[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]


              PRIORITIZING SMALL UNDERSERVED AND RURAL 
               BUSINESSES IN THE SBIR/STTR PROGRAMS

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

                                HEARING

                               BEFORE THE

                      SUBCOMMITTEE ON UNDERSERVED,

                        AGRICULTURAL, AND RURAL 
                              DEVELOPMENT

                                 OF THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                             JUNE 23, 2021

                               __________

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
                               

            Small Business Committee Document Number 117-020
             Available via the GPO Website: www.govinfo.gov
             
                              __________

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
44-849                     WASHINGTON : 2021                     
          
-----------------------------------------------------------------------------------               
            
             
                   HOUSE COMMITTEE ON SMALL BUSINESS

                 NYDIA VELAZQUEZ, New York, Chairwoman
                          JARED GOLDEN, Maine
                          JASON CROW, Colorado
                         SHARICE DAVIDS, Kansas
                         KWEISI MFUME, Maryland
                        DEAN PHILLIPS, Minnesota
                         MARIE NEWMAN, Illinois
                       CAROLYN BOURDEAUX, Georgia
                         TROY CARTER, Louisiana
                          JUDY CHU, California
                       DWIGHT EVANS, Pennsylvania
                       ANTONIO DELGADO, New York
                     CHRISSY HOULAHAN, Pennsylvania
                          ANDY KIM, New Jersey
                         ANGIE CRAIG, Minnesota
              BLAINE LUETKEMEYER, Missouri, Ranking Member
                         ROGER WILLIAMS, Texas
                        JIM HAGEDORN, Minnesota
                        PETE STAUBER, Minnesota
                        DAN MEUSER, Pennsylvania
                        CLAUDIA TENNEY, New York
                       ANDREW GARBARINO, New York
                         YOUNG KIM, California
                         BETH VAN DUYNE, Texas
                         BYRON DONALDS, Florida
                         MARIA SALAZAR, Florida
                      SCOTT FITZGERALD, Wisconsin

                 Melissa Jung, Majority Staff Director
            Ellen Harrington, Majority Deputy Staff Director
                     David Planning, Staff Director
                            
                            
                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Jared Golden................................................     1
Hon. Jim Hagedorn................................................     3

                               WITNESSES

Dr. Joshua A. Henry, President and Founder, GO Lab, Inc., 
  Madison, ME....................................................     5
Ms. Nancy Min, Founder, ecoLong, Albany, NY, testifying on behalf 
  of the Clean Energy Business Network (CEBN)....................     7
Dr. Angelique Johnson, Founder and Chief Executive Officer, 
  MEMStim LLC, Louisville, KY....................................     9
Dr. David Green, Chief Executive Officer, Physical Sciences Inc., 
  Andover, MA, testifying on behalf of the New England Innovation 
  Alliance (NEIA)................................................    11

                                APPENDIX

Prepared Statements:
    Dr. Joshua A. Henry, President and Founder, GO Lab, Inc., 
      Madison, ME................................................    25
    Ms. Nancy Min, Founder, ecoLong, Albany, NY, testifying on 
      behalf of the Clean Energy Business Network (CEBN).........    27
    Dr. Angelique Johnson, Founder and Chief Executive Officer, 
      MEMStim LLC, Louisville, KY................................    42
    Dr. David Green, Chief Executive Officer, Physical Sciences 
      Inc., Andover, MA, testifying on behalf of the New England 
      Innovation Alliance (NEIA).................................    46
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    Invent Together..............................................    51

 
 PRIORITIZING SMALL UNDERSERVED AND RURAL BUSINESSES IN THE SBIR/STTR 
                                PROGRAMS

                              ----------                              


                        WEDNESDAY, JUNE 23, 2021

              House of Representatives,    
               Committee on Small Business,
         Subcommittee on Underserved, Agricultural,
                            and Rural Business Development,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 2:40 p.m., in 
Room 2360, Rayburn House Office Building, Hon. Jared Golden 
[chairman of the Subcommittee] presiding.
    Present: Representatives Golden, Delgado, Williams, 
Hagedorn, Stauber, and Tenney.
    Chairman GOLDEN. Good afternoon. I call this hearing to 
order.
    Without objection, the Chair is authorized to declare a 
recess at any time.
    I apologize to those joining us to testify today for the 
late start, but we have been voting down on the House floor. I 
think we should be good now. But I will just quickly note it is 
possible there could be a series of votes on the floor during 
this hearing, in which case we will stand in recess while we go 
vote. But I think we are going to be good. So I appreciate your 
patience.
    Let me first say that standing House and Committee rules 
and practice continue to apply during hybrid proceedings. All 
members are reminded that they are expected to adhere to 
standing rules, including decorum.
    House regulations require members to be visible through a 
video connection throughout the proceeding, so please keep your 
cameras on. Also remember to remain muted until recognized to 
minimize background noise. If you have to participate in 
another proceeding, please exit this one and log back in later.
    In the event a member encounters technical issues that 
prevent them from being recognized for questioning, we will 
move to the next available member of the same party and later 
recognize that member at an appropriate time slot provided they 
have returned to the proceeding.
    For those members and staff physically present in the 
Committee room today, we will continue to follow the most 
recent guidance. Masks are no longer required in our meeting 
space for members and staff who are vaccinated. Members and 
staff who have not been fully vaccinated are asked to wear a 
mask and to socially distance. And we sincerely hope we can all 
do our part to protect each other, but most importantly our 
staff.
    Thank you for joining us for the hearing today.
    In a world dominated by technology and innovation, the 
science, technology, engineering, and math field, otherwise 
known as STEM, is more vital than ever to our national 
interest.
    STEM helps drive our economy forward. It creates life-
improving innovations. And it allows us to keep pace with 
global technological transformation.
    It also provides Americans with good jobs and the 
opportunity to contribute to our Nation's technological 
development.
    In 2019, over 19 million employees were working in STEM, 
and job growth in the sector continues to outpace non-STEM 
jobs. But for many workers the barriers to entry into STEM are 
steep, and certain groups are chronically underrepresented in 
the field.
    With STEM research and development clustered around major 
research institutions, often in urban commercial centers, it 
can be difficult for rural small businesses to fully 
participate in the innovation economy.
    This is borne out by the overwhelmingly rural character of 
underrepresented States in the SBA's Small Business Innovation 
Research, or SBIR, and Small Business Technology Transfer, or 
STTR, programs, including Maine.
    Compounded with the capital access challenges facing rural 
small businesses, this underrepresentation risks stifling rural 
economic development and also deprives Federal agencies of 
worthy products and services.
    Additionally, Black and Hispanic workers make up just a 
tiny percentage of STEM workers compared to their percentage of 
workers across all occupations. Further, women hold less than 
20 percent of U.S. tech jobs, and only 5 percent are in 
leadership positions at technology companies.
    From urban population centers to rural areas, like Maine's 
Second Congressional District, too many entrepreneurs are being 
kept out of our innovation ecosystem.
    As technology continues to develop, STEM jobs will continue 
to grow in importance. We can't allow certain groups to lag as 
our economy moves forward. And it is in our interest to ensure 
the 21st century economy is as diverse and inclusive as 
possible.
    That is why we should elevate the current Federal programs 
that are driving diversification in the STEM field, including 
initiatives like SBIR and STTR.
    SBIR was created in 1982 to reduce risk of investment in 
small businesses and encourage entrepreneurs to commercialize 
Federal R&D innovations.
    Ten years later, Congress created the STTR program to drive 
cooperation between small firms and research institutions.
    The Federal Government funds these programs through set-
asides of government agencies' extramural research and 
development funds.
    These two programs play a substantial role in supporting 
innovative small businesses and contribute tens of millions of 
dollars to small firms annually. Both share the stated goal of 
fostering inclusion and diversification by encouraging program 
participation by socially and economically disadvantaged firms.
    By working to improve the reach and effectiveness of these 
programs, Congress can help make the STEM field more accessible 
and ensure that more Americans benefit from our Nation's 
technological development.
    We will hear today from a diverse range of businesses 
during today's hearing about the challenges that they face 
operating in the STEM field and their experiences with the SBIR 
and STTR programs.
    Although statutorily required, participating agencies have 
struggled to increase participation of rural business owners, 
women-owned small businesses, socially disadvantaged 
businesses, and businesses in underrepresented States.
    Program statistics show that women-owned small businesses 
and disadvantaged businesses make up approximately the same 
share of awards as they did nearly a decade ago.
    This lack of progress is concerning, and we must examine 
efforts within the program for diversification.
    We also must evaluate how the SBA research agencies and 
institutions are spreading program awareness. Small businesses 
can't take advantage of these programs if they aren't aware of 
the offerings.
    Once aware, many small businesses depend on outside 
resources to complete the onerous application.
    Once they have won an award, small businesses rely on 
program-specific technical and business assistance providers to 
maximize the impact of their technology.
    I hope that today's hearing gives us the chance to examine 
how SBA and Federal research agencies can better promote these 
initiatives and reach entrepreneurs in underserved communities.
    The two programs have a proven track record of providing a 
return on investment in funding groundbreaking technologies 
that can improve Americans' lives, but high barriers to entry 
limit the reach and impact of the program.
    By increasing diversity in the STEM field, we can create a 
better future for many Americans and regain our footing as one 
of the world's most innovative nations.
    I will now yield to the Ranking Member, Mr. Hagedorn, for 
his opening statement.
    Mr. HAGEDORN. Chairman, thank you for holding the hearing. 
It is good to see you today. And I appreciate our shared 
commitment to rural development and small businesses in the 
rural communities.
    Today, we will discuss two vital programs to our Nation's 
industrial base, the Small Business Innovation Research, or 
SBIR, and the Small Business Technology Transfer, or STTR, 
programs.
    These two initiatives play pivotal roles in the development 
of new technology to enable Federal agencies to meet program 
and project goals while sparking significant job creation 
amongst American small businesses.
    These programs have positioned thousands of small 
businesses to create new technologies, commercialize products, 
and generate high-wage jobs.
    We must continue to facilitate success while ensuring that 
taxpayer dollars are utilized appropriately and efficiently.
    Given the success and popularity of the SBIR and STTR 
programs, I believe our Small Business Committee should move 
swiftly and pass reauthorizing legislation far before their 
September 2022 expiration.
    I appreciate, Chairman, that you are holding this hearing 
and you are working closely with members on both the majority 
and the minority so we can keep moving this issue along.
    Without any additional cost to taxpayers, the Federal 
agencies utilize SBIR and STTR programs to contract with small 
businesses, to procure unique solutions to improved service to 
the American people, and solve public sector challenges.
    Success stories include development of a new, longer-
lasting and lighter Lithium battery to enhance the Air Force's 
F-22; a new National Cancer Institute treatment that has the 
potential of saving thousands of lives; and a new piece of 
technology that enhances safety for astronauts on the 
International Space Station.
    These programs are delivering strong returns on investment. 
For example, SBIR and STTR economic impact studies from the 
Department of Defense and the National Cancer Institute have 
shown economic returns in excess of $15 to $23 for every dollar 
spent.
    That is in addition to improved military strength and 
capability, significant cost savings, expanded sales of new 
products and services for our small businesses, life-saving 
medical techniques and products, and added sales and profits in 
our economy.
    When administered appropriately, the SBIR and STTR are a, 
quote/unquote, ``win'' for U.S. taxpayers, Federal agencies, 
and small businesses.
    To state it again, these are successful government programs 
that deliver real results. I hope we can continue to encourage 
the acquisition of technology and solutions to meet the Federal 
Government's needs while ensuring that small companies have 
equal access to these programs and guarantee that taxpayer 
dollars are being spent efficiently and effectively.
    Thanks again, Mr. Chairman. I yield back.
    Chairman GOLDEN. Thank you, Mr. Hagedorn.
    I would like to take a quick moment to explain how the 
hearing will proceed.
    Each witness will have 5 minutes to provide a statement, 
and each Committee member will have 5 minutes for questions. 
Please ensure that your microphone is on when you begin 
speaking and that you return to mute when finished.
    With that, I would like to introduce our witnesses.
    Our first witness is Mr. Joshua Henry, president and 
founder of GO Lab, Inc., located in Belfast, Maine. GO Lab was 
founded in 2017 to develop and manufacture wood fiber 
insulation for the residential and light commercial 
construction markets.
    In 2018, GO Lab won a Phase 1 SBIR award from the EPA to 
further develop their technology.
    In 2022, GO Lab will become the first company to make wood 
fiber insulation in North America at its new manufacturing 
facility in Madison, Maine.
    Thank you, Dr. Henry, for sharing your story with us today.
    Our second witness is Ms. Nancy Min. She is the founder of 
ecoLong, located in Buffalo, New York. EcoLong is currently 
working on Phase 2 of their project, advanced peer-to-peer 
transactive energy platform with predictive optimization 
awarded by the Department of Energy. Their technology aims to 
reduce the cost of solar power and increase adoption of 
distributed energy resources.
    Thank you, Ms. Min.
    Our third witness is Dr. Angelique Johnson, founder and 
chief executive officer--you will have to correct me if I am 
wrong, I am sorry--of MEMStim, LLC, located in Louisville, 
Kentucky.
    Dr. Johnson has used three SBIR grants from the National 
Institutes of Health to develop her 3D printing methods used to 
manufacture parts for cochlear implants.
    In addition to her work in the lab, she is the CEO/founder 
of Visionarium, an organization that promotes, trains, and 
equips underrepresented entrepreneurs.
    We greatly appreciate her expertise on today's topic.
    The Ranking Member, Mr. Hagedorn, will introduce his 
witness.
    Mr. HAGEDORN. I am honored to introduce our final witness.
    Dr. David Green is the chief executive officer of Physical 
Sciences, Inc., or PSI, headquartered in Andover, 
Massachusetts. PSI's mission is to translate science into 
solutions that solve mission-critical needs for their 
customers.
    Andover has been the headquarters and backbone of PSI since 
1989. It is the largest and most extensive of the several 
locations, hosting 68,000 square feet of office and laboratory 
space.
    In addition to their technical capabilities, the site is 
also home to their accounting, contracts, and technical 
publications departments, as well as their prototype 
manufacturing facility.
    Dr. Green has participated in the growth of the PSI for 45 
years, emphasizing technical excellence in program performance 
and focusing on aggressive technology maturation to enable its 
rapid successful transition to fulfill the needs of their 
government and commercial customers.
    Dr. Green, we welcome you today, and we look forward to 
your testimony.
    Chairman GOLDEN. Thank you.
    We will now move to our witness testimony.
    And, Dr. Henry, you are recognized for 5 minutes.

 STATEMENTS OF DR. JOSHUA A. HENRY, PRESIDENT AND FOUNDER, GO 
   LAB, INC., MADISON, ME; MS. NANCY MIN, FOUNDER, ECOLONG, 
 ALBANY, NY, TESTIFYING ON BEHALF OF THE CLEAN ENERGY BUSINESS 
   NETWORK (CEBN); DR. ANGELIQUE JOHNSON, FOUNDER AND CHIEF 
EXECUTIVE OFFICER, MEMSTIM, LLC, LOUISVILLE, KY; AND DR. DAVID 
    GREEN, CHIEF EXECUTIVE OFFICER, PHYSICAL SCIENCES INC., 
ANDOVER, MA, TESTIFYING ON BEHALF OF THE NEW ENGLAND INNOVATION 
                        ALLIANCE (NEIA)

                  STATEMENT OF JOSHUA A. HENRY

    Mr. HENRY. Thank you, Chairman Golden, Ranking Member 
Hagedorn, and members of the Subcommittee on Underserved, 
Agricultural, and Rural Business Development.
    Good afternoon. My name is Joshua Henry. I am the president 
of GO Lab, a Maine-based building materials company.
    I am grateful for the opportunity to talk to you today 
about the Small Business Innovation Research program, the vital 
support it gave our company at its inception, and some of the 
ways we believe SBIR can be strengthened.
    Next year, at our production facility inside the former 
paper mill, GO Lab will become the first company to manufacture 
wood fiber insulation made in America.
    Our products, marketed under the brand name TimberHP, will 
include batt insulation for stud wall cavities, continuous 
exterior insulation boards, and a blown-in loose fill, designed 
to work as one comprehensive, above-grade system for the entire 
building envelope, or as affordable, healthier drop-in 
replacements for foam, mineral wool, cellulose, and other 
traditional insulations targeting the residential and 
commercial construction market.
    While SBIR grants are modest monetarily speaking, they are 
nonetheless critically important to early stage companies. The 
program gives small businesses and entrepreneurs the freedom to 
research and develop new technologies, often in partnership 
with local universities, that are years away from 
commercialization.
    When we founded GO Lab in 2017, insulation made from 
softwood chips had already been a successful product in 
European markets for over 20 years. Our SBIR grant allowed us 
to partner with researchers at the University of Maine's 
Advanced Structures and Composite Center.
    Using the center's advanced machinery and equipment, we 
were able to determine that we could make a more renewable, 
cost-competitive, and higher-performing form of wood fiber 
insulation in America by using alternative binding agents in 
the insulation manufacturing process.
    Too often, these sorts of research and design partnerships 
with major universities and access to their highly specialized 
equipment are more easily accessible in urban centers than in 
remote rural communities, like the one where GO Lab's 
production facility is based.
    Our SBIR grant, though small, helped validate the entire 
concept at the heart of our business plan. We were able to use 
this hard, verified data to begin the long process of raising 
private equity and other financing to move our vision of wood 
fiber insulation, made in America, towards reality.
    And, by the end of the summer, we will have financed this 
project with over $40 million of private equity and $85 million 
of private bond equity into the project.
    Expanding funding and partnership opportunities under the 
SBIR program is critical if we hope to empower the kind of 
entrepreneurship in rural communities that makes it easier for 
new industries to take hold, hire local people, and thrive.
    I would like to end my remarks with two suggestions for 
improving SBIR based on our experience.
    The program, as valuable as it is, could be made even 
stronger by simplifying the application process. As a former 
college professor with a Ph.D. in materials chemistry, I have 
applied for many grants over the years.
    Nonetheless, a colleague, also an experienced grant writer, 
and I found the application process far more bureaucratic and 
complicated than it needed to be.
    To complete our proposal, we ended up needing extensive 
help from consultants and SBIR specialists hired by the State 
of Maine. It still took many weeks to complete our application.
    Simplifying the application process would be an important 
step in the right direction.
    Additionally, as a business launching in a community 
qualifying for the New Markets Tax Credit program and within an 
Opportunity Zone, I strongly believe, as I noted earlier, that 
more incentives are needed to ensure that a program as valuable 
as SBIR is able to make more investments in underresourced 
rural areas where public research and development resources are 
limited.
    I think, potentially, if there could be incentives or bonus 
points, if you will, for SBIR applications from these areas, 
that could be an advantage and could serve as a stimulus for 
more companies from these areas to take advantage of the 
program.
    Thank you for your time, and I would be happy to answer any 
of the Committee's questions.
    Chairman GOLDEN. Thank you very much for the testimony.
    We will now recognize Ms. Min for 5 minutes.

                     STATEMENT OF NANCY MIN

    Ms. MIN. Chairman Golden, Ranking Member Hagedorn, and 
members of the Subcommittee, thank you for the opportunity to 
testify today on the topic of prioritizing small, underserved, 
and rural businesses in the SBIR/STTR program. It is an honor 
to be here.
    My name is Nancy Min, and I am the founder and CEO of 
ecoLong, based in Albany, New York. Our mission is to build 
interconnected and resilient communities.
    This mission is at the heart of everything we do, including 
developing a blockchain based energy marketplace that provides 
communities equitable access to clean energy.
    We are fortunate beneficiaries of the SBIR/STTR program, 
having received U.S. Department of Energy SBIR Phase 1 and 
Phase 2 from the Solar Energy Technologies Office to build out 
the platform. The DOE SBIR funding provides critical support 
that is positioning us for growth.
    Our path to the SBIR/STTR program wasn't easy. It took a 
lot of trial and error.
    My entrepreneurial interests began in college when I first 
heard of a new technology called blockchain technology that was 
the underlying technology to this new thing called Bitcoin. The 
technology and its application have evolved significantly since 
then. We now use blockchain technology to decentralize and 
democratize the energy market.
    All small business owners will tell you starting a company 
is hard. But knowing what is next is harder.
    Hearing about and participating in the National Science 
Foundation Innovation Corp, or NSF I-Corp program, was a 
pivotal moment for us. The NSF I-Corp program taught me how to 
articulate my business idea and forced me to ``get out of the 
building'' to validate that our technology was commercially 
viable.
    However, the closest site that the NSF I-Corp program was 
administered was in New York City. That meant we had to travel 
3 hours from Albany to New York City, or 6 hours round trip, to 
attend classes.
    The first time writing a SBIR proposal is daunting. 
Thankfully, the U.S. Department of Energy has a Phase 0 program 
that provides a variety of proposal support services for the 
first-time applicant. All of these programs helped us to get 
the DOE SBIR awards.
    In addition to the financial support of the SBIR, the 
program managers of the DOE Solar Energy Technologies Office 
provided integral support at every step of our development and 
commercialization process.
    The support of these communities continues even to this day 
with the support that we get from business networks, such as 
the Clean Energy Business Network, or CEBN, that plays a key 
role in advocating for clean energy research, promoting 
business partnerships across the Nation, and nurturing small 
businesses like ecoLong for growth.
    Today, my testimony is about the power of communities and 
its role in accelerating small, underserved, and rural 
businesses in innovation-driven programs such as the SBIR/STTR 
program.
    The first point I will talk to is improving awareness and 
accessibility to Federal innovation programs.
    The NSF I-Corp program addresses the knowledge gap with 
transformation of research into business ventures. However, 
awareness and accessibility of this program is often limited to 
innovators that are integrated with educational or research 
institutions or located in urban areas.
    Writing a proposal takes a lot of effort. Increasing the 
visibility and accessibility of the DOE Phase 0 program or 
research for all applicants is very beneficial for innovative 
firms, particularly for underserved and rural businesses.
    Community-based organizations are vital for innovators to 
extend their business network. For example, CEBN has been 
enhancing the accessibility of the SBIR's funding solicitation 
across their network and beyond.
    More support for regional or national support organizations 
that serve as community hubs on the ground would help small 
underserved businesses and rural businesses get the support 
that they need to be competitive in the SBIR/STTR programs.
    The second point is promoting open collaboration and open 
source to reduce the barriers to access technological 
innovation.
    The barriers to small business innovation are not limited 
to access to entrepreneurship programs. The development of 
technology innovations often requires extensive technical 
community support and resources.
    A great example is open source technology. Businesses can 
significantly reduce the expenses and time to develop a product 
from scratch and focus their efforts on high-impact uniqueness 
and innovation.
    As the Chair of the Linux Foundation Hyperledger Social 
Impact Special Interest Group, I have seen firsthand small 
businesses rising from the open source community.
    For example, the Department of Energy has encouraged and 
supported various open source projects, including Pacific 
Northwest National Laboratory developed VOLTTRON, an open 
source distributed sensing and control software platform 
technology that joined the Eclipse Foundation.
    Researchers at Brookhaven National Laboratory developed 
world leading privacy preserving artificial intelligence and 
will be contributing it to the open source PyTorch community.
    At the end of the day, the mission of the SBIR/STTR program 
is to support scientific excellence and technological 
innovation to build a strong national economy. This requires 
innovation on both the technical and business or commercial 
end.
    By improving the awareness and access to Federal 
entrepreneurship programs, small businesses will have the tools 
to build successful business ventures. By promoting open 
collaboration and open source, small underserved and rural 
businesses across the Nation will have a launch pad to catapult 
their technological innovation to do their part in building a 
strong national economy.
    Thank you again for the opportunity to testify. I look 
forward to answering the Committee's questions.
    Chairman GOLDEN. Thank you.
    The Committee will now recognize Dr. Johnson for 5 minutes.

                 STATEMENT OF ANGELIQUE JOHNSON

    Ms. JOHNSON. Thank you so much.
    I want to thank Chairman Golden and Ranking Member Hagedorn 
for the opportunity to come and talk and testify to the 
Committee on Small Business and the Subcommittee on 
Underserved, Agricultural, and Rural Business Development 
during this hearing, which is titled ``Prioritizing Small 
Underserved and Rural Businesses in the SBIR/STTR Programs.''
    My name is Dr. Angelique Johnson, as you have already 
heard, and I testify today not only as CEO and founder of 
MEMStim, but also as a leader in several STEM organizations, 
both at the NSF and the NIH, as well as locally in the State.
    Some of those organizations include the NSF Council on 
Engineering Research Visioning Alliance, the Kentucky Statewide 
EPSCOR Committee, the National Institute of Biomedical Imaging 
and Bioengineering at the NIH, the NSF NNCI External Advisory 
Board, and Medtech Color.
    I have also given my opinions to several other Federal 
organizations and actual global international organizations, 
such as the Eighth District of the Federal Reserve, the Royal 
Academy of Science International Trust, the International 
Chamber of Commerce, and the United Nations Assembly on Women 
and Girls in Science.
    And I say all that to say that I represent not only my own 
opinion, but also the opinions I have heard from countless 
members of the African-American community in the STEM field and 
innovation, as well as countless members of women innovators in 
the field.
    While getting my Ph.D. in electrical engineering from the 
University of Michigan, I founded MEMStim, and MEMStim is a 
company that is developed to create advanced manufacturing 
practices for neurostimulator devices for conditions such as 
hearing loss, heart failure, chronic pain, Parkinson's tremors, 
and much more.
    Now, that is a lot. That is a mouthful. But if we think 
about the human body, everything we think, say, and do is 
controlled by nerves and neurons. And when there is any sort of 
problem in the human body, in many cases it can be tied back to 
a nervous system issue. And so the technology we are creating 
is very critical.
    But we are not only just creating this technology. We are 
making it cheaper, more affordable, to lower the healthcare 
costs in this Nation, and we are innovating the technology so 
that we can increase the performance.
    At MEMStim we use 3D printing, as opposed to hand assembly, 
to be able to make these devices, which not only will decrease 
healthcare costs nationwide here in the U.S., but also allow us 
to increase access to countries globally and export our 
technology.
    Now, today I wanted to talk about my experience a little 
bit having received SBIRs, and one thing I wanted to make very 
clear is that my company would not have been able to be as 
innovative and have done as much great work as we have done 
without funding from the SBIR program.
    However, the reasoning for this is because there is such a 
lack of funding in venture capital, particularly for African-
American females and Black business founders. Less than 1 
percent of venture capital goes to those founders, and less 
than 0.27 percent actually goes to African-American female 
founders.
    Now, the SBIR program is a wonderful example of a program 
that can come in and fill this gap, but, unfortunately, it also 
suffers from these less than 1 percent funding going to 
African-American founders and even seeing worse numbers when 
you talk about African-American female founders.
    So some suggestions that I want to highlight are really 
these four ones.
    A, I think that we need to have an increase of 
representation on the review committees, and that 
representation needs to be paid.
    I know that there is a lot of recruitment for diverse 
representation, particularly Black faculty members, 
researchers, and innovators, but they do have lower wages that 
they are receiving and much more discriminatory things in terms 
of seed funding outside of the SBIR program. So pay should be 
included in that.
    I also think that we should create a special fund to help 
Black businesses acquire consultants and trainers in writing to 
help to prepare the grants and the applications.
    And then, also, I think we should have a special fund, an 
actual award supplement, that would be a subcontract line of 
funding to Black businesses that would not only provide an 
entry into the SBIR program, but also provide monitoring and 
assistance as they continue to contribute to the innovation 
economy through the SBIR program.
    And the last thing that I will say is I concur with some of 
what the other speakers said in that we need to expand the 
reach beyond academia.
    It is no mystery that there is very poor representation of 
African Americans, Hispanic, Latino faculty members in STEM, 
and that is not due to those populations' account. It is due 
to, unfortunately, the low rates of achieving tenure and other 
systemic injustices.
    So we need to be looking beyond academia for PIs to submit 
to SBIR programs and providing training programs to help those 
individuals submit to it.
    Thank you.
    Chairman GOLDEN. Thank you.
    And we will now recognize Dr. Green for 5 minutes.

                    STATEMENT OF DAVID GREEN

    Mr. GREEN. Good afternoon, Chairman Golden, Ranking Member 
Hagedorn, members of this Subcommittee and the House Small 
Business Committee.
    Thank you for the opportunity to speak today. It is an 
honor to testify on behalf of the New England Innovation 
Alliance, a coalition of small high-technology companies across 
the New England area.
    NEIA members, including Physical Sciences, Inc., have 
demonstrated the benefits that small businesses can provide the 
Federal Government and America's economy throughout the 
program's nearly 40-year history.
    As mentioned, studies have shown that the SBIR program 
generates post-award revenues 15 to 23 times greater than the 
initial investment. The program more than pays for itself.
    I appreciate that this Committee is holding these hearings 
to ramp up efforts to reauthorize these good programs.
    SBIR is a flagship American innovation program that other 
countries seek to emulate. The formula for its success lies at 
its core: competitive and merit based.
    Innovative small business entrepreneurs from across the 
country propose concepts addressing national priorities and 
commercial needs.
    There are many more ideas than awards. Selection at each 
phase is based on the best concepts, best performance, and, 
above all else, the best science.
    This competitive, merit-based process leads to a very high 
success rate for transition and commercial success. The best 
science produces the best technology that is essential if the 
United States is to remain a global leader.
    Those best ideas can come from anywhere in the country. 
Using the publicly available SBIR.gov website, I conducted an 
analysis into SBIR awards by geographic location.
    This analysis confirmed that citizens in each part of our 
country have priorities and are motivated to improve what 
matters to them in their daily lives. The analysis found that 
different parts of our Nation pursue technology innovation in 
different areas.
    To this point, the State of Maine wins over four times the 
national average per capita in Department of Agriculture SBIR 
awards and three times the national average in Commerce 
Department awards. Kansas and Wisconsin far exceed the national 
average in agriculture awards. Minnesota wins nearly three 
times the national average in Department of Education awards 
and well above the national average per capita in health, 
agriculture, and awards from NSF. New York exceeds the national 
average in education awards.
    Innovators in those States are motivated to address 
problems that affect their daily lives. And with insight based 
on firsthand knowledge, they achieve a high award rate.
    Great SBIR ideas and compelling solutions arise from the 
trained scientific and engineering minds, wherever those 
researchers reside. The SBIR program does not compel those 
minds to live in a certain State.
    What SBIR can do is give woman- and minority-owned and 
disadvantaged businesses a fair chance to compete, win, and see 
their innovation succeed.
    The current 3 percent administrative allocation that allows 
participating agencies to promote outreach and diversity within 
the program should continue.
    A large community of support organizations exists to help 
with all aspects of creating a winning proposal, from 
preparation to identifying commercial applications. First-time 
proposal writers can readily find the support they need to 
submit their great idea.
    The NEIA is an informal group of companies, often 
competitors, that share best practices to make each company 
stronger. This mentoring for the common good brings benefit to 
all. NEIA has helped establish similar alliances in other parts 
of our country.
    We encourage the Committee to consider this model, a 
network of competitive performers, to improve proposals.
    Many NEIA members are employee-owned companies where every 
employee owns a portion of the company and all employees share 
in the success: women, minorities, service-disabled veterans, 
no matter their ethnicity or sexual orientation.
    In closing, NEIA respectfully urges the Committee to pass 
an SBIR/STTR reauthorization bill this year affirming its core 
principles. The program should be permanently reauthorized in 
its current form to provide stability. The permanent 
reauthorization should strengthen the commitment to a 
competitive, merit-based participation and award structure.
    The existing pilot programs, including the use of 3 percent 
of the funds for administrative costs, permitting outreach to 
increase participation by underrepresented communities, should 
be made permanent.
    The reauthorization should include a quantitative 
assessment of the merits of changes in a publicly available 
report to Congress.
    NEIA commends this Subcommittee for holding this hearing. 
SBIR has proven its value many times over. Please make it 
permanent.
    Thank you again. I look forward to answering your 
questions.
    Chairman GOLDEN. Thank you.
    And, with that, we will move to questions, and I will 
recognize myself first for 5 minutes.
    I think I will start--probably no surprise to folks--with 
our panelist from Maine.
    Mr. Henry, I am just curious. Could you remind us of the 
degree that you hold?
    Mr. HENRY. I have a Ph.D. in physical and materials 
chemistry from Cornell University.
    Chairman GOLDEN. And you have also, I think--do I remember 
correctly, you have been a professor?
    Mr. HENRY. Yes. I was a professor in the chemistry 
department at the University of Maine when we started this 
company.
    Chairman GOLDEN. So I think it is fair to say you have a 
lot of training and background in things that have helped you 
with some pretty complex stuff, as well as experience helping 
other people understand very complex issues that probably most 
of us here in Congress don't understand ourselves.
    And, yet, you found the bureaucratic and complicated 
application process for the SBIR program that GO Lab competed 
for and ultimately did win to be pretty tough.
    Can you just talk more about that experience? And do you 
have any specific examples or recommendations about what we 
could do to ease that process?
    Mr. HENRY. Yeah. I mean, I am very curious to hear what the 
other panelists have to say about their application experience. 
We have full-time employees of about 15 at this point. When we 
were doing the SBIR, it was only four or five of us at that 
point.
    But another colleague of mine had about 20 years of 
experience in government relations and grant writing, and we 
found the SBIR application to be the hardest of the Federal 
grants to apply because of the detailed nature of the 
application.
    There are just so many--it varies from agency to agency, 
but we found across agencies that there were numerous addendums 
to every part of the application, so much so that the State of 
Maine basically has full-time consultants working with the 
Maine Technology Institute, which is an industry advocate and 
funder of advanced technology companies.
    They hire consultants to just help those companies through 
the SBIR application process, help them with their budget, help 
them with just submitting the application and making sure every 
box is checked.
    And I think the hard thing for small companies and 
companies that are struggling with funding is the question--
most grant proposals are not successful, as Dr. Green pointed 
out.
    To dedicate that much time to a proposal with the chance of 
it being knocked out for some small sort of box not checked in 
the application can be devastating for a company to spend that 
much time and yield absolutely nothing from it, including no 
feedback from reviewers. That can be tragic for a small 
company, and I think it is not necessary.
    And I am curious from the people who institute SBIRs why 
this--I would be curious if I were a Committee member--your 
Committee members to find out from the people who have 
instituted SBIR over the years why they find it necessary for 
all of these various forms and things that need to be committed 
and that they don't see this as a problem of the program that a 
State like Maine would need to hire consultants in order to get 
people through the program.
    I also think, being from a rural area, I can tell you that 
most of the people where we are in the town of Madison have no 
idea what SBIR is, let alone the idea that they would reach out 
to--that they would know that there are consultants there to be 
able to help them through the process.
    Of course I know about it, but I was a professor at the 
University of Maine. But most business owners in the State of 
Maine, I am sure, don't have an understanding of SBIR, and 
certainly couldn't get through the application process, in my 
mind.
    Chairman GOLDEN. Thank you. That is a very helpful start to 
the conversation. I have a lot more questions for you, but also 
for the other panelists.
    But I am just going to go ahead and cede my 10 seconds 
remaining here and recognize Mr. Hagedorn next. We will come 
back later.
    Mr. HAGEDORN. Thank you, Chairman.
    I appreciate all the witnesses for being here. Very good 
discussion so far.
    Dr. Green, you seem to have some success with these 
programs and have made some gains for Federal agencies along 
with your own company.
    Can you explain kind of in a nutshell how you are doing so 
well and how you have utilized this and how it helps the 
taxpayers and the government?
    Mr. GREEN. We, from the outset at the proposal stage, focus 
on the application and direct the program to achieve what the 
customer has as his goal. At each step of the way, we define 
milestones, reducing the greatest risks first, and then move 
the project forward.
    We have had many successes. And, through those successes, 
we have learned that it is essential to address all aspects of 
the problem, as well as to decide on the best path to market.
    That best path does not necessarily mean that your company 
develops new skills along each step of the way. As various 
people have noted, not just in proposal writing, but even when 
a technology is successful, there are many stages after that--
the production, the marketing, the market presence, the 
distribution. All of these require additional skills.
    What we decide is the best path to market. That often 
involves partnering, and partnering with other small businesses 
which are already active in that technology field, where we can 
transfer that technology to them, and they already have in 
place the know-how and other skills.
    That allows our innovators to go back and to solve the next 
problem for the government.
    Mr. HAGEDORN. Sounds like it is not a direct line and you 
have learned some things over the years and probably had 
consultants and other help helping you with that, and maybe 
just building a better mousetrap when it comes to how to do 
this.
    You talked about maintaining the 3 percent allocation and 
reauthorizing. You feel strongly about that. We should, the 
Committee should move forward and reauthorize and make this 
permanent?
    Mr. GREEN. Yes. I think that is essential.
    First of all, the 3 percent each of the other speakers 
today has addressed that. And I think it is important, because, 
as has been noted, there is a barrier, and we need to work to 
overcome that barrier. And that can either be done by reducing 
the paperwork or standardizing it in some manner, or by the 
additional help that is provided by the agencies and by the 
private sector.
    The benefit of making it permanent is both to the 
government and to the small businesses. During the 
reauthorization period in 2008 through 2011, there were 14 
continuing resolutions to keep the program alive. During that 
time, awards were put on hold. Small businesses, who had 
started with ideas, actually went out of business waiting for 
decisions to be made.
    From the Federal side, it allows there to be a defined 
program budget that they can then plan and allow technology to 
be developed through Phases 1, 2, and 3. It also creates good 
career paths for Federal employees to become deeply 
knowledgeable and become good advisers in each agency to guide 
the program to help the small businesses.
    Mr. HAGEDORN. Thank you.
    Real quickly. Mr. Henry, you were talking about the 
complicated application process. And my understanding is these 
aren't really grants, they are awards. And, having worked at 
the Treasury Department, I kind of have some background in how 
government agencies have to justify for Congress and others 
their expenditures and moneys that go out the door. So maybe 
that is some reason why it is a little more complicated.
    But you mentioned that you don't receive feedback if you 
are on the losing end, if you want to put it that, for one of 
these awards. Help us understand that a little bit more. And do 
you think it would be important for agencies to have to follow 
up?
    Mr. HENRY. Well, I want to clarify that if you are on the 
losing end, if your application is accepted and it goes through 
the process and it is rejected, then you would receive some 
feedback, although we have not always received feedback from 
every agency, which they are supposed to provide but do not 
always, at least not in our experience.
    But if you were to not be able to submit on a technicality 
and the application was rejected before that process, then that 
is correct, you would not get any feedback. It would not be--
the application simply would not be reviewed.
    Mr. HAGEDORN. Okay. Thanks. I think that clears it up.
    Chairman, I will yield back.
    Chairman GOLDEN. Thank you.
    Next, we will recognize Rep Pete Stauber from Minnesota 8.
    Mr. STAUBER. Okay. Thank you very much.
    Thank you to the witnesses for being here today.
    Early in my time in Congress, I became familiar with the 
Small Business Innovation Research program and the good work it 
can do for our small businesses.
    Lake Assault Boats in Duluth, Minnesota, which builds 
custom fire and rescue patrol boats, applied for Phase 1 
funding from the Air Force's SBIR program. Lake Assault 
intended to use the funds to undertake a trial to improve 
improve patrol boat technology, ultimately reducing energy 
inefficiencies.
    As Mr. Green noted in his testimony, it is fascinating to 
see how the different parts of the Nation are inspired to 
pursue technology innovation.
    With our many lakes in Minnesota, it makes sense that my 
constituents would look for technology that improves the 
technology of our patrol boats while keeping our lakes pristine 
for future generations.
    Mr. Green, as we look toward reauthorization, what would 
you caution Congress from adding or removing from a 
reauthorization bill that might actually impede or harm the 
program?
    Mr. GREEN. I would argue that we certainly don't want to 
add more barriers and make it more difficult to submit to the 
program. The program has already made great strides in moving 
more quickly, to make decisions quickly, and that allows the 
small business to have continuity.
    So I would urge the Congress to continue to make sure that 
award decisions are made in a timely manner so that the small 
business can make business decisions and move forward.
    I think what is essential is that the program remain merit 
based, because there are always many suggested solutions to any 
problem, but we, as Americans, have to have the best solution 
so that we can continue to remain the world technology leader. 
If we settle for less than optimum solutions, that will result 
in us losing our leadership.
    Thank you.
    Mr. STAUBER. [Inaudible].
    Chairman GOLDEN. Thank you.
    We will now recognize Representative Claudia Tenney from 
New York 22.
    Ms. TENNEY. Thank you, Chairman Golden and Ranking Member 
Hagedorn, for taking the time.
    And thank you to the witnesses for being here.
    I represent New York's 22nd Congressional District, which 
stretches from the shores of Lake Ontario to the border of 
Pennsylvania. We have a diverse collection of cities, rural 
area and suburban areas. But we are also the home to a lot of 
innovation heritage, including IBM was founded in my district. 
The Air Force Research Lab Directorate is part of the former 
Griffiss Air Force Base. So we do have quite a bit of 
innovation.
    But I wanted to focus, Mr. Green, you said--and I thought 
your testimony was interesting, just to kind of piggyback on 
what Mr. Stauber had to say--you indicated that the State of 
Maine and Kansas and others have twice the grants.
    What can we do in New York to revitalize our innovation and 
be able to have access to some of these tech grants and also 
innovation transfer grants? How would you create a model that 
we could get more innovation in New York and more resources to 
New York that emulates the success of other countries? And how 
could we make that a permanent issue, then something we could 
support in reauthorizing this bill?
    Mr. GREEN. Well, if I may, I think the government has 
already put in place--through this 3 percent allocation--
factors to provide support. And as I have mentioned, there is a 
private sector community to provide support.
    But because I am speaking today on behalf of the New 
England Innovation Alliance, I think it is essential for small 
businesses who are competitors, are peers, to get together and 
share best practices.
    That doesn't have to be just winning an SBIR grant. It can 
be HR. It can be benefits. It can be hiring. All of these 
things are challenges that every small business entrepreneur 
faces.
    And so by having this collective, open discussion with your 
competitors, you end up building a better company and you end 
up developing a philosophy of how to respond and win grants.
    And so we have helped create organizations in Ohio as well 
as California that follow this model. And I think, beside 
Federal involvement, private sector and peer involvement is a 
great way for each company to improve its knowledge base.
    Thank you.
    Ms. TENNEY. Yeah. Thank you, Mr. Green.
    Could I just add a quick anecdote to that? Do you think 
that the fact that maybe some of our State regulations and the 
operation of our State business community or the way that 
States handle innovation and supporting these businesses has an 
impact?
    For example, New York versus Maine, and, as you indicated, 
Kansas as well has even more grants than we do. Is that 
something that is a factor in your experience?
    Mr. GREEN. If I may clarify, that was more grants per 
capita.
    Ms. TENNEY. Per capita. Okay.
    Mr. GREEN. Yes. I mean, you can't expect Wyoming to have as 
many grants as California. There are a few more people in 
California.
    New York----
    Ms. TENNEY. New York is huge.
    Mr. GREEN. And New York has a fair amount of people, and 
they also, as a State, make significant investments. I am aware 
of NYSERDA and other such State-funded organizations that help 
create, and stimulate commercial opportunities that complement 
the SBIR program.
    Ms. TENNEY. Thank you.
    Mr. GREEN. So I think the State should, in addition, try to 
complement and benefit the companies within their States, and 
that will help attract people to those States to address 
problems in technology areas that are important for the 
citizens of that State.
    Ms. TENNEY. Thank you. I appreciate that.
    Just one quick question for Ms. Min.
    In your testimony, you pointed out that many of these 
businesses, especially the Small Business Innovation Research 
experience, finds that a lot of these businesses have a tough 
time getting through some of the technical and bureaucratic 
process.
    Would you recommend that we either fund or provide 
technical resources to businesses that are applying for these 
grants so that they can use these funds and this assistance 
more effectively?
    Ms. MIN. Thank you, Congresswoman.
    Ms. TENNEY. [Inaudible.]
    Ms. MIN. Oh, absolutely.
    I think an example of a resource that we have taken 
advantage of is the DOE Phase 0 program, which provides 
critical proposal support services. And other things that you 
can select from a kind of a la carte menu is technical support 
services as you are developing out your proposal.
    Ms. TENNEY. Let me ask a quick question.
    So we have a huge interest and need in the broadband 
industry. Would that be somewhere where we could actually get 
the technical assistance to help with trying to incentivize 
people to move into that industry and that business? Quickly.
    Ms. MIN. Absolutely. Yes. Absolutely.
    Ms. TENNEY. Thanks so much. We appreciate it.
    I yield back.
    Chairman GOLDEN. Thank you.
    We will now recognize Representative Roger Williams, the 
Vice Ranking Member of the Committee.
    Mr. WILLIAMS. Successful entrepreneurs will recognize needs 
in their daily lives and work towards bringing solutions to the 
marketplace.
    Something I think is beneficial about the SBIR program is 
that it does not take on a one-size-fits-all Federal approach 
and runs through different Federal agencies. This allows 
innovators in different States to be able to access the 
resources to best address their needs in their own communities.
    So, Dr. Green, as someone who represents numerous SBIR 
grantees across the Northeast, is there any agency that 
administers this program the best? And how can the other 
agencies adopt these best practices to better help 
entrepreneurs?
    Mr. GREEN. Again, a complex question, and I appreciate it.
    I think many of the members of NEIA have interacted with 
the Department of Defense, and I think they have a program that 
is very effective because it ties the topics of the SBIR book 
to agency needs. And, with that, they have a plan that they 
will award so many Phase 1s, down select more than one Phase 2.
    And then, if a project meets the metrics as put forth in 
the book, the SBIR call, they promise that they will place some 
core program funds against that topic to see that the 
technology is inserted into the agency's program.
    I commend the National Institutes of Health. They have very 
deep peer review, very thoughtful pee review councils, as does 
Department of Energy. Oftentimes we will submit a proposal and 
get six reviews on a single proposal. So I commend them all for 
the care they take in trying to make a good selection.
    Mr. WILLIAMS. Thank you.
    Mr. GREEN. Thank you.
    Mr. WILLIAMS. Several of you stressed the need to simplify 
the SBIR application process. We don't want to see small 
business being deterred from commercializing their products and 
advancing American technology because of too much bureaucratic 
red tape.
    So, Dr. Henry, you mention in our testimony that you had to 
hire outside consultants to help with your application and that 
it still took weeks to complete. So could you elaborate on what 
specific changes could be made to streamline the application 
process without compromising fraud and abuse protections in the 
SBIR?
    Mr. HENRY. Well, I think, just to clarify, as Dr. Min said, 
that we utilized basically the Phase 0 program as well as 
consultants that were hired by the State of Maine. We didn't 
have to hire those. I also pointed out that we had a colleague 
who was skilled in grant writing and participated in that 
process.
    I was pointing that out just to show the level of depth of 
experience that we had in order to be successful. And I think 
that, in my experience, there are a lot of innovative companies 
here in the State of Maine that don't have the benefit of 
people with grant-writing experience that would be able to 
access these programs.
    Dr. Green, for example, represents an organization that is 
successful because they have a number of Ph.D. scientists that 
are experienced with the grant-writing process. And once you 
have the experience of getting through it once, it is quite a 
bit easier than the second and third and fourth time. It is 
that initial barrier to get over it that I think is a problem.
    I can't really speak to the fraud issue. I don't know why 
the process is so complicated. And looking at other Federal 
programs--for example, we won a Wood Innovations Grant from the 
USDA that was for more money than the EPA SBIR that we were 
funded for, and the entire proposal was all of five pages.
    And I do think that that is not always possible for 
something like SBIR. And I am not advocating simplifying the 
actual writing of the proposal. The proposal should be 
extremely detailed, as Dr. Green mentioned. It should lay out 
all of the aspects that need to be laid out in order to verify 
the scientific veracity, engineering veracity of the problem 
they are trying to solve and the market.
    But the bureaucratic aspect of it seems to me somewhat 
unnecessary. There is a lot in there that a layperson or a 
person who has never approached an SBIR program would not be 
able to get through or understand.
    And I am telling you that based on over a decade of 
experience of winning grants from the National Science 
Foundation, from the Department of Energy, from the Department 
of Transportation. This was an unnecessarily complicated 
process relative to other programs.
    Mr. WILLIAMS. Thank you for that testimony.
    I yield my time back.
    Chairman GOLDEN. Thank you very much.
    Assuming that we don't have Representative Salazar on 
remote anymore, we are going to move on to a second round. And 
I am going to recognize myself.
    I did want to just quickly, Mr. Green, PSI, it looks like, 
has gotten about 1,400 SBIR or STTR awards since 1983. I am 
assuming that is when the company was started, but perhaps not. 
Maybe that is just the first time.
    So you are in Andover, Massachusetts. I think Mass has 
gotten about 385 awards, I think, last year. But I think in the 
last 3 years you have got over 100 contracts, 66 million, and 
220 employees.
    These are good things. So congratulations on that, and I 
know that the company has been very successful.
    But how did you start out? I mean, were you a smaller 
company then? How do you compare to, let's say, a startup 
company today when you were just getting started back in the 
1980s?
    Mr. GREEN. Our company Physical Sciences began in 1973 
during the aerospace crunch after we had put man on the Moon. 
And so we existed for a decade before there was an SBIR 
program, supporting the government through research and 
development contracts.
    In the early days of SBIR, the discretionary funds that had 
funded many companies were taken away and used for SBIRs. So 
initially SBIRs, in addition to serving the dual purpose of 
commercialization, also continued to support national needs.
    I think the reason that our company is successful is that 
we have many people who are trained, as Dr. Henry has pointed 
out, trained at writing grants. We have people that are rounded 
entrepreneurs.
    But also, PSI has realized that we are good at the research 
and development. And so we, as I mentioned earlier, we make a 
decision that oftentimes it is better not for us to develop the 
production, the marketing, sales, distribution, market 
presence, brand, it is better for us to transfer and partner 
with another company who has an existing technology, but this 
allows them a next-generation technology.
    And that allows the technology to get to the market 
efficiently because there is a probability that a good idea 
could die at every step in that process.
    It is efficient. It is quicker. And, as a result, it 
produces a greater return for the SBIR program. And then our 
serial entrepreneurs can take their expanded skill sets and try 
and address the next problem.
    Chairman GOLDEN. All right. Thank you.
    Some people were, I think, a little confused with some of 
the earlier statistics when we were talking about per capita.
    Maine got six awards, I think, most recently. If we could 
stack that up against 800 in California, 258 in Massachusetts, 
I think like 150-something in New York, Kentucky, where Ms. 
Johnson is from, 16.
    So per capita sounds impressive, but there are some pretty 
big gaps there.
    I am curious, Dr. Johnson, how would you propose that SBIR/
STTR outreach activities could be better designed to reach 
targeted populations? I think Dr. Henry made the point that 
people in a place like Madison, Maine, wouldn't even know this 
program exists unless there is someone there to help lead them 
to it.
    Ms. JOHNSON. Yeah, I think that marketing of the program 
needs to go beyond the academic campus. I know historically 
that is where much of the PIs that apply for SBIRs come from. 
Even presently there is a huge concentration there.
    But marketing really needs to go beyond that to be 
[inaudible]. I mean, that really is where most of the 
businesses are being generated if you really think about 
today's, the startup community or the small business community, 
not actually coming from academic institutions anymore.
    So that would be my highest recommendation, that they need 
to partner with startup ecosystems, provide training events, 
workshops in those startup ecosystems, as well as small 
business development centers, and the like.
    Chairman GOLDEN. Thank you. I appreciate that.
    I have got about 30 seconds left, so I am going to reserve 
further questions. And at this time, I will yield back and 
recognize Mr. Hagedorn.
    Mr. HAGEDORN. Thank you, Chairman. I appreciate that.
    Both Dr. Green and Dr. Johnson, you kind of waded into an 
area about reauthorization.
    And, Dr. Green, you were pretty explicit that in the 
future, if these programs are going to work properly, that the 
best science needs to win out, this needs to be a merit-based, 
totally competitive process.
    And, Dr. Johnson, you talked a little bit about how there 
maybe needs to be more outreach so folks who are new into the 
process or don't have as much experience are aware of the 
programs and maybe have some additional expertise provided to 
them as far as going through the application and that type of 
thing.
    What I would be concerned about as we look at 
reauthorization is any concept that the actual awards be given 
based upon preference of identity or race.
    Recently, with the Small Business Administration's 
Administrator, I have spoken with her in one of our hearings 
and asked about the Restaurant Revitalization Fund. I didn't 
think that that was quite fair. I thought it was discriminatory 
that we had a priority list.
    And now we have basically everybody who wasn't on the 
priority list is not getting any money for their restaurants, 
and they happen to be, in this case, White men.
    And then you had the Biden administration put out an 
executive order saying that SBA needed to change its programs 
and make them conform with equity standards, whatever that 
means. I have asked her for an explanation of that, haven't 
received anything quite yet, although we just sent that letter.
    Do you have any comments, Drs. Green and Johnson, as to 
whether or not this should continue to be a competitive process 
based upon merit, and also that maybe we still need to do some 
more in order to help people understand what is out there for 
them?
    Ms. JOHNSON. Yes. So I think absolutely it needs to stay 
merit based. I am not suggesting anything other than that.
    When we think about merit, Dr. Green, I agree with some of 
his comments and things like that. But we need to understand 
that these are not research grants. These are Small Business 
Innovation Research grants.
    And so, unfortunately, if you look at the statistics, many 
of the companies that come out of universities are not the ones 
creating economic impact in the United States of America.
    So when we talk about merit, it is not merit based off of 
how sexy the innovation idea is, it is merit based off of can 
you translate that innovation's impact for the United States in 
terms of innovation, impact in the economy, impact in 
healthcare, impact in the environment. And then also, can you 
translate that into a commercial company.
    And so, unfortunately, academic institutions have not shown 
a stellar track record in comparison to other ecosystems, like 
the startup ecosystem, small development ecosystem.
    So I think it needs to be merit based. And my suggestion 
would not be to change the merit or even the review per se of 
the grants, but more so provide more assistance on the front 
end.
    For example, if you are looking at the academic institution 
or even in the startup ecosystem, a lot of times minority 
business enterprises don't have seed funding to actually do the 
early stage research necessary.
    So I would propose that we add to the Phase 0 programs that 
we see for grant writing an actual Phase 0 program that 
provides pre-seed funding so that people can produce minimally 
viable prototypes for pre-early stage research so they could 
have a much more competitive Phase 1 application.
    So I think it definitely needs to stay merit based, but we 
need to make sure that the metrics for merit are based off of 
economic impact and innovation and not just pure basic science 
research.
    Mr. HAGEDORN. Thank you.
    I think I understand what you said. I am not sure that I 
completely agree with the last part of that.
    Mr. Green?
    Mr. GREEN. May I add?
    So I agree with the fact that, of course, it should be 
merit based, and I also agree that there should be additional 
assistance.
    I believe that the 3 percent administrative funds now 
really are adequate to address this problem. But what I would 
suggest is we take a study to decide how they can best be 
deployed.
    I understand that the SBIR road show has toured all the 
States, and we should assess the benefit of that versus 
targeting particular entities that could benefit more.
    So we agree with reauthorizing the pilot programs, and I 
think the Phase 0 and the I-Corp are part of those pilot 
programs. If they are not already permanent, they should be 
made permanent. And I think that the agency should look how to 
optimize the benefit of their administrative allowance.
    Thank you.
    Mr. HAGEDORN. Thank you. I appreciate it.
    I yield back.
    Chairman GOLDEN. Thank you.
    I do want to kind of dig a little bit further into the 
merit versus economic benefit discussion. I am interested in 
that.
    Mr. Henry, maybe I will give a little bit of time to you on 
this, but I can also share a little bit of your story.
    In my district, Madison, Maine, was a paper mill town; the 
mill closed just a few short years back. And I think it is fair 
to say, without those jobs, without that industry, the town was 
pretty much on a path to being decimated. That look was not 
good at all.
    The decision by GO Lab to not only choose Madison but also 
move into that old mill space and redevelop it I think almost--
it is hard to gauge the impact there in bringing back. I think 
you are on a path to probably something in the realm of, what, 
a hundred jobs or more. Of course, this remains to be seen how 
successful you will be.
    But hard to, I think, gauge the benefit just dollar for 
dollar comparing an SBIR award in a place, let's say, like 
Massachusetts, versus Madison, Maine, that there has got to be 
a way to gauge how meaningful that economic benefit is to, 
let's say, rural Maine, rural America.
    And as a result, spurring jobs, creating jobs in 
disadvantaged communities, I would say it is pretty important 
from the perspective of taxpayers. Certainly if you are a 
taxpayer in rural Maine, it has almost definitely got to be the 
perspective.
    But could you, any one of you, talk a little bit about how 
you might approach some kind of analysis, a way of adding 
weight in the application process to the award that takes it 
into the dynamics that I just discussed?
    Mr. HENRY. Sure, yeah. I am not an economist, and so there 
are economists that do studies on the impact of various 
businesses on their community. I know in the forest products 
industry, we have an impact factor of something like 16, that 
is a combination of forest products and manufacturing. That is 
a huge impact on employment and on a community compared to most 
other industries.
    But I can't really--it is really hard to say definitively 
anything really valuable to that end.
    I feel compelled to comment on Dr. Green's comment that 3 
percent is adequate. A lot of facts have been thrown around. A 
lot of numbers have been thrown around. But what proof do we 
have that 3 percent is adequate on funding these kind of 
programs?
    I can't see things changing significantly in terms of how 
we distribute funds for research and development and innovation 
throughout underrepresented areas, throughout underrepresented 
communities.
    I think, to Representative Hagedorn's point, merit based is 
really--people will throw that around and want it to be some 
concrete thing. But my mom was a professor in an Ivy League 
institution for over 40 years. She graduated more African-
American Ph.D.s than any professor in the United States in her 
tenure, and she graduated four.
    So representation is an issue for many communities because 
those various communities value different things. Rural areas 
value different things than urban areas. And if the people who 
are reviewing the applications are primarily from academic 
institutions, as Dr. Johnson mentioned, they are going to value 
scientific merit. They are not going to value economic merit.
    Our company was rejected for most of our SBIRs because of 
our scientific merit. They didn't view there to be significant 
scientific merit. But the impact of our future investment of 
$150 million on a town like Madison is immeasurably larger than 
most, the impact that it has on----
    Chairman GOLDEN. Quickly, sir. Dr. Henry, if I could--I 
have only got 30 seconds left there.
    But that is a great point, talking about that perspective 
right there, which is the economic merit versus just purely the 
scientific, not just--the product that you are bringing is 
going to benefit, There is going to be an economic merit across 
the country in regards to lower home heating prices and other 
things. So I think that is also something that could 
potentially be worked into a process such as this.
    But, Mr. Hagedorn, any other questions on your end?
    Mr. HAGEDORN. No.
    Chairman GOLDEN. I will just give Dr. Johnson or Dr. Min, 
Dr. Green, the opportunity to weigh in on this if you want. You 
don't have to.
    And I think with that, we are----
    Ms. JOHNSON. I would like to just comment.
    I know that we use this term ``merit,'' and we are trying 
to figure out what to evaluate. I actually serve on one of the 
review committees for one of the agencies that distribute SBIR 
and STTR. And I don't want to get lost in this discussion of 
merit that when it comes to the committees, there is no 
consideration whatsoever for the applicant coming from a rural 
area, being Black, White, Hispanic, Latino. There is no--none 
of that is applied into the review process.
    And so I think really what we are talking about is how do 
we get applicants, a more diverse pool of applicants, doing 
more diverse innovation of higher quality into the program. And 
that starts with equipping and enabling more individuals from 
diverse backgrounds that are currently underserved to be able 
to do that.
    So when we talk merit, yeah, when it gets down to brass 
tacks, when you act in that review committee, we don't see 
anything but the application in front of us. But we really need 
to make sure that everybody is given the opportunity to put the 
best application in front of us, not just in the way that they 
write it but also in the content, which is more so what we care 
about.
    Chairman GOLDEN. Thank you.
    Anyone else have any other thoughts on this particular 
issue?
    Very good. Well, I want to thank you all for joining us for 
the hearing today. I certainly appreciate your taking the time 
and your patience, again, as we started a little bit late. The 
testimony is very helpful, and I think that the Q&A was 
productive as well.
    As we have heard today, not all small businesses have the 
chance to succeed in the STEM sector, from rural technology 
companies to women-run startups. In our metropolitan centers, a 
broad range of entrepreneurs are at a disadvantage in the 
field.
    SBIR and STTR offer good opportunities for developing 
technology and growing small firms, but we should work to make 
them extend to a broader range of business owners.
    Today's witnesses provided us with critical insights, very 
helpful insights into improving these programs and fostering 
greater diversification.
    I look forward to working with members of this Subcommittee 
to implement these improvements and ensure that these critical 
programs are reaching as many small businesses as possible.
    And with that, I would ask unanimous consent the members 
have 5 legislative days to submit statements and supporting 
materials for the record.
    Without objection, so ordered.
    If there is no further business to come before the 
Committee, we are adjourned.
    Thank you.
    [Whereupon, at 3:57 p.m. the Subcommittee adjourned.]
                            
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