    [House Hearing, 116 Congress]
    [From the U.S. Government Publishing Office]

                              AMERICA'S SEED FUND:
                           A REVIEW OF SBIR AND STTR

    =======================================================================

                                    HEARING

                                   BEFORE THE

                    SUBCOMMITTEE ON RESEARCH AND TECHNOLOGY

                                     OF THE

                          COMMITTEE ON SCIENCE, SPACE,
                                 AND TECHNOLOGY
                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED SIXTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                FEBRUARY 5, 2020

                                   __________

                               Serial No. 116-65

                                   __________

     Printed for the use of the Committee on Science, Space, and Technology

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

           Available via the World Wide Web: http://science.house.gov

                        U.S. GOVERNMENT PUBLISHING OFFICE
    39-569 PDF                  WASHINGTON : 2021

    --------------------------------------------------------------------------------------

                  COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY

                 HON. EDDIE BERNICE JOHNSON, Texas, Chairwoman
    ZOE LOFGREN, California              FRANK D. LUCAS, Oklahoma,
    DANIEL LIPINSKI, Illinois                Ranking Member
    SUZANNE BONAMICI, Oregon             MO BROOKS, Alabama
    AMI BERA, California,                BILL POSEY, Florida
        Vice Chair                       RANDY WEBER, Texas
    LIZZIE FLETCHER, Texas               BRIAN BABIN, Texas
    HALEY STEVENS, Michigan              ANDY BIGGS, Arizona
    KENDRA HORN, Oklahoma                ROGER MARSHALL, Kansas
    MIKIE SHERRILL, New Jersey           RALPH NORMAN, South Carolina
    BRAD SHERMAN, California             MICHAEL CLOUD, Texas
    STEVE COHEN, Tennessee               TROY BALDERSON, Ohio
    JERRY McNERNEY, California           PETE OLSON, Texas
    ED PERLMUTTER, Colorado              ANTHONY GONZALEZ, Ohio
    PAUL TONKO, New York                 MICHAEL WALTZ, Florida
    BILL FOSTER, Illinois                JIM BAIRD, Indiana
    DON BEYER, Virginia                  FRANCIS ROONEY, Florida
    CHARLIE CRIST, Florida               GREGORY F. MURPHY, North Carolina
    SEAN CASTEN, Illinois                VACANCY
    BEN McADAMS, Utah
    JENNIFER WEXTON, Virginia
    CONOR LAMB, Pennsylvania
    VACANCY
                                     ------

                    Subcommittee on Research and Technology

                    HON. HALEY STEVENS, Michigan, Chairwoman
    DANIEL LIPINSKI, Illinois            JIM BAIRD, Indiana, Ranking Member
    MIKIE SHERRILL, New Jersey           ROGER MARSHALL, Kansas
    BRAD SHERMAN, California             TROY BALDERSON, Ohio
    PAUL TONKO, New York                 ANTHONY GONZALEZ, Ohio
    BEN McADAMS, Utah                    VACANCY
    STEVE COHEN, Tennessee
    BILL FOSTER, Illinois

                             C  O  N  T  E  N  T  S

                                February 5, 2020

                                                                       Page

    Hearing Charter..................................................     2

                               Opening Statements

    Statement by Representative Haley Stevens, Chairwoman,
      Subcommittee on Research and Technology, Committee on Science,
      Space, and Technology, U.S. House of Representatives...........     8
        Written Statement............................................     9

    Statement by Representative Jim Baird, Ranking Member,
      Subcommittee on Research and Technology, Committee on Science,
      Space, and Technology, U.S. House of Representatives...........    10
        Written Statement............................................    11

    Written statement by Representative Eddie Bernice Johnson,
      Chairwoman, Committee on Science, Space, and Technology, U.S.
      House of Representatives.......................................    12

                                   Witnesses:

    Dr. Dawn Tilbury, Assistant Director, Directorate for
      Engineering, National Science Foundation
        Oral Statement...............................................    14
        Written Statement............................................    16

    Dr. Maryann Feldman, S.K. Heninger Distinguished Professor of
      Public Policy, Department of Public Policy; Adjunct Professor
      of Finance, Kenan-Flagler Business School; Faculty Director,
      CREATE, Kenan Institute of Private Enterprise; The University
      of North Carolina at Chapel Hill
        Oral Statement...............................................    25
        Written Statement............................................    27

    Mr. Nicholas Cucinelli, Chief Executive Officer, Endectra
        Oral Statement...............................................    32
        Written Statement............................................    34

    Dr. Johnny Park, Chief Executive Officer, Wabash Heartland
      Innovation Network
        Oral Statement...............................................    45
        Written Statement............................................    47

    Discussion.......................................................    54

                 Appendix I: Answers to Post-Hearing Questions

    Dr. Dawn Tilbury, Assistant Director, Directorate for
      Engineering, National Science Foundation.......................    68

    Dr. Maryann Feldman, S.K. Heninger Distinguished Professor of
      Public Policy, Department of Public Policy; Adjunct Professor
      of Finance, Kenan-Flagler Business School; Faculty Director,
      CREATE, Kenan Institute of Private Enterprise; The University
      of North Carolina at Chapel Hill...............................    71

                Appendix II: Additional Material for the Record

    Letters submitted by Representative Haley Stevens, Chairwoman,
      Subcommittee on Research and Technology, Committee on Science,
      Space, and Technology, U.S. House of Representatives...........    76

                              AMERICA'S SEED FUND:
                           A REVIEW OF SBIR AND STTR

                                  ----------

                          WEDNESDAY, FEBRUARY 5, 2020

                      House of Representatives,
               Subcommittee on Research and Technology,
                   Committee on Science, Space, and Technology,
                                                       Washington, D.C.

        The Subcommittee met, pursuant to notice, at 2 p.m., in
    room 2318 of the Rayburn House Office Building, Hon. Haley
    Stevens [Chairwoman of the Subcommittee] presiding.
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairwoman Stevens. This hearing will come to order.
    Without objection, the Chair is authorized to declare recess at
    any time. Good afternoon, and welcome to this hearing of the
    Subcommittee on Research and Technology to review opportunities
    and challenges for the Small Business Innovation Research
    (SBIR) and Small Business Technology Transfer (STTR) programs.
    I'd like to extend a warm welcome to our distinguished panel of
    witnesses. We look forward to hearing your testimony, and to
    having this discussion this afternoon. Today we're going to
    explore the role of these important programs in catalyzing the
    innovation and commercialization accomplishments from our
    Federal research investments to generate new economic growth,
    and further American leadership in innovation.
        The SBIR and STTR programs have helped entrepreneurs in my
    home State of Michigan to pursue their big ideas, and
    contribute to our thriving innovation economy. Since the
    creation of these programs, small businesses, as an example, in
    Michigan have been able to leverage $1.2 billion in funds to
    develop an amazing array of new technologies, while creating
    jobs and driving economic growth in our region. These
    investments transform communities and competitively grow small
    businesses.
        For instance, Variation Reduction Solutions, Incorporated,
    VRSI, is a small business located in my district in Plymouth,
    Michigan, and they're focused on manufacturing production
    technology. With our great roots in Southeastern Michigan in
    the auto industry, this, you know, we needed to kind of find a
    way to continue to grow our economy as we were coming out of
    the Great Recession that began in Michigan in 2007. So with the
    help of an SBIR grant, VRSI expanded into the aerospace
    industry. See, this is the plight of diversification, right? So
    we love our auto industry, but if there's a downturn, we want
    to be able to sell into other industries as well. And so they
    became involved with the F-35 Program, and generated
    relationships with the Department of Defense and large industry
    players, such as Lockheed-Martin and Northrop Grumman. The SBIR
    program was an essential piece of this successful transition to
    allow VRSI to not only weather through the transition of the
    Great Recession, but also to grow into a stronger and more
    thriving business.
        Today SBIR programs continue to allow small businesses in
    my district with the opportunity to scale into new industries
    and new markets, while building critical relationships with
    government and industry partners. It's because of successes
    like these that I am so proud to co-sponsor a bipartisan bill,
    and we did this earlier this Congress. I did this with my
    friend Ranking Member Baird, and two of our colleagues on the
    other Committee, on the House Small Business Committee, to
    further strengthen SBIR and STTR programs. H.R. 3774, the Small
    Business Innovation Research and Small Business Technology
    Transfer Improvement Act of 2019 encourages agencies to give
    high priority to funding small manufacturers and cybersecurity
    forums, right? These are places where we need and want to
    innovate, and it's absolutely critical for our economic and
    national security for the U.S. to maintain a domestic
    manufacturing base, and to develop the best cybersecurity tools
    for all businesses.
        For these entrepreneurs who are just getting started, early
    stage funding, right, helps them to get on the path for
    success. So this legislation, H.R. 3774, would require the
    Phase 0 proof of Concept Pilot Program currently carried out by
    NIH (National Institutes of Health) to be expanded to NSF
    (National Science Foundation), DOE (Department of Energy), and
    NASA (National Aeronautics and Space Administration). This
    pilot program has been instrumental in providing funds to
    innovators to identify research with commercial potential,
    engage in entrepreneurial training, and make technical
    validations. What could be greater? Phase Zero awards also
    allow researchers to take these important steps before company
    formation and before spending weeks to months to complete an
    SBIR application. Data from the NIH pilot program have clearly
    demonstrated the potential for this program to improve the
    overall outcomes of the SBIR program. Phase Zero efforts have
    also demonstrated success in broadening the participation of
    women and minorities in entrepreneurship, which is an important
    goal of the SBIR program that the agencies have long grappled
    with.
        SBIR has also been an important program in our overall
    Federal R&D (research and development) portfolio. It helps the
    agencies achieve their missions, and it supports innovative
    entrepreneurs who are creating jobs and generating economic
    growth in communities across the Nation. The improvements to
    the SBIR program proposed in H.R. 3774 will ensure that we can
    continue to build upon the program's successes and lessons
    learned. I cannot think of a more essential and exciting topic
    for us to explore and learn more about today. I want to thank
    our witnesses again for being here. We are really looking
    forward to your feedback on the legislation, and any other
    additional ideas that Congress should consider for improving
    the SBIR program.
        [The prepared statement of Chairwoman Stevens follows:]

        Good afternoon and welcome to this hearing of the
    Subcommittee on Research & Technology to review opportunities
    and challenges for the Small Business Innovation Research and
    Small Business Technology Transfer program. I'd also like to
    extend a warm welcome to our distinguished panel of witnesses.
    We look forward to your testimony and having this discussion
    this afternoon.
        Today, we will explore the role of these important programs
    in catalyzing the innovation and commercialization
    accomplishments from our federal research investments to
    generate new economic growth and further American leadership in
    innovation.
        The SBIR and STTR programs have helped entrepreneurs in
    Michigan pursue their big ideas and contribute to our thriving
    innovation economy. Since the creation of these programs, small
    businesses in Michigan have leveraged $1.2 billion in funds to
    develop an amazing array of new technologies while creating
    jobs and driving economic growth in our region.
        These investments transform communities and grow small
    businesses. For instance, Variation Reduction Solutions,
    Incorporated, VRSI, is a small business in my district in
    Plymouth, Michigan focused on manufacturing production
    technology. With its roots in the auto industry, it needed to
    find a way to succeed as the economy was crashing in 2007.
        With the help of an SBIR grant, VRSI expanded into the
    aerospace industry, becoming involved with the F-35 program and
    generating relationships with the Department of Defense and
    large industry players such as Lockheed Martin and Northrup
    Grumman. The SBIR program was an essential piece of this
    successful transition to allow VRSI to not only weather the
    Great Recession but to grow into a stronger and thriving
    business.
        Today the SBIR Program continues to allow small businesses
    in districts like mine the opportunity to scale into new
    industries and new markets while building critical
    relationships with government and industry partners.
        It is because of successes like these that I was proud to
    cosponsor a bipartisan bill earlier this Congress with Ranking
    Member Baird and two of our colleagues on the House Small
    Business Committee to further strengthen the SBIR and STTR
    programs. H.R. 3774, The Small Business Innovation Research and
    Small Business Technology Transfer Improvements Act of 2019,
    encourages agencies to give high priority to funding small
    manufacturers and cybersecurity firms. It is critical for our
    economic and national security for the U.S. to maintain a
    domestic manufacturing base and to develop the best
    cybersecurity tools for all businesses.
        For those entrepreneurs who are just getting started, early
    stage funding helps set them on the path to success. H.R. 3774
    would require the Phase 0 Proof of Concept pilot program
    currently carried out by NIH to be expanded to NSF, DOE, and
    NASA. This pilot program has been instrumental in providing
    funds to innovators to identify research with commercial
    potential, engage in entrepreneurial training, and make
    technical validations. Phase 0 awards allow researchers to take
    these important steps before company formation and before
    spending weeks to months to complete an SBIR application. Data
    from the NIH pilot program have clearly demonstrated the
    potential for this program to improve the overall outcomes of
    the SBIR program. Phase 0 efforts have also demonstrated
    success in broadening the participation of women and minorities
    in entrepreneurship. That is an important goal of the SBIR
    program that the agencies have long struggled with.
        SBIR has long been an important program in our Federal R&D
    portfolio. It helps the agencies achieve their missions and it
    supports innovative entrepreneurs who are creating jobs and
    generating economic growth in communities across the nation.
    The improvements to the SBIR program proposed in H.R. 3774 will
    ensure that we can continue to build upon the program's
    successes and lessons learned.
        I cannot think of a more essential and exciting topic for
    us to explore and learn more about today. I want to thank the
    witnesses for being here today. I look forward to your feedback
    on our legislation and any additional ideas Congress should
    consider for improving the SBIR Program.

        Chairwoman Stevens. Before I recognize Dr. Baird for his
    opening remarks, I would like to present for the record
    statements from the National Institutes of Health and Clean
    Energy Business Network regarding this hearing, so we have
    statements from both of these organizations for the official
    record today.
        And now, without further ado, our Chair is going to
    recognize Dr. Baird for an opening statement.
        Mr. Baird. Thank you, Chairwoman Stevens. Anyway, let's not
    get confused here. I really appreciate you holding this
    hearing, and you know I really appreciated the opportunity to
    work with you to introduce that H.R. 3774. And, you know, these
    are, you know, descriptive terms, I guess, but when you talk
    about small business innovation research, if you really think
    through that, that's extremely important, and then you add to
    it the small business technology transfer improvement, I mean,
    that's so important to our economy, to our country, and to our
    citizenship, so we really appreciate the opportunity to do that
    with you, and I appreciate all the witnesses being here.
        I'm really proud of America for our leadership in science
    and technology over the years and through the centuries, and as
    I mentioned, it is critical to our economy, and it's critical
    our national security. And so basic research, supported with
    taxpayer dollars through the National Science Foundation,
    through NASA, NIH, DOD (Department of Defense), and other
    Federal agencies have led to key scientific discoveries that
    have created today's world, the Internet, wireless
    communications, life-saving medicines, lasers, and so on. So
    when you think about the products and innovations that have
    evolved from this kind of research, it's phenomenal. So basic
    research produces the scientific fuel for innovation, risk-
    taking small businesses are the engines for converting that
    knowledge, and into new products and services. Small businesses
    are the catalysts for economic growth for producing good paying
    jobs in our communities. So I think a lot of us recognize how
    important small businesses are to our communities, and to our
    States, and to the country.
        So SBIR and STTR programs help accelerate the
    commercialization of taxpayer funded research into new products
    and services. They also help the Department of Defense and
    other Federal agencies meet their research and development
    needs. The SBIR and STTR programs are funded from set-asides of
    the extramural research budget at Federal agencies to the tune
    of 3.2 percent for SBIR grants, and just less than half a
    percent for the STTR. These set-asides sound small, but they
    amount to about $2.7 billion for SBIR and $368 million for STTR
    on an annual basis, so this is a huge taxpayer investment, so
    it's important that we ensure that these programs are working.
    And I think that's why we have these kinds of hearings, to
    share with us, as Congress Members, how the programs are
    working.
        My legislation takes steps to improve the accountability
    portion of that. First, it reinforces the requirement that the
    Small Business Association give a comprehensive annual report
    to SBIR and STTR programs to Congress, and hold the Department
    of Defense accountable to stimulate technological innovation.
    The bill also sets priorities for SBIR and STTR--boy, programs
    to stimulate manufacturing and cybersecurity, and the products
    and services that we utilize in the United States.
        The bill extends the flexibility given to agencies for
    innovative funding mechanisms for those two programs. Congress
    acted to extend those two programs through Fiscal Year 2022,
    but our work must continue to ensure the success of these
    programs. They're vital to helping the Hoosier small
    businesses, and the other segments of our Nation. I'm proud to
    have one of those Hoosier success stories on the panel here
    today. Dr. Johnny Park took basic research he developed in his
    lab at Purdue University. Did you hear that? Purdue University,
    yes.
        Chairwoman Stevens. OK----
        Mr. Baird. Anyway----
        Chairwoman Stevens [continuing]. We heard you.
        Mr. Baird [continuing]. And started a company with the
    assistance of an SBIR award to develop his research, then he
    created products for farmers, and a thriving business that has
    been acquired since then. I look forward to hearing his
    testimony today as a great example of the innovation system in
    America. We must take every opportunity to strengthen
    investment in R&D so that we can continue breaking boundaries
    and moving our economy forward. I'm proud to work with our
    colleagues to encourage innovation and give our businesses the
    resources they need to thrive. I look forward to hearing ideas
    from our panel and witnesses on how we can continue to
    strengthen the two programs. And I yield back. Thank you.
        [The prepared statement of Mr. Baird follows:]

        Chairwoman Stevens, I appreciate you holding today's
    hearing to review the SBIR and STTR programs.
         I was proud to introduce H.R. 3774, the Small Business
    Innovation Research and Small Business Technology Transfer
    Improvements Act.
        I want to thank the Chairwoman for joining me in sponsoring
    the bill, and for advancing that effort with today's
    legislative hearing.
        America's leadership in science and technology is critical
    to our economic and national security. Basic research supported
    with taxpayer dollars through the National Science Foundation,
    NASA, NIH, DOD, and other federal agencies has led to the key
    scientific discoveries that have created today's world: the
    internet, wireless communications, life-saving medicines,
    lasers, and more.
        If basic research produces the scientific fuel for
    innovation, risk-taking small businesses are the engines for
    converting knowledge into new products and services. Small
    businesses are the catalysts for economic growth, for producing
    good-paying jobs in our communities.
        The SBIR and STTR programs help accelerate the
    commercialization of taxpayer-funded research into new products
    and services. They also help the Department of Defense and
    other federal agencies meet their research and development
    needs.
        The SBIR and STTR programs are funded from set-asides of
    the extramural research budgets at federal agencies--3.2% for
    SBIR grants and just less than half a percent for STTR. These
    set-asides sound small, but they amount to over $2.7 billion
    for SBIR and $368 million for STTR annually. This is a huge
    taxpayer investment, so it is important for Congress to ensure
    the programs are working.
        My legislation takes steps to improve accountability.
        First, it reinforces the requirement that the Small
    Business Administration (SBA) give a comprehensive annual
    report of the SBIR and STTR programs to Congress and holds the
    Department of Defense (DoD) accountable to stimulate
    technological innovation.
        The bill also sets priorities for the SBIR and STTR
    programs to stimulate manufacturing and cybersecurity products
    and services in the United States. The bill also extends
    flexibility given to agencies for innovative funding mechanisms
    under the SBIR and STTR programs.
        Congress acted to extend the SBIR and STTR programs through
    Fiscal Year 2022, but our work must continue to ensure the
    success of these programs. The SBIR and STTR programs are vital
    to helping our Hoosier small businesses and our nation.
        I am proud to have one of those Hoosier success stories on
    our panel today. Dr. Johnny Park took basic research he
    developed in his lab at Purdue University, and started a
    company with the assistance of SBIR awards to develop his
    research. He created products for farmers and a thriving
    business that was then acquired. I look forward to hearing his
    testimony today, as a great example of the innovation system in
    America.
        We must take every opportunity to strengthen investment in
    R&D so we can continue breaking boundaries and moving our
    economy forward. I'm proud to work with my colleagues to
    encourage innovation and give our businesses the resources they
    need to thrive.
        I look forward to hearing ideas from our panel of witnesses
    of how we can continue to strengthen the SBIR and STTR
    programs.
        I yield back.

        Chairwoman Stevens. If there are Members who wish to submit
    additional opening statements, your statements will be added to
    the record at this point.
        [The prepared statement of Chairwoman Johnson follows:]

        Good afternoon and thank you to the Chair and Ranking
    Member for holding this hearing and for introducing a good,
    bipartisan bill making improvements to the SBIR and STTR
    programs. I would also like to welcome our witnesses to today's
    hearing and thank them for sharing their expertise with us on
    these important programs.
        The SBIR program is known as ``America's Seed Fund.'' A
    strength of the Federal scientific enterprise is its ability to
    harness research and ideas from a wide range of innovators
    including small businesses. Just a modest amount of early stage
    support for these ideas can propel them forward and open the
    door to significant private sector investment and commercial
    success.
        To build on these successes for the future, it is important
    to periodically evaluate the SBIR program and ensure policies
    are in place to help the agencies meet the goals of the
    program.
        There is no one size fits all assessment of SBIR because
    each agency implements a unique program. And Congress has
    recognized the need to provide agencies the flexibility to do
    so. Each agency has its own mission and research needs.
    However, the overarching goals are constant across the
    agencies, and Congress requires the National Academies of
    Science, Engineering, and Medicine to review these programs
    every four years with those goals in mind. The Academies has
    recently initiated a new round of reviews so we don't have new
    recommendations yet. However, in their last round in 2015-2016
    they found that overall, agencies were doing a good job in
    meeting the statutory goals, except when it came to achieving
    increased women and minority participation in SBIR and STTR.
        Whether this is a pipeline issue or an accessibility issue,
    the status quo is not good enough. Congress authorized agencies
    to use 3 percent of their SBIR funds for administrative
    activities, program evaluation, and outreach. I am interested
    in any feedback the witnesses might offer on the use of these
    funds for increasing the participation of underrepresented
    groups in the program. I am also eager to learn more from NSF
    about the promise of the Innovation Corps and other preSBIR
    activities in engaging more women and minorities in
    entrepreneurship. We should continue to experiment with these
    and other potential solutions to addressing the lack of
    diversity in the SBIR program and our innovation pipeline.
        Finally, this Committee has long advocated for early-stage
    funding. It takes business acumen, a solid technology
    foundation, and adequate resources to get an idea into the
    market. NIH recently reported a number of successes funded
    through a Congressionally mandated pilot program to fund
    activities to improve the commercialization potential of pre-
    competitive technologies. Considering these successes, I would
    like to see other agencies carry out a similar program.
        I look forward to an informative hearing, and I appreciate
    the witnesses being with us to share their insights and
    legislative recommendations.
        Thank you, and I yield the balance of my time.

        Chairwoman Stevens. And at this time, I'd also like to
    introduce our witnesses in full.
        Our first witness is Dr. Dawn Tilbury. Dr. Tilbury is the
    Assistant Director of the Directorate of Engineering at the
    National Science Foundation. In this role she leads the
    directorate in its mission to support engineering research and
    education critical to the Nation's future. The engineering
    directorate also manages the National Science Foundation's SBIR
    and STTR programs. Dr. Tilbury is on temporary leave, wait for
    it, from the University of Michigan, where she has been a
    professor since 1995 in both mechanical and electrical
    engineering. She is also the inaugural chair of the Robotics
    Steering Committee, and served as an associate dean for
    research in the College of Engineering at the University of
    Michigan. And, as we just launched last week the Women in STEM
    (science, technology, engineering and mathematics) Caucus for
    the House of Representatives, we look forward to engaging you
    in that caucus as well in that Committee.
        And then our next witness is Dr. Maryann Feldman. Dr.
    Feldman is the Distinguished Professor in the Department of
    Public Policy and Adjunct Professor of Finance in the Kenan-
    Flagler Business School at the University of North Carolina at
    Chapel Hill. Her research focuses on the geography of
    innovation, the commercialization of academic research, and the
    factors that promote technological change and economic growth.
    Dr. Feldman is also the co-chair of several assessments of the
    SBIR and STTR programs that are underway at the National
    Academies of Sciences, Engineering, and Medicine, and we're
    counting you in our Women in STEM Caucus too. We're promoting
    it, since we just launched it.
        And then next, and we're so delighted to have Mr. Nicholas
    Cucinelli. Mr. Cucinelli is the Chief Executive Officer of
    Endectra LLC, an SBIR funded spinout from the University of
    Michigan launched in 2015 that has a portfolio of photonic and
    nano-sensor technologies for defense, medical, and industrial
    applications. He is also an entrepreneurial leadership
    instructor at the University of Michigan Center for
    Entrepreneurship. And from 2013 to 2018 he served as a mentor
    in residence for the Tech Transfer Talent Network Program,
    supporting university startup teams Statewide. Mr. Cucinelli
    served 16 years with the U.S. Coast Guard, where he focused on
    environmental protection, and was named Coast Guard Hero in
    2000, and thank you so much for doing that important work.
        Our fourth witness, who we heard a little bit about, is Dr.
    Johnny Park. Dr. Park is the Chief Executive Officer of Wabash
    Heartland Innovation Network, a consortium of 10 counties in
    North Central Indiana devoted to developing the region into a
    global epicenter of digital agriculture and next generation
    manufacturing by using the Internet of Things. Prior to his
    position at this network, Dr. Park founded, scaled, and led a
    successful exit of an ag tech company, Spensa Technologies. He
    was previously a faculty member in the School of Electrical and
    Computer Engineering at Purdue University, where his research
    included projects on robotics, computer vision, machine
    learning, and distributed sensor networks. We will make note
    that not all SBIR funding goes through Michigan and Indiana,
    but we are very pleased to have these great witnesses here
    today. And there's one thing we know on this Committee, is that
    the Midwest is best.
        So, as our witnesses should know, you're each going to have
    5 minutes for your spoken testimony, and make sure to turn on
    your microphone when you're speaking. Your written testimony
    will be included in the record for the hearing, and then, after
    each of you have completed your spoken testimony, we'll begin
    with questions, and each Member will have 5 minutes to question
    the panel. And, with that, we're going to start with Dr.
    Tilbury.

                     TESTIMONY OF DR. DAWN TILBURY,

       ASSISTANT DIRECTOR, DIRECTORATE FOR ENGINEERING, NATIONAL
                           SCIENCE FOUNDATION

        Dr. Tilbury. Great. Well, thank you very much, Chairwoman
    Stevens, Ranking Member Baird, and Members of the Subcommittee.
    Thank you for the opportunity to testify on the SBIR and STTR
    programs at the National Science Foundation. It's great to see
    a little Big Ten rivalry up there. So this year, as NSF
    celebrates its 70th anniversary, we reflect on the many
    breakthrough discoveries and innovations that have been enabled
    by NSF investments that sustain, accelerate, and transform
    America's globally preeminent research ecosystem. Some of the
    most well-known innovative companies of today, such as
    Qualcomm, started with NSF support, and specifically with
    support from SBIR and STTR. These programs are an integral part
    of the NSF strategy to stimulate innovation and address
    societal needs through the commercialization of the results of
    fundamental research.
        NSF is unique across the Federal Government, with a mission
    to support fundamental research across all fields of science,
    technology, engineering, and mathematics, or STEM, and all
    levels of STEM education. Given this unique role in supporting
    innovators, the agency recognized early on the potential for
    greater and faster commercialization of NSF funded research.
    That is why, in the late 1970s, NSF created the SBIR program.
    The primary objective of the SBIR and STTR programs is to
    transform scientific discoveries into products and services
    with commercial potential or societal benefits. Within NSF most
    of our SBIR and STTR Program officers are scientists, and also
    former entrepreneurs, investors, or both.
        At NSF, SBIR research topics cover the entire spectrum of
    the marketplace and the Nation, and I'll tell you a story about
    one of my colleagues from the University of Michigan, Dr.
    Shorya Awtar. Shorya started his career getting some early NSF
    funding for basic research into kinematics, which, if any of
    you are mechanical engineers, that's pretty old-fashioned
    mechanical engineering. However, he had an innovative idea
    about how to re-map the surgeon's hand movements in a
    laparoscopic surgical instrument using purely kinematics, so
    when the surgeon moves his fingers this way, the end-effector
    moves the same way, instead of the opposite way, as you would
    expect.
        Now, current technology, such as the DaVinci Robot, can do
    this remapping, but it takes a whole room of electronics and
    costs a million dollars. Shorya's mechanical device costs less
    than $500. So he went through I-Corps, one of NSF's programs,
    started a company, and got SBIR Phase 1 and Phase 2 awards, and
    his company is currently operating in Michigan with several
    dozen employees, producing these surgical devices as fast as
    they can. Now he's back at the university, has another basic
    research award, and possibly the cycle will start all over
    again. We'll wait and see.
        NSF's I-Corps Program provides training to potential
    entrepreneurs, faculty, graduate students, post-docs, teaching
    them about what the market needs are, and how they might
    commercialize their product. PIs who have been through the I-
    Corps Program are three to four times more likely to receive an
    NSF SBIR Phase 1 award than the general population. So,
    building on this success, over the last year we have put more
    than 1,000 NSF SBIR and STTR Phase 1 awardees through a
    condensed version of the I-Corps Program called Beat the Odds
    Bootcamp.
        So, in conclusion, I'll echo what we heard earlier. Small
    businesses create jobs. They fuel the economy, and they support
    communities. For over 40 years NSF has helped startups and
    small businesses across the country transform their ideas into
    marketable products and services through our SBIR and STTR
    programs. NSF is constantly assessing its performance against
    the goals of these programs, and has taken on new initiatives,
    and new outreach, and new enhancements. We know that it takes
    more than the SBIR and STTR investment to translate a technical
    vision into a realized, economically viable company, but these
    SBIR and STTR Programs anchor our extensive activity in
    identifying and leveraging the opportunities for new
    technologies.
        On behalf of the National Science Foundation, and all of
    our awardees, I want to thank you for your support of NSF, and
    for this opportunity to highlight the programs that provide
    startups and small businesses with the means to keep America on
    the forefront of innovation. Thank you.
        [The prepared statement of Dr. Tilbury follows:]
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                    TESTIMONY OF DR. MARYANN FELDMAN,

                 S.K. HENINGER DISTINGUISHED PROFESSOR

             OF PUBLIC POLICY, DEPARTMENT OF PUBLIC POLICY,

                     ADJUNCT PROFESSOR OF FINANCE,

                     KENAN-FLAGLER BUSINESS SCHOOL,

                       FACULTY DIRECTOR, CREATE,

                 KENAN INSTITUTE OF PRIVATE ENTERPRISE,

            THE UNIVERSITY OF NORTH CAROLINA AT CHAPEL HILL

        Dr. Feldman. So, Chair Stevens, Ranking Member Baird, and
    Members of the Committee, thank you so much for inviting me to
    testify. And I am the Co-Chair of several ongoing National
    Academies assessments of the SBIR program. Our first assessment
    of the Department of Energy will be released at the end of
    March, so I'm not able to speak to any of the findings or
    recommendations of the Committee. I'm appearing today in my
    capacity as an expert in innovation, and as a scholar who was
    studied the SBIR program, its impacts, and also the ways in
    which those impacts may be broadened. And so this program is
    highly successful. It's copied around the world, and it
    deserves Congress' continued and enthusiastic support.
        The program strengthens the capacity for private sector
    innovation in the U.S., but there are opportunities. States
    have been experimenting with programs to encourage technology
    commercialization, but these State resources are not evenly
    distributed, and there's a tendency for the States that have a
    lot of activity to get more. And so an example of the way that
    we could level the playing field are increased funding for the
    Phase Zero Proof of Concept centers, and about half of the
    States currently have these programs. With small amounts of
    money in the range of $2 to $10,000, they increase the
    competitiveness of the SBIR proposals, and this is very
    important for first time applicants, but also, when people have
    an unsuccessful application, they can then revise it.
        Another example is the SBIR State match, and these are for
    companies that have been awarded funding, and it tops off the
    amount of the funding, and there are currently 15 States that
    offer a match that will increase the amount of funding. My own
    research with Lauren Lanahan has examined this program. We find
    that small amounts of money, in the range of $25 to $50,000,
    increase the probability of a firm moving from a Phase 1 to a
    Phase 2. That suggests that increasing the amount of funding
    will increase the success of the program. Now, these State
    programs are copied on an ad hoc basis, and having them be a
    national program might increase the success of the program.
    Many States simply don't have the access to adopt these
    programs, and these are the States where there is the greatest
    need.
        The evidence suggests that the SBIR program is working
    well, but the SBIR program is only one component of a larger
    system of innovation. The program's called America's Seed Fund,
    and it is meant to address this colorfully named funding gap,
    the Valley of Death, but venture capital has not been moving in
    with follow-on funding. Many SBIR recipients are unable to
    secure the needed funding to move forward, and this is
    especially true for the high risk, high reward technologies
    that are central in energy independence, providing new and
    better industrial materials, and really those technologies that
    have the potential to create new industries. Venture capital
    (VC) has increasingly been moving toward software investments,
    and this is where you have lower--shorter development times,
    lower capital cost, and less market uncertainty. The VC model
    is also predicated on returning moneys to investors within 5 to
    10 years, and that's not enough time to develop these
    technologies, where there is such great uncertainty.
        I'd also like to suggest that these wonderful pilot
    programs you've been trying should be part of this landscape,
    and should be institutionalized, and so this is a way of
    nesting the companies in support organization. The idea of
    public/private partnerships which would blend funding, bringing
    together different users will help validate discoveries, and
    move business forward. NSF, excuse me, NIH has tried this very
    successful with their REACH Program, that's Research Evaluation
    and Commercialization Hubs, but this could be extended to other
    agencies.
        And so I think that, as we think of reforming the SBIR
    program, it's important to remember it works very well, and
    that we need to get other components of the system supporting
    SBIR in a better way. Thank you.
        [The prepared statement of Dr. Feldman follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                  TESTIMONY OF MR. NICHOLAS CUCINELLI,

                 CHIEF EXECUTIVE OFFICER, ENDECTRA, LLC

        Mr. Cucinelli. Chairwoman Stevens, Ranking Member Baird,
    and Members of the Subcommittee, thank you for inviting me here
    today to offer an entrepreneur's perspective on H.R. 3774 and
    the overall SBIR/STTR program. Apologies in advance for saying
    that acronym over and over again. I offer my perspective
    through the unique lens of having professionally mentored or
    personally managed more than 15 technology ventures that have
    received approximately eight million in seed funding from the
    SBIR/STTR program over the last 12 years. This funding has
    spanned the NSF, NIH, DOE, NASA, and the DOD, and in many cases
    led to follow-on angel, venture capital, and strategic
    investment, and the commercialization of technologies that now
    meet important civilian and military needs, and keep the U.S.
    at the forefront of global technological innovation.
        One great example is Intralase, which launched out of the
    University of Michigan in 1997, and commercialized the blade
    free laser technology used in LASIK eye surgery. The company
    received about 2.2 million in SBIR seed funding in the 1990s,
    and was eventually acquired for over 800 million in 2007. More
    than 40 million people worldwide have benefited from this life-
    changing technology, including me, and probably many people in
    this chamber. It has created high tech jobs, economic growth,
    and contributed to our technological leadership. The inventor
    of this platform laser technology received a Nobel Prize in
    Physics in 2018, and is now working on a way to use it to
    render nuclear waste harmless. These are truly remarkable
    economic and societal dividends for a $2.2 million seed
    investment by the U.S. Government.
        More recent examples from the past decade include H3D, a
    2013 spinout from the University of Michigan with a novel
    radiation imaging technology, and SkySpecs, a company launched
    by Michigan grad students in 2012, which uses autonomous drones
    to conduct wind turbine inspections. Together these companies
    have received a total of about 2.3 million in SBIR funding, and
    have gone on to create over 85 high tech jobs, reach in excess
    of 15 million in combined annual revenue, and deliver
    revolutionary technologies into the global energy industry. 70
    percent of the U.S. nuclear power plant fleet now uses H3D
    radiation detectors, while SkySpecs has completed over 30,000
    wind turbine inspections in 19 countries. Again, this is a
    remarkable return on a relatively small investment by the U.S.
    Government.
        Some ongoing projects with which I am involved include
    Enertia Microsystems, with NSF SBIR funding to develop a high
    precision gyroscope that can enable autonomous vehicles to
    operate on inertial navigation alone for up to 15 minutes, and
    iReprogram, with DARPA (Defense Advanced Research Projects
    Agency)/STTR funding to develop a biocomputational platform for
    cellular reprogramming. Imagine having a simple skin biopsy and
    converting your own body's cells into personalized treatments
    for wound healing, obesity, diabetes, cancer, and even aging.
    My own company, Endectra, has received $1.3 million in SBIR and
    STTR funding from NSF and the DOD, resulting in a broad
    portfolio of sensor technologies for defense, medical, and
    industrial applications, including distributed radiation and
    gas detectors, bio-photonic probes for cancer radiotherapy and
    real-time diabetes monitoring, and power meters for enterprise
    energy management.
        These, and thousands of other high potential companies, are
    currently using SBIR and STTR funding to move federally funded
    research across the wide chasm that exists between laboratory
    and marketplace. But like Intralase, H3D, and SkySpecs, they
    will typically not succeed overnight, but rather require seven
    to 10 years, exceptional dedication, and the patient bridge
    capital that the SBIR/STTR program provides. I applaud the
    Subcommittee's ongoing support of this program, and its efforts
    to prioritize small manufacturers, cybersecurity, and diversity
    in H.R. 3774. I would also recommend that in future you
    prioritize small businesses developing low carbon energy and
    climate mitigation technologies in order to address the
    existential threat of global warming.
        In closing, SBIR/STTR funded innovations have a long record
    of creating American jobs, improving our lives, and meeting
    strategic national needs. Thank you for the opportunity to
    participate in today's hearing, and for your continued support
    of this important program. I'll be pleased to answer any
    questions you may have, and, for the record, I was born in Fort
    Wayne.
        [The prepared statement of Mr. Cucinelli follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                      TESTIMONY OF DR. JOHNNY PARK,

                        CHIEF EXECUTIVE OFFICER,

                   WABASH HEARTLAND INNOVATION NETWORK

        Dr. Park. Thank you for the opportunity to speak to you
    today about the SBIR and STTR program. I hope you'll find that
    my own experience provides compelling evidence of the value of
    this very important program. I was a professor at Purdue doing
    research in robotics, machine learning, and wireless system
    networks. In 2008 I received a grant from USDA (United States
    Department of Agriculture) to develop technologies that could
    automate labor intensive activities in agriculture. I knew very
    little about agriculture back then, so this project served as
    an entry door for me to this very important industry.
        In that USDA project, my work focused on automating the
    process of monitoring insect populations. Traditionally,
    monitoring insect populations is done by deploying a large
    number of cardboard sticky traps in the field. Each week,
    workers have to go in the field, first find a trap, open it up,
    count the number of bugs that are caught in the trap, write the
    number down on a piece of paper, clean the trap up, hang it
    back up, and repeat that process for hundreds of traps deployed
    in the field. As you can imagine, this is very labor intensive,
    but it's critically important because those trap numbers
    determine and inform when, where, and how much insecticide to
    apply.
        About a year of research and development at Purdue, we were
    able to demonstrate the feasibility of automatically monitoring
    insect populations with a wireless network of highly
    specialized sensors. Because of the potential for this
    technology to drastically improve the practice of pest
    management, I started a company, Spensa, to commercialize the
    research. But as with many technology startups that stem from
    university research, commercialization took much longer than
    anticipated. We had several problems to resolve in order to
    take our lab prototype into a full commercial product.
        The SBIR program helped us in two specific ways. First, it
    provided a necessary infusion of money to allow us to complete
    the research and development to the point where venture capital
    could participate. Second, the SBIR program taught me, through
    its very well organized SBIR grantee workshops, how to navigate
    between the paradigms of scientific research and
    entrepreneurship. Both were critically important to an
    academic-turned-entrepreneur like myself.
        Spensa received approximately $1.5 million in SBIR grants
    from USDA and NSF. Spensa was named by Forbes as one of the top
    25 most innovative ag tech startups in 2017. Spensa created
    jobs, hiring over 70 technical and business professionals. Its
    products helped growers reduce the labor costs associated with
    pest management, and helped them make more informed and timely,
    judicious spray decisions. On average, Spensa doubled its
    annual revenue in each of the last 5 years before it was
    acquired by DTN, which continues to operate the business from
    the Purdue research park where Spensa was founded.
        But well beyond this impact on Spensa was SBIR's impact on
    me. The program taught me to understand entrepreneurship as a
    customer-centered engine for innovation that accelerates change
    through the strategic, value sensitive, and nimble deployment
    of resources. And resources include not only financial capital
    and intellectual property, but also the team's talents, time,
    and passion. The entrepreneurship model is thus a resource
    engine, as each new asset comes to fruition, becomes the basis
    for the new deployment and generation of value, ultimately
    helping others in need, and making their lives better.
        As I mentioned earlier, Spensa was ultimately acquired, but
    my current role as CEO of the Wabash Heartland Innovation
    Network, or WHIN, is an even greater and truly unique
    opportunity to put research and entrepreneurship together to
    meet the needs of rural America. With very generous funding
    from the Lilly Endowment, WHIN was created by the 10 county
    rural region of Indiana with the goal of enabling the region to
    leverage its many assets, especially Purdue University, Ivy
    Tech Community College, and strong manufacturing and
    agricultural sectors to improve the region's economic
    prospects. WHIN is a nonprofit organization with a very
    ambitious goal, and I am leading this organization like a
    startup. I believe WHIN is benefiting tremendously from lessons
    learned from Spensa. I believe its story illustrates how the
    SBR program, in action with Spensa, continues to generate
    economic growth. In the long run, WHIN envisions the Wabash
    heartland as the global epicenter of digital ag and next
    generation manufacturing, powered by IoT technology. That is
    quite a return for $1.5 million in SBR grant funding to a
    little startup in West Lafayette, Indiana.
        I hope this gives you an idea of both the short and the
    long-term impact of the SBR program. I hope you will continue
    to give it your full support. Thank you.
        [The prepared statement of Dr. Park follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairwoman Stevens. And, with that, we're going to begin
    with our first round of 5 minute questions, and the Chair is
    going to recognize herself at this time.
        Thank you again for the very informative testimony. A lot
    to unpack here, and I think where I'd like to start is kind of
    where we left off on the commercialization and the flexibility
    component of things. Obviously we're always in such a rush,
    commercialize, commercialize, but we also need a little bit of
    flexibility and some time with that. We need to recognize not
    everything is going to have the same turnaround for
    commercialization. In fact, Dr. Park, I almost believe--I can
    guarantee you that I was at a venture connector's presentation
    in Louisville, Kentucky, where I heard about your company in
    2014, and thought, wow, what a neat idea, and fascinating six
    years on to see what Spensa's been able to achieve and do.
        But if you don't mind, just--Mr. Cucinelli and Dr. Park,
    just talking a little bit more about the flexibility,
    particularly even at the beginning stages, when you're, you
    know, processing the award, getting the dollars, you know,
    working with the agency, and then also maybe some thoughts that
    you might have around allowing the agencies to implement more
    flexible award structures to make them more compatible with the
    pace of innovation? If you don't mind shedding light on that?
    And I'll let you two duke it out for who goes first. Yes.
        Dr. Park. I'll get started. Yes, so, again, I'm a first-
    time entrepreneur, and SBR program was something that I was not
    very familiar with. But as any businesses--as we embark on
    commercializing a research project to a commercial market, you
    are embarked with very different scenarios, something that you
    had not anticipated. And because I believe SBR programs and
    program managers stem from kind of research related projects,
    they understand the uncertainty of the path that we're on. So I
    was very appreciative of our program manager at NSF being very
    flexible and understanding of our need for pivoting, even
    during the project.
        For instance, we had--in our proposal was to develop a
    certain type of sensor that we believed would solve a certain
    issue that we had in mind, but in about 2 to 3 months into the
    project, we quickly realized that the sensor type was not
    viable commercially, and so we requested to the program manager
    that we think we need to change the type of sensor that we need
    to research on, and program manager was very, very flexible on
    allowing us to do that because he saw ultimately is this type
    of flexibility and pivoting was a critical piece of making sure
    the research moves on, and successful commercialization path.
        Chairwoman Stevens. Yes. Great.
        Dr. Park. Um-hum.
        Mr. Cucinelli. So I have two observations. One is that I
    really like the idea in the legislation of the second Phase 2,
    the follow-on funding. So the idea that the government can
    double down, so to speak, on the investments that are going
    pretty well, but need a little more push into the private
    sector. I think, from what you've heard about these different
    companies that have succeeded, you can tell that there's a
    significant return on investment here, and I think, especially
    with what I call the hard tech, physical science-based
    companies that have a really big chasm to cross, a big Valley
    of Death, they can really be helped by that second Phase 2,
    when it's appropriate. It has to be vetted properly.
        My second observation is it would be really helpful if the
    agencies that award SBIRs and STTRs by contract, as opposed to
    as a grant, push more of their funding up front so that the
    money isn't tranched in small drips and drabs along the way.
    So, for example, with the $150,000--I'm--not to pick on DOD,
    but with a DOD contract, you're going to get $30,000 every 2
    months along the way, and then a final project payment, as
    opposed to an NSF grant, where you're going to get $150,000,
    now $225, right up front. If you're talking about a brand new
    company that's trying to jump out of the lab and into the
    private sector, that DOD contract is very difficult to manage
    because you don't have any working capital yet, whereas the NSF
    is giving you that money right up front. So if there was a way
    to encourage the contracting agencies to just move some of that
    funding earlier, I think it would be very, very helpful.
        Chairwoman Stevens. Yes, as needed. OK. I'm going to cede
    my time to the next questioner, but we are going to do another
    round of questions. So, with that, I'm going to recognize Dr.
    Baird, and then we'll go through everyone that's here, and then
    we'll start again.
        Mr. Baird. Well, I'm going to continue on, Mr. Cucinelli,
    and have Dr. Park give his impression of, you know, you started
    with an SBIR award from USDA, and then you went to one from
    NSF, so can you share your experiences in those two programs,
    and how effective or efficient they were to work with?
        Dr. Park. Right. So USDA SBIR, we only received Phase 1,
    and then we received NSF Phase 1, 2, and 2B. We did apply for a
    USA Phase B--I'm sorry, Phase 2, but we did not get it, so I
    have a lot more experience with NSF than USDA. But both cases
    we were awarded the full amount up front, at least for Phase 1,
    but Phase 2 was tranched. But I think it was very helpful for
    us to get--again, I agree that, as a startup, you need working
    capital, and this is already a very competitive process, and
    this has been vetted for, you know, maybe 10, 20 percent of the
    applications only get Phase 1. So I think having that--going
    through the vetting process, at least in Phase 1, my
    recommendation is also to have all that money put in up front.
        I would also say that NSF has wonderful grantee workshops.
    Every time I attend the workshops, I am so energized and
    inspired, and I learn so much because, again, the business
    formation, venture capital raising--and that is something that,
    you know, you don't really learn much, and--but having the
    experience of like-minded entrepreneurs and experienced VCs as
    a speaker, and learn from them firsthand, for me, it was
    extremely valuable as a first time entrepreneur.
        Mr. Baird. Thank you. My next question, Dr. Tilbury, what
    steps does the NSF take to measure the success of its two
    programs?
        Dr. Tilbury. So we do a lot of assessment of all of our
    programs at NSF. We certainly survey the awardees and get their
    feedback on what they're doing, and we've made quite a lot of
    changes in the last few years. In fact, a couple years ago we
    changed the program so people could submit a pitch before they
    had to register with the Federal Government, and fill out 37
    forms before they could write a 15 page proposal, and hear that
    their project wasn't appropriate for NSF. So we try to
    streamline, based on the assessment that we had, and the
    feedback from the PIs, and we, you know, take data.
        So there's some data in my written testimony, but a new
    number that I got this morning was that, if you look at awards
    we've made since 2014 there's been more than $9 billion in
    subsequent funding that these companies have received from
    venture capital, or other awards, and more than 100 of those
    companies have been acquired, which is often a goal, as Johnny
    Park talked about with this company. Do you have more specific
    questions, or----
        Mr. Baird. No, I think that's good. Dr. Feldman, would you
    continue that on, what you look for, what criteria you used to
    measure the success?
        Dr. Feldman. The success of the program, I think, extends
    way beyond just the individual companies, and so the SBIR
    program at universities has really helped to change the culture
    and to put more emphasis on commercializing academic
    discoveries, and so that has been very positive. We also know
    that, through the program, agencies are able to source great
    ideas from small companies, and those companies will have ideas
    that have escaped larger corporations. And in--we have some
    evidence that this induces other people to look at those
    topics, so that fundamental discoveries that result from SBIR
    projects actually help to cede scientific fields that work--
    that result in translational, additional follow-on work. And so
    that is sort of an indirect effect. There are lots of effects
    in creating follow-on products, generating patents, but the
    generation of fundamental knowledge really helps to keep
    America competitive.
        Mr. Baird. Thank you, and I'm out of time. Mr. Cucinelli,
    your answer to the previous question is going to have to count
    as my question to you. So thank you, and I yield back.
        Chairwoman Stevens. And with that, the Chair would like
    recognize Congressman Tonko for 5 minutes of questioning.
        Mr. Tonko. Well, the Member would like to acknowledge your
    recognition, so thank you, Chair, and welcome, to our
    witnesses. America's SBIR and STTR programs support our
    Nation's most forward-thinking entrepreneurs and innovators.
    The Small Business Innovation Research and Technology Transfer
    Programs have proven to be among the most successful Federal
    programs for driving technological innovation in U.S. history.
    Combined, they, excuse me, have delivered more than 70,000
    patents, including extraordinary innovations in agriculture,
    defense, energy, health sciences, homeland security, space
    transportation, and other fields. Phase 1 and Phase 2 SBIR
    awards have made it possible for countless jobs to be created
    in my district in the capital region of New York. Thanks to
    these, and other similar programs, our region has built itself
    into a boom in high technology innovation and economic
    development.
        Among our many success stories, four stand out from our
    capital region. The first is Kitware. A company based in
    Clifton Park, New York, Kitware's first round of funding came
    from the SBIR program in 1998, when they received a Phase 1
    award from the Air Force to develop technology related to the
    visualization of uncertainty in data. While this effort did not
    progress to Phase 2, they were able to attract additional
    customers with the developed technology to fuel their early
    growth. Since then they've relied upon SBIR/STTR program to
    develop advanced technology that improves lives, grows
    businesses, and meets the critical needs of the Federal
    Government.
        Kitware's story is inspiring, but in many ways it is also
    entirely typical of SBIR companies. New York's capital region
    is also home to another SBIR success story, that being
    Automated Dynamics, which credits their existing technology to
    the SBIR program. In fact, Automated Dynamics was one of the
    original inventors of 3D printing in the 1980's, with the help
    of a National Science Foundation SBIR grant. This is now an $8
    billion a year industry that is expected to grow 30 percent
    this year. Automated Dynamics also helped to develop its core
    technology, namely additive manufacturing of advanced
    composites--composite structures through Army and Navy SBIR
    awards. They remain the world leader in this technology, and
    while they have managed to outgrow the SBIR program, as they
    are no longer a small business, they continue to credit the
    program as a springboard for their success.
        Speaking of grateful SBIR winners, International Electronic
    Machines, IEM, a small company located currently in Troy, New
    York, has said they, quote, and I quote, ``have had the great
    privilege and honor of participating multiple times in the SBIR
    Program''. SBIR contracts that IEM has won have helped support
    the company over the three decades that IEM has been in
    business, and have resulted in more than 50 patents, both here
    and overseas. Some of the products that have resulted from
    their SBIR work have generated millions of dollars in revenue
    over the years, supporting the success of the business, and
    their employees, consultants, vendors, and broader community.
        Last, but not least, Innovative Technology, Inc., or MITI
    for short, has been in business in the capital district for 25
    years, and is a previous recipient of the prestigious SBIR
    Tibbetts Award. They shared how they believe that they, and the
    capital district tech valley, have benefited greatly from the
    SBIR/STTR program by making it possible to keep engineers and
    scientists locally, but also to attract and retain high caliber
    international technologists and researchers.
        These extraordinary successes demonstrate, to me, clearly
    that research funding has a powerful economic return, and we
    need to continue to fight to ensure these agencies have the
    funding they need, and, in turn, ensure productive funding
    levels for the SBIR/STTR programs. To me, the reinvestment in
    the community from SBIR and STTR is absolutely amazing. It's
    keeping talent at work, it's providing for additional people to
    claim my district as their now homefront, and is unleashing
    untold amounts of progress and success that obviously
    percolates into the greater society, so that we're all
    benefited by it.
        So--wanted to share those on the record in the 5 minutes
    that was allotted, but I think it's important to document the
    real-life outcomes in our given congressional districts, and
    for that we thank you. I yield back.
        Chairwoman Stevens. With that, the Chair's going to
    recognize Mr. Balderson for 5 minutes of questioning.
        Mr. Balderson. Thank you, Madam Chair. Thank you, panel,
    for being here, and this first question that I'm going to ask I
    can direct it to the whole panel, and Dr. Tilbury, you could
    start from there, and we'll go down along. But thank you all
    again for being here, and when I'm talking to small business
    owners in central Ohio, I often hear about the most important
    things that Congress and the Administration can do to help
    small businesses grow and create new jobs is to reduce taxes on
    businesses, make the tax code simpler, and clear away
    unnecessary and excessive government regulations. In the small
    businesses you work with, what barriers to success do you see?
        Dr. Tilbury. So, at NSF, we fund small businesses to try to
    take the technological risk out of their ideas, so these are
    the high tech companies, and this is the stage before venture
    capital really has an appetite to come in. The companies that
    we fund, in fact, 92 percent of them have fewer than 10
    employees, and 77 percent are less than 5 years old. So these
    are really young, really small companies with really high tech
    ideas, and they need this SBIR or STTR funding to get over that
    technological risk.
        Dr. Feldman. So as I'm sitting on a panel with people from
    Michigan and Indiana, let me reveal that I'm from Ohio, and I'm
    a Midwesterner who had to go south----
        Mr. Balderson. Thank you very much. I will ask my staff why
    they didn't tell me that.
        Dr. Feldman. Sorry. And--it's probably somewhere on a very
    deep resume. But let me mention, for these innovative small
    firms, taxes are not the problem because they're not profitable
    yet. Really what they require is more in terms of resources and
    support. I think that, you know, it is encouraging to hear the
    importance of training things with the I-Corps Program. So
    really smart scientists, who are then suddenly confronted with
    starting a business, that's a completely different set of
    skills, so providing that type of expertise is costly. I'm a
    great believer in the State Technology Economic Development
    Programs, and, you know, that, again, provides incredible
    resources to small companies.
        Mr. Cucinelli. So, again, to comment on the taxes issue,
    boots on the ground perspective, I don't pay any taxes because
    I spend every single penny of my SBIR funding as fast as I get
    it. I spend it every year. I work with my accountant to make
    sure that I don't pay taxes until I become profitable, so
    that's how I manage that. I get really frustrated when people
    talk about small business, and they're talking about the sort
    of Main Street bricks and mortar small business, whereas I'm
    doing scalable tech startup business. They're very different in
    terms of their needs, and that's an example where that dialog
    can go sideways. It sounds like you've got a great handle on
    that.
        Second point is to build on something Dr. Feldman said, but
    from a different perspective, the idea that the SBIR program
    can provide cultural benefits in the universities. As a mentor
    in residence, or entrepreneur in residence, what I've seen is I
    can use the SBIR program as a way to help influence that
    culture shift when I'm coaching a senior faculty member. You
    know, if I'm working with someone who has built a laboratory
    over the course of 20 years, and knows how to manage graduate
    students, Ph.D.'s, post-docs, they don't know how to run a
    small business yet, and I can use the SBIR program to have a
    framework to help them begin to adopt the right mindsets.
        Dr. Park. I would concur, tax was not at all an issue for
    us throughout our--the course of Spensa. I would say, yes, I
    think the impact the small business or tech startups has in the
    economy is great, but I would also like to emphasize its impact
    on people, the entrepreneurs, the researchers and scientists
    who may not have gone to entrepreneurship if it wasn't for
    SBIR, like myself, right? I was an academic, but SBIR really
    opened an opportunity for me to get into starting a startup,
    which led to now leading something that I had never imagined
    that I could do.
        I would really consider and encourage you to think about
    not just the company's impact on the economy. How about the--
    all the people that have been touched by SBIR? What's their
    second career or third career looks like? How have they really
    changed the way they lead, the way they run businesses because
    of the impact of SBIR?
        Mr. Balderson. Thank you all very much. I yield back.
        Chairwoman Stevens. The Chair would like to recognize Mr.
    Gonzalez for 5 minutes of questioning.
        Mr. Gonzalez. Thank you, Madam Chair, and thank you to our
    panel. Dr. Feldman, I too am from Ohio, went to Ohio State. Mr.
    Cucinelli, you will see that, in this Committee, not only are
    we bipartisan, but we can actually work across enemy lines
    geographically as well. This is a fantastic Committee in that
    regard. So, as many folks here would know, I'm somebody who
    wants to make sure that we are properly funding our research
    enterprise, that we're supporting entrepreneurs in particular
    in fast growing industries, and so, as a general premise, as
    somebody who'd be very supportive of SBIR and STTR, I do have
    some questions around how we're measuring success, and I want
    to start with Dr. Tilbury.
        So you kind of highlighted some brief data points at the
    end, but I'd love to hear kind of any numbers you have, or any
    barriers to acquiring these numbers, around, you know, percent
    of companies that receive follow-on private investment, dollars
    raised, percent still operating versus acquired employment
    numbers, geographical split. I'm trying to figure out kind of
    how we're tracking from funding to viable company.
        Dr. Tilbury. So I might defer that to Dr. Feldman----
        Mr. Gonzalez. OK.
        Dr. Tilbury [continuing]. But I will say we are trying to
    track all of those numbers, and we have data on people who get
    the Phase 2B, which is a matching. If you're----
        Mr. Gonzalez. Right.
        Dr. Tilbury [continuing]. In a Phase 2, and you get
    external input, then NSF will match that up to a certain
    amount, so that number we absolutely know, because we gave them
    matching.
        Mr. Gonzalez. Right.
        Dr. Tilbury. But as was also mentioned earlier, some of
    these companies, you know, the Phase 2 is a couple of years,
    and it might take many more years until they're commercially
    viable, or they're acquired. And so, during that lag time, I
    think we are absolutely interested in acquiring that data, and
    that's why we work with the National Academies. And you may not
    be able to say yet, but----
        Dr. Feldman. Yes, and so I am co-chairing the National
    Academies assessment of the SBIR program----
        Mr. Gonzalez. OK.
        Dr. Feldman [continuing]. And I'm not able to really talk
    about our findings yet, and I'm happy to come back. Our report
    on the Department of Energy will be released in March.
        Mr. Gonzalez. OK.
        Dr. Feldman. But, you know, this is an important question
    because we have a need for government investment because these
    technologies are so early stage, and so risky----
        Mr. Gonzalez. Yes. Absolutely.
        Dr. Feldman [continuing]. And so it's very complicated, and
    this is where we're now able, with new digital technologies
    scraping the web, to sort of be able to follow this sort of
    initial receipt of a grant to companies.
        Mr. Gonzalez. Right.
        Dr. Feldman. Sometimes when companies fail, that might be
    appropriate, right?
        Mr. Gonzalez. Yes.
        Dr. Feldman. Because the technology----
        Mr. Gonzalez. That happens.
        Dr. Feldman [continuing]. Right--wasn't----
        Mr. Gonzalez. Yes.
        Dr. Feldman [continuing]. Going anywhere. And then I think
    the entrepreneur, the entrepreneurial team, other people in the
    company, will then be recycled and do other things in a local
    economy.
        Mr. Gonzalez. And then, if I could step in for a second?
    Dr. Tilbury, the average grant size is what? So you talk about
    there's some who are kind of operating for years before they
    receive the follow-on funding. I ran a venture-backed company
    at one point. We didn't have years, right? You know, you're
    usually doing it in 18-month increments.
        Dr. Tilbury. So I believe that--so it's not an average. So
    the Phase 1, if you get it from NSF, is $225,000----
        Mr. Gonzalez. OK.
        Dr. Tilbury [continuing]. All in one shot----
        Mr. Gonzalez. And that'll be----
        Dr. Tilbury [continuing]. And then----
        Mr. Gonzalez [continuing]. Two to three----
        Dr. Tilbury [continuing]. Phase 2----
        Mr. Gonzalez [continuing]. Employees.
        Dr. Tilbury [continuing]. Has been increased now to
    700,000.
        Mr. Gonzalez. Yes.
        Dr. Tilbury. And then they can get matching on top of that,
    and there's----
        Mr. Gonzalez. Got it.
        Dr. Tilbury [continuing]. Supplements on top of that. So
    there's a lot of--even though that's the base number, there's a
    lot of extra supplements, opportunities.
        Mr. Gonzalez. OK. And then, with my last minute, Dr.
    Feldman, without getting into specifics of your report, and
    what's you're going to release, what are the key barriers, that
    you're seeing to acquiring the data that I outlined that I
    think would be helpful, in terms of collecting it?
        Dr. Feldman. Well--and--so ideally we would like to know
    who was applying to the program, right, and then not only--we
    now know, through the SBA, who was awarded funding, but if we
    could follow those who applied and didn't get funding, or did
    they come back, that's capturing another kind of learning, so
    that would be very valuable. It would also be much easier for
    us if we could access some of the census data centers, and the
    data that is behind that sort of security wall.
        Mr. Gonzalez. All right. Thank you. Yes, sure, Mr.
    Cucinelli.
        Mr. Cucinelli. I don't have this in front of me, I
    apologize, but in preparing my written testimony, I found an
    Air Force report from I believe 2014 that is worth taking a
    look at. I'll followup with your staff, if you'd like----
        Mr. Gonzalez. That'd be great.
        Mr. Cucinelli [continuing]. But it did this across hundreds
    and hundreds of SBIR awards, and came up with metrics----
        Mr. Gonzalez. Thank you. And, as I said at the beginning, I
    want to be helpful, I want to empower you guys, but we need
    some data so we can just measure how we're doing. With that, I
    yield back.
        Chairwoman Stevens. Thank you, Mr. Gonzalez. We're going to
    do one more round of questions. It might just be Dr. Baird and
    myself, but we've got a lot to chew on here. I wanted to go
    back to the geographic diversity component that you brought up,
    Dr. Feldman. You talked about the pockets of prosperity in
    university towns, and then you also talked about how this
    system, with SBIR and STTR funding, works well in some places,
    but not everywhere. And I know the other part of what you do is
    the research on the geography of innovation. And I'd love to
    hear a little bit more about how we can better democratize
    innovation, especially through the SBIR program, so that towns
    all throughout this country can participate in our innovation
    economy. And if you have any thoughts, I'd really appreciate
    it.
        Dr. Feldman. Thank you. And so, you know, as we study this,
    we do see these pockets of prosperity, mainly in college towns,
    where the SBIR program is working well. But one of the problems
    when we rely on venture capital funding, when you take money
    from outside, and, you know, it--you're not going to be able to
    stay, in many cases, so companies will relocate. And also,
    given that the venture capital model is predicated on a 5 to 7
    year return, what that means is that there will be an exit, and
    with that exit it's very likely that you would have the company
    relocating as it was acquired. And so it doesn't really keep
    the company local, and grow to employment. And I think one of
    the things about the Phase 2B additional funding helps stream
    tips--bring that along. Also, having more proof of concept
    centers.
        But, you know, as we talk about these companies, SBIR is
    not really meant to be a jobs program. It is an innovation
    program, but we need something else in place to give us the
    jobs that we need in many parts of the country to spread that
    prosperity more widely.
        Chairwoman Stevens. Right. And it's, you know, spanning 11
    agencies for SBIR, five for STTR funding, and you sort of
    wonder, you know, does it help to have regions as designated--
    self-designated areas, for instance. I know the Economic
    Development Administration has looked at this. Obviously that
    might get overly prescriptive, and too quick--it could get
    overly prescriptive too quickly, however, you know, when we're
    looking at how do we make sure that we're spreading the peanut
    butter throughout our--all of these great towns and
    communities, and into the hands of innovators. I mean, part of
    why we are having this hearing, and having this go into the
    congressional record, is that we want America to hear this. We
    want people to know that this is available, and whether you're
    at one of the big universities or not, that these 11 agencies,
    right, are coordinated in this way, and in their own research
    areas.
        And this is a small point, but I just wanted to ask about
    it, which is the administrative fee that Congress has
    authorized that these pilot programs, you know, it's allowing
    agencies to use the 3-percent of their SBIR funds for new
    activities such as outreach, and commercialization, and
    oversight, and administration of the program, and this is known
    as the administrative fee pilot. There was this 2016 GAO
    (Government Accountability Office) report that found 7 of the
    11 SBIR agencies spent $19.1 million of these funds. This is
    going back to Fiscal Year 2014. And, Dr. Tilbury or Dr.
    Feldman, do you have, you know, any examples of this that you
    can elaborate on for us, particularly how agencies are tracking
    the outcomes of these efforts? I know this is a little bit of
    what Congressman Gonzalez was talking about, but--question
    about--should we be--is this one of the pilot programs we
    should be expanding? Is this helpful?
        Dr. Tilbury. Absolutely, it's a helpful program. I can tell
    you that we use some of those administrative fees to send our
    program directors on outreach trips to underserved geographic
    areas, underserved communities. We have a joint program right
    now with GEM, the Graduate Education for Minorities.
        Chairwoman Stevens. Yes.
        Dr. Tilbury. We use some of those funds for the Beat the
    Odds Bootcamp that we put the SBIR Phase 1----
        Chairwoman Stevens. Right.
        Dr. Tilbury [continuing]. People through. We sponsor trade
    shows that provide commercialization opportunities for
    grantees. We use that to launch this project pitch that I told
    you about, which allows people to come in at any time with a
    brief pitch about their idea and see if it's appropriate for
    NSF, to fund this National Academies study about the impact of
    the SBIR program. So those are the kinds of things that we do
    with the administrative fee that are not directly to small
    business, but absolutely supporting the program.
        Chairwoman Stevens. Right. Thank you. Thanks so much. All
    right, with--I'm out of time.
        Mr. Baird. Thank you. You know, I'm a veteran, so I'm kind
    of partial to veterans. In fact, I think we've got a bill
    that'll be signed hopefully next week or so that encourages an
    increased outreach for veterans in the STEM program. So, Dr.
    Tilbury, you mentioned in your testimony that there's a
    veterans research supplement that attracts veterans into the
    STEM enterprise. Would you care to elaborate on that a little?
        Dr. Tilbury. So we have a lot of programs to attract
    veterans into the research enterprise, research experience for
    veterans, and I believe they can work with a small business
    through an SBIR, so the small business would get a supplement
    to bring in a veteran to help them in their activities. I know
    we certainly do that for all the basic research awards that we
    offer.
        Mr. Baird. Any others want to comment about that, regarding
    veterans, and----
        Dr. Feldman. Regarding veterans, what we see is
    disproportionately veterans come from rural areas in the south
    and west, and they're more sort of geographically isolated.
    People would like to return to their small towns, but there are
    not necessarily opportunities for them. And veterans make great
    entrepreneurs, right? They're just disciplined, and they know
    how to work together, so I think this is an area where we could
    have more fruitful engagement.
        Mr. Baird. Anyone else?
        Mr. Cucinelli. Yes, I completely agree. I have a number of
    friends who are currently running small businesses started from
    scratch, and the skillsets required to do that are a perfect
    overlap with what many people experience in the military, both
    in terms of their training and their experience, the creativity
    under fire, so to speak, the discipline, the dedication that it
    takes to see something through for 7 to 10 years. So pulling
    more veterans in is going to be invaluable in increasing the
    success of the program.
        Dr. Park. I would just mention, in relation to rural
    communities, there are--the Midwest region has traditionally
    been kind of labeled as there's not enough capital, but
    investors are waking up, and there's--increasingly more
    investors are targeting Midwestern companies, including rural
    communities. So I think, to me, SBIR is a form of investment
    from the government, and so if venture capital is waking up to
    invest more, I think there is a case to be made for SBIR
    program to consider geographically diverse investments to
    support rural communities.
        Mr. Baird. Well, what I just heard was good news, because
    most of those veterans, if they've been deployed, or been in
    the service for a period of time, they probably just want to go
    home, and a lot of those, you just mentioned, from rural areas,
    so----
        Dr. Park. That's right.
        Mr. Baird [continuing]. That's good news. Thank you very
    much.
        Dr. Park. Um-hum.
        Chairwoman Stevens. Thank you. And now the Chair will
    recognize the gentleman from the great State of New York again
    for 5 minutes of questioning.
        Mr. Tonko. Thank you, Madam Chair. The many, many hearings
    that we've had recently have spoken to the need for us to
    maintain a very strong competitive edge, especially when it
    comes to critical technologies, so my question to any and all
    of our witnesses is what role do you believe the SBIR and STTR
    programs can play in the United States' innovation policy, and
    in helping our Nation maintain science and technology
    leadership in what is that increasingly competitive world?
        Dr. Tilbury. So I believe the SBIR program is a critical
    component of that increasing competitiveness because it allows
    the results of basic fundamental research, which is primarily
    funded by the Federal Government, to make the transition into
    commercialization. And, as we've heard, it can be a long and
    slow road to commercialization, and it takes not only
    investment, but also patience, and passion, perseverance. And
    so I think the SBIR program helps that transition into the
    current industries that we have, to strengthen them, as well as
    create new industries that we haven't imagined yet.
        Mr. Tonko. Thank you. Anyone else?
        Mr. Cucinelli. I had the privilege of being involved in a
    fuel cell startup between 2009 and 2011 in Europe, and it was
    very, very difficult to get the initial seed capital. I saw
    just a fundamental difference between here and there, and we
    talked constantly--some of the people who had been on this side
    of the pond would lament with me in the pub at lunch about how,
    you know, I wish we had the SBIR/STTR program to get us to the
    venture capital. And we eventually raised about I think 3.2
    million Euros, or something like that, but it was incredibly
    difficult. So I think our system here works much, much better
    to get these early stage companies out of the gate, and get us
    to a position where we might eventually be able to double down
    on some of this innovation, and maintain that leadership.
        Mr. Tonko. All right. Yes? Dr. Feldman.
        Dr. Feldman. I think also it's important to remember that
    this program is just part of our larger innovation system, and
    we really need to make sure that basic research is going on,
    these sort of fundamental discoveries, the serendipitous
    inquiry that will, you know, sort of provide the seed corn for
    moving things forward, and we don't get too far out of balance
    by focusing on things that are immediately commercializable and
    more short range.
        Mr. Tonko. Well, there are some of those--some fiscally
    conservative think tanks that monitor action on the Hill that
    would advocate that there be no Federal dollars shared with
    research, that--they don't believe it's appropriate. What would
    your response to that be?
        Dr. Feldman. That they are wrong, and that would be an
    awfully fun debate to engage in, because I think it's
    critically important. And so in the U.S. for a long time we
    have issued the idea of industrial policy, yet the, you know,
    we see that in Asia there is a lot of industrial policy, and a
    lot of targeted investment, and I think this is the wrong time
    for us to be questioning government's role.
        Mr. Tonko. Dr. Tilbury?
        Dr. Tilbury. We talked about the commercialization. NSF is
    celebrating its 70th anniversary this week, and he mentioned
    the LASIK eye surgery. Now, that came out of fundamental
    research in lasers. They weren't trying to build eye surgery
    when they did that fundamental, basic research. They were
    trying to understand high energy physics. And so I think we
    need to continue to fund that fundamental basic research that
    you're not sure where it's going to lead, because it might lead
    someplace really interesting.
        Mr. Tonko. Right. And--yes, sir?
        Mr. Cucinelli. So I'm----
        Mr. Tonko. Mr. Cucinelli.
        Mr. Cucinelli [continuing]. Teaching a course in
    entrepreneurial leadership to graduate students, Ph.D.s, MBAs,
    and they asked me the other day, well, where do we get our
    ideas from? And I said, well, you know, you find a pain point,
    and you think about it, and you live it, and then you go and
    fix it, but you can also go and look to the labs. Look around.
    Look to your engineering colleagues who are taking courses in
    aeronautics, or whatever, and you'll find innovation there.
    That's the basic research, and it's being looked for by these
    bright young innovators who are going to see the idea that maps
    over to the pain point they've identified, and then go find the
    professor and his or her lab team, and make a company out of
    it, and make it go. And they'll use SBIR/STTR to do that. But
    they can't do it if they don't have the basic research in
    place.
        Mr. Tonko. Thank you. So I'm hearing, with sound rationale,
    you would reject the advice of those who suggest the Federal
    Government not apply any dollars toward research. Thank you so
    much. That's encouraging. I yield back.
        Chairwoman Stevens. Thank you, Mr. Tonko. We didn't invite
    them to the hearing, so--and, you know, a big thank you to our
    witnesses. You know, we're so proud of the NSF, and your
    leadership as one of the 11 SBIR agencies, and what I think we
    kept hearing today, which is that you're such an example, and a
    leader of how to do this right.
        And, you know, thank you, Dr. Tilbury, for your leadership,
    and Dr. Feldman for not only your leadership at the Academies
    at this time, but also for your great research contributions,
    something that I know is very important to the economic
    development conversation, as well as how States look to do that
    technology-based economic development strategies, and so we
    work very closely with our State partners as well. And then,
    obviously, a treat to have you here, Mr. Cucinelli, from
    Michigan, and, you know, thanks for your fabulous leadership,
    not only as an entrepreneur, but also as an educator, and
    that's the other piece of it. And, Dr. Park, you know, just
    wonderful to hear not only about your business success, but
    what you're also doing with WHIN and the network that I think
    is going to have some tremendous effects.
        We like to say this will--I'll say this, this was all Dr.
    Baird's idea, OK? The legislation, the hearing, and it's the
    best in business here on the Science Committee, which is that,
    you know, we talk about the things that bring people together,
    and this is what the country wants to see. This is part of the
    doing and delivering agenda for our country, and we are looking
    forward to having you back when we get this legislation marked
    up, passed, and signed into law, and continuing to see the
    growth of SBIR, and the lives that are changed and influenced.
    And, yes, as an innovation program, because that is what
    America does really well. Our plight of innovation in the post-
    9/11 era, in particular over these last 20 years--we were the
    ones who proliferated the Internet, propagated the iPhone,
    mobile apps, just to name one segment of our innovation economy
    that's really quite tangible to all, so thank you again.
        The record's going to remain open for two weeks for
    additional statements from Members, and for any additional
    questions that the Committee Members may have of our witnesses.
    And at this time our witnesses are excused, and the hearing is
    adjourned.
        [Whereupon, at 3:20 p.m., the Subcommittee was adjourned.]

                                   Appendix I

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                       Answers to Post-Hearing Questions
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                                  Appendix II

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                       Additional Material for the Record
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