Okay. Thank you very much, Mr. Ramos. I don't 
have any other questions on that, but both of those two 
examples show just great examples of American ingenuity and 
show what we can do, what small businesses can do, and make 
great technological improvements, and here very much help our 
military and our men and women in serving to protect us right 
now.
    My main question for the panel goes to what is probably the 
biggest controversy right now or discussion at least in regard 
to SBIR. That is the limit on venture capital.
    If 51 percent or more venture capital, then you cannot 
apply for SBIR program, and this has come out of a Small 
Business Administration ruling. I am just wondering--and I am 
not taking a position here. What I am interested in is 
information.
    I am not sure how much Mr. Jenkins can say about this right 
now, but I am interested to hear from you, Mr. Jenkins, and 
everyone else about their department or agency what impact you 
think that that limit had, and is it--Well, you can put in it 
whether or not you think it is a good impact or not, but I am 
just wondering what impact you think that does have on the SBIR 
program and how it accomplishes its goals in your particular 
department or agency.
    Mr. Jenkins. Yes, sir. As you mentioned, as a result of 
Office of Hearings and Appeals findings, SBA clarified its 
rules regarding the ownership issue, and our rule has always 
stated that 51 percent must be owned by an individual.
    We have heard from both sides in terms of whether or not we 
should allow for venture capital to participate. We have also 
heard from small businesses that feel that they would be 
competing unfairly. So I think it is important for SBA to 
continue to look at the comments that we have received and 
actually try to weigh them and come to some conclusion at this 
point, but we have not yet made any kind of decision to change 
our rules at this point.
    Mr. Lipinski. Mr. Ramos?
    Mr. Ramos. At this point, I think we want to defer to the 
SBA and see what policy guidelines come out. There are, 
obviously, some pros and cons on it. There's been some 
discussions in the past.
    I have a book here on the National Research Council that 
was addressed--that issue was addressed, and there are a lot of 
variances in terms of where this plays into, particularly in 
the topic area of interest with respect to either angel 
investment or venture capital. But at this time, I just don't 
think I can address it, because we are looking to the SBA to 
give us some guidelines on that.
    Mr. Lipinski. Is there anyone who will venture an opinion 
on what impact you think that it has? Dr. Bravo?
    Dr. Ruiz Bravo. I would be happy to. For us at the NIH, if 
you recall the SBA issued a new rule in 2005. It became 
effective in 2005, and that opened the door to venture capital 
companies, majority ownership by a single venture capital 
company. We think that is terrific.
    It opened the door some, but perhaps not as much as would 
be beneficial to the National Institutes of Health. For us, 
particularly for companies that deal with drug development, 
drug discovery, therapeutics, for those kinds of companies less 
than one percent of those innovative research projects actually 
reach the marketplace, and they have a number of 
characteristics.
    For example, they have very high intensive capital needs. 
They require an unusually long development time. They are 
exceptionally high in burn rate of investment funds. In other 
words, they go through money very quickly. Sometimes it takes 
hundreds of millions of dollars to get a drug to market, and 
they require significant investment by the venture capital 
companies, and they require multiple venture capital financing.
    So for those kinds of companies, while the SBA's rule 
opened the door somewhat, it didn't open it sufficiently to 
allow us to reach some of those kinds of companies; and in 
fact, we have had some companies that we thought we were going 
to be able to fund that have applied for grants, and we have 
had to turn them down. I can give you one or two examples of 
that.
    Mr. Lipinski. Thank you. Anyone else want to--I am not 
trying to paint anyone into a corner. It is not a trick 
question. I was trying to get information on how you see this 
having an impact.
    Mr. Decker. At the Department of Energy, we don't think 
that the present guidelines has had a adverse impact on our 
program. I think it probably does depend a lot on the type of 
business that the company is in and what they are trying to do 
as to whether or not this is a significant issue. We just don't 
see it with the companies we deal with.
    Mr. Lipinski. Okay. Any others?
    Ms. Hefferan. Well, I would add that at USDA we have had 
relatively few cases where this has been an issue thus far, 
although, certainly, there is a growing Ag biotech sector. So 
it could have an effect similar to NIH, but at this point it 
has not been a substantial issue for us.
    Mr. Lipinski. Thank you.
    Mr. Hennessey. It hasn't really been an issue at NSF, even 
with our Phase IIB program. So we haven't really taken a 
position. However, we certainly can support the position that 
NIH has taken on it, but it hasn't been a handicap for us in 
managing our program.
    Mr. Lipinski. Thank you. Further question?
    Chairwoman Musgrave. Certainly.
    Mr. Lipinski. I had another question arising out of the 
testimony. I know that Dr. Decker talked about the Department 
of Energy was the first to aid in commercialization, and Dr. 
Hennessey talked about what NSF does with the Phase IIB.
    I was wondering if other departments and agencies--what 
they do in regard to helping with commercialization. Dr. Bravo?
    Dr. Ruiz Bravo. NIH does have a commercialization 
assistance program where small agencies are basically taught 
about how to get through what is called the ``valley of 
death,'' which is the place of getting through from having a 
great idea and the beginning of a product out to the product.
    Mr. Lipinski. Thank you. Mr. Ramos--Go ahead, Dr. 
Hennessey.
    Mr. Hennessey. NSF has a program that we call our Phase I 
commercialization planning assistance program, which works with 
all the Phase I grantees to help them develop a 
commercialization plan as part of their Phase I submission. 
That has been very successful in improving the quality of the 
Phase II proposals.
    We are evaluating now alternatives and how we can expand 
that to help--in addition to our Phase IIB program, how we can 
expand that to help our active Phase II grantees.
    Mr. Lipinski. Thank you. I always make it a point, whenever 
anyone from NSF is testifying before a Committee that I am on, 
to say I am always happy to see someone from the NSF, because I 
have applied for one NSF grant in my life, and I received it. 
So it's always good. Dr. Hefferan.
    Ms. Hefferan. In the case of the Department of Agriculture, 
we limit the technical assistance to the Phase II awardees, and 
it is done through contracts with firms that provide education 
and training, particularly for this transition from the 
development of the product to the development of something you 
can sell, and that is limited to a contract valued at $4,000 
per recipient.
    I think there are a lot of other avenues that could be 
developed to help with technical assistance. At USDA, of 
course, we have the Cooperative Extension Program which can 
help with commercialization and business development. NIST has 
a manufacturing extension program, and obviously, SBA and other 
programs have technical assistance.
    So we try to encourage our recipients to use a wide range 
of resources, many of which are low cost or free for small 
businesses, but the formal program is limited to the Phase II 
awardees.
    Mr. Lipinski. Thank you. Mr. Ramos?
    Mr. Ramos. I am one to use empirical data to make 
determinations, and we have two studies that are ongoing right 
now, one from the National--I've forgotten the name here--the 
National Academy of Science, and we also have the RAND.
    This has been an interest of both the House and Senate side 
in small business, and before we come forward with any 
conclusions, we better serve to the Congress if we get that 
empirical data to examine where these solutions may be applied.
    Mr. Lipinski. Thank you. Thank you very much.
    Chairwoman Musgrave. I just wonder what kind of interagency 
information sharing you all do. Anyone want to comment on that?
    Mr. Jenkins. Well, in terms of the SBA, the data is clearly 
important for us in order to track the success of the program. 
I think, as we move forward and make some modifications to our 
data collection system, we will be able to continue to show the 
success of the program, in all phases, but certainly through 
commercialization.
    So we collect data from each of the agencies to help us 
with that, and show the benefits of the program.
    Mr. Ramos. What we undertook this last year was a joint 
Department of Defense Phase II forum. We invited other agencies 
to participate, and for the first time we focused on Phase II 
and beyond.
    That seems to be a forum where we can push the program a 
little more effectively than we have in the past, and we plan 
to have another iteration of that forum again with our sister 
organizations.
    Chairwoman Musgrave. Very good. It seems that the east and 
west coasts have more award winners than anywhere else. Does 
anyone have a comment on that, why that might be the case?
    Mr. Ramos. I am from the west. They are smarter.
    Mr. Lipinski. I would take offense to that.
    Mr. Ramos. I just want to make reference to Congressman Tom 
Davis in one of the periodicals, that he was a guest speaker at 
one of these forums, and I think there is a circle trend in 
terms of where seats of technology sit. They seem to be 
principally in the Boston, Massachusetts, quarter and in 
California.
    Why that is, I think that is for any of the academics to 
speculate, but some people say that is the innovative 
environment that exists in those areas. Again, that is very 
subjective, but that seems to be a pattern.
    Chairwoman Musgrave. Are there any particular industries 
that you all see that are getting an increase in awards? No 
trend there? All right.
    Is there anything that you would suggest about the way the 
program is administered? Would you like to see any changes that 
would cause it to improve? Dr. Bravo?
    Dr. Ruiz Bravo. I think I have already mentioned the kinds 
of things, the flexibility around the eligibility, that would 
help NIH fund the kinds of applications that we need to fund.
    Chairwoman Musgrave. Anyone else like to comment on any 
changes they would like to see?
    Very interesting testimony today. Dr. Hennessey?
    Mr. Hennessey. We noted in our testimony that the area of 
discretionary funding to help with technical assistance, and 
for a lot of us technical assistance is really defined as 
helping them understand the principles of commercialization.
    I think a number of us believe that that would enhance our 
capability to do more mentoring, counseling, and try to address 
some of these issues that I mentioned before, a lot of great 
technologies, but how they get from technology to the 
marketplace--there is a huge gap of knowledge there in many of 
these companies.
    Mr. Decker. We, certainly, at Department of Energy support 
that position. We think that is a critically important piece 
for the success of this program.
    Chairwoman Musgrave. Thank you. Well, thank all of you. I 
know Trent Lott talks about herding cats, but then we heard 
about vaccinating eggs today, and I found that very intriguing, 
trying to imagine vaccinating a chick. So what an innovation.
    Good testimony today, and thank you also to you two 
gentlemen who assisted with demonstrating those things for us.
    This Committee is adjourned, and again thank you for 
coming.
    [Whereupon, at 11:07 a.m., the Subcommittee was adjourned.]

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