[Congressional Record Volume 145, Number 106 (Monday, July 26, 1999)]
[Senate]
[Pages S9227-S9230]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LEVIN (for himself and Mr. Kerry):
  S. 1435. A bill to amend section 9 of the Small Business Act to 
provide for the establishment of volunteer mentoring programs; to the 
Committee on Small Business.


legislation to establish a volunteer mentoring program for the sbir and 
                             sttr programs

  Mr. LEVIN. Mr. President, small businesses are the biggest job 
producers in our economy and technology is an increasingly important 
component to those growth figures. Contributing to that continued high 
technology job growth is a high technology procurement program that 
allows small and innovative high technology companies to bid on some of 
the federal government's research and development proposals. The Small 
Business Innovation Research (SBIR) program gives these small 
technology companies a tool to compete in the big leagues by giving 
them fairer access to federal research and a way to finance that 
research in order to commercialize it. It also gives the federal 
government access to highly innovative companies that can custom design 
and develop specialized technology for an agency's specific needs--
something bigger companies may not be able to do as well.
  The SBIR program does this by mandating that each federal agency with 
a research and development budget that is contracted to outside vendors 
in excess of $100 million designate 2.5 percent of this budget for 
awards to small businesses. Currently there are 10 federal agencies 
participating in the SBIR program. A smaller component of this program 
is the Small Business Technology Transfer program (STTR), which allows 
5 agencies to allocate three twentieths of one percent of these funds 
to small businesses that partner with non-profit institutions to do the 
research and development.
  The SBIR program creates jobs, increases our capacity for 
technological innovation and boosts our international competitiveness. 
According to an April 1998 GAO study, about 50 percent of SBIR research 
is commercialized or receives additional research funding. That's a 
pretty good success rate. It's also a great example of federal agencies 
working together with small businesses to develop technologies to solve 
specific problems and fill government procurement needs in a cost 
effective way.
  The SBIR and STTR programs are successful programs and we can make 
them even more successful by establishing a volunteer mentoring 
program. Such a program would partner CEOs of small high technology 
companies that have successfully completed a SBIR or STTR program with 
small businesses in low participation areas to guide them through the 
process, increasing their chances for success and, ultimately, the 
commercialization of their research.
  Many states believe they can do better regarding the number of SBIR 
awards their small businesses win. Since the SBIR and STTR programs are 
highly competitive and merit-based programs and should remain so, I 
believe the best way to increase participation is through outreach and 
mentoring. My bill would target its mentoring program to low 
participation areas which receive a disproportionately low number of 
SBIR awards as compared with other areas in the state or in the 
country.
  Michigan is just one example of a state which has many low 
participation areas within it that could improve their participation in 
the program. In 1997 Michigan small businesses nevertheless won 102 
SBIR awards worth a total of $24.6 million, ranking it 14th nationally. 
But Michigan should be doing better. Based on its population, Michigan 
ranks 8th nationally, not 14th as it does in number of SBIR awards. I 
believe the volunteer mentoring program I am proposing will help small 
high technology businesses from those areas within Michigan and around 
the country that lack access to research universities, venture capital 
or other resources to increase their chances of participating 
successfully in this program.
  Last summer, the Senate Small Business Committee held an SBIR 
oversight hearing to begin to develop a hearing record in preparation 
for SBIR's reauthorization. At that hearing, GAO presented a study 
favorably reviewing the program. It pointed out, however, that because 
agencies are adhering to the program requirements that they not use 
SBIR funds to pay for the administrative costs of the program, this 
funding restriction has limited their ability to provide some needed 
administrative support. For example, some agencies reported they do not 
have the necessary funds to provide personnel to act as mentors to 
their SBIR companies or engage in activities that could possibly 
increase the program's success in phase III. GAO also said the lack of 
administrative support means agencies are unable to provide SBIR 
participants with much-needed training in business skills. A volunteer 
mentoring program could fill this void.

  Also at that hearing, a number of Senators expressed a desire to see 
more geographical distribution of SBIR awards and hearing witnesses 
suggested this could be addressed through outreach to make more high 
technology small businesses aware of the program. A natural complement 
to reaching out to new companies to tell them about the SBIR and STTR 
programs is the establishment of a mentoring program to increase their 
odds for success in those programs.
  Many SBIR-company CEOs have benefitted from the program, are 
committed to its success and have told me they want to give something 
back. They propose doing this in the way of mentoring small businesses 
that are new to the SBIR process. The bill I am introducing today would 
establish a program to coordinate that process and reimburse volunteer 
mentors for their out-of-pocket-expenses. It would also address the 
desire to expand participation in the program by targeting the 
mentoring to low participation areas.
  I am pleased to have the Senate Small Business Committee Ranking 
Member, John Kerry, join me as an original cosponsor of this bill. My 
legislation also has the support of key members of the SBIR community.

[[Page S9228]]

  My bill would establish a Mentoring program where past SBIR and STTR 
recipients partner with new applicant companies in low participation 
areas to help guide them through the process and increase their chances 
of success. A small business's failure to obtain a phase I or Phase II 
award may have nothing to do with the capability of its technology but 
rather is often a result of a lack of understanding the government 
procurement process and procedures. This mentoring program would help 
bring new companies into the SBIR program from areas that have not 
traditionally participated at high rates. It would also increase Phase 
III awards and commercialization of the technology being developed.
  Specifically, my bill would establish a competitively bid volunteer 
mentoring grant program for the SBIR and STTR programs. The Small 
Business Administration would be responsible for administering the 
program. Organizations representing SBIR and STTR awardees could apply 
for grants ranging from $50,000 -$200,000 to participate in the 
program. Qualifying organizations would match small businesses in low 
participation areas new to the SBIR/STTR process with CEOs and others 
of small, high technology companies that have successfully completed 
one or more SBIR/STTR contracts, grants or cooperative agreements. The 
``volunteer mentors'' would be reimbursed only for their out-of-pocket 
expenses. Their time, energy and know-how would be donated free-of-
charge. The program would be authorized at $1 million per year to cover 
administration of the program and reimbursement of volunteer mentors 
for their out-of-pocket expenses.
  There are a number of effective organizations and entities 
representing SBIR and STTR companies that would be eligible to apply 
for the program. This legislation is intended to attract organizations 
such as the Small Business Technology Coalition, various regional 
groups or entities working with SBIR companies as well as some 
technology oriented specialized Small Business Development Centers, and 
others. Some of these eligible entities and organizations may even 
chose to partner together in a collaborative effort to apply to the 
program.
  The SBIR program, originally established in 1982 and reauthorized and 
expanded in 1992, expires in fiscal year 2000. This highly competitive 
program has a well deserved reputation for success and has enjoyed 
bipartisan support over the years. I hope my bill can be included in 
that reauthorizing legislation to improve what is already a successful 
program giving small high technology companies access to federal 
research and development and the federal government access to some of 
the world's best innovation.
  Mr. President, I ask unanimous consent that the letters of 
endorsement for the bill be printed in the Record.
  There being no objection, the letters were ordered to be printed in 
the Record, as follows:

                                                    Small Business


                                         Technology Coalition,

                                    Washington, DC, July 22, 1999.
     Hon. Carl Levin,
     U.S. Senate, Washington, DC.
       Dear Senator Levin: The Small Business Technology Coalition 
     (SBTC) wishes to express its support for your ``mentoring'' 
     bill to amend the reauthorization of the Small Business 
     Innovation Research (SBIR) Program. The amendment would 
     provide much needed support to small business in ``low 
     participating areas'' applying for grants under the SBIR 
     program.
       As you know, the amendment would establish a competitively 
     bid volunteer mentoring grant program for the SBIR. The Small 
     Business Administration would be responsible for 
     administering the program. Organizations representing SBIR 
     awardees could apply for grants ranging from $50,000 to 
     $200,000 to participate in the program. Qualifying 
     organizations would match small businesses new to the SBIR 
     process with CEOs and other of small, high-technology 
     companies that have been successful SBIR award winners. These 
     ``volunteer mentors'' would be reimbursed only for their out-
     of-pocket expenses incurred while mentoring, not for their 
     time. The program would be authorized at $1 million per year 
     to cover administration of the program and reimbursement of 
     volunteer mentors for their out-of-pocket expenses.
       As the nation-wide trade association of small high tech 
     business CEOs, SBTC can attest to the value of a mentoring 
     program to help small businesses new to the SBIR process. 
     SBTC members have hands-on experience and know the importance 
     of expert technical assistance in locating venture capital, 
     seeking Phase III partners and commercialization. SBTC speaks 
     for the small high tech business community and knows through 
     experience that mentoring is a key to success in the SBIR 
     process.
       The anticipated result of your amendment would be an 
     increase in SBIR awards to businesses in areas which 
     traditionally have had low numbers of awards. With the 
     passage of this amendment, businesses in certain areas that 
     do not have access to research or venture capital for 
     example, could connect with companies with demonstrated 
     expertise in those fields. Successful mentoring in these low 
     participating areas would broaden the geographic and 
     demographic distribution of SBIR awards.
       As the leading industry association representing the 
     interest and needs of small, emerging, research-intensive, 
     technology-based companies, we support your amendment to help 
     small businesses in rural areas succeed in the SBIR program.
           Sincerely,
     Jeff Noah.
                                  ____



                           Small Business Legislative Council,

                                    Washington, DC, June 28, 1999.
     Hon. Olympia J. Snowe,
     U.S. Senate, Washington, DC.
       Dear Senator Snowe: On behalf of the Small Business 
     Legislative Council (SBLC), I urge you to support an 
     amendment to the Small Business Innovation Research (SBIR) 
     reauthorization to be offered by Senator Levin. The purpose 
     of the amendment is to create a ``mentoring'' program to 
     encourage small businesses in states not currently 
     benefitting from the SBIR program to participate.
       As you know, the SBIR program is a ``win-win'' program. The 
     federal government obtains necessary research and small 
     businesses obtain the opportunity to develop commercially 
     feasible products and processes.
       SBLC is a permanent, independent coalition of eighty trade 
     and professional associations that share a common commitment 
     to the future of small business. Our members represent the 
     interest of small businesses in such diverse economic sectors 
     as manufacturing, retailing, distribution, professional and 
     technical services, construction, transportation, tourism and 
     agriculture. Our policies are developed through a consensus 
     among our membership. Individual associations may express 
     their own views. For your information, a list of our members 
     is enclosed.
           Sincerely,
                                                  John S. Satagaj,
                                    President and General Counsel.


           Members of the Small Business Legislative Council

       ACIL.
       Air Conditioning Contractors of America.
       Alliance for Affordable Services.
       Alliance for American Innovation.
       Alliance of Independent Store Owners and Professionals.
       American Animal Hospital Association.
       American Association of Equine Practitioners.
       American Bus Association.
       American Consulting Engineers Council.
       American Machine Tool Distributors Association.
       American Nursery and Landscape Association.
       American Road & Transportation Builders Association.
       American Society of Interior Designers.
       American Society of Travel Agents, Inc.
       American Subcontractors Association.
       American Textile Machinery Association.
       Architectural Precast Association.
       Associated Equipment Distributors.
       Associated Landscape Contractors of America.
       Association of Small Business Development Centers.
       Association of Sales and Marketing Companies.
       Automative Recyclers Association.
       Automotive Service Association.
       Bowling Proprietors Association of America.
       Building Service Contractors Association International.
       Business Advertising Council.
       CBA.
       Council of Fleet Specialists.
       Council of Growing Companies.
       Direct Selling Association.
       Electronics Representative Association.
       Florists Transworld Delivery Association.
       Health Industry Representatives Association.
       Helicopter Association International.
       Independent Bankers Association of America.
       Independent Medical Distributors Association.
       International Association of Refrigerated Warehouses.
       International Formalwear Association.
       International Franchise Association.
       Machinery Dealers National Association.
       Mail Advertising Service Association.
       Manufacturers Agents for the Food Service Industry.
       Manufacturers Agents National Association.
       Manufacturers Representatives of America, Inc.
       National Association for the Self-Employed.
       National Association of Home Builders.
       National Association of Plumbing-Heating-Cooling 
     Contractors.

[[Page S9229]]

       National Association of Realtors.
       National Association of RV Parks and Campgrounds.
       National Association of Small Business Investment 
     Companies.
       National Association of the Remodeling Industry.
       National Chimney Sweep Guild.
       National Community Pharmacists Association.
       National Electrical Contractors Association.
       National Electrical Manufacturers Representatives 
     Association.
       National Funeral Directors Association, Inc.
       National Lumber & Building Materials Dealers, Association.
       National Moving and Storage Association.
       National Ornamental & Miscellaneous Metals Association.
       National Paperbox Association.
       National Society of Accountants.
       National Tooling and Machining Association.
       National Tour Association.
       National Wood Flooring Association.
       Organization for the Promotion and Advancement of Small 
     Telephone Companies.
       Petroleum Marketers Association of America.
       Printing Industries of America, Inc.
       Professional Lawn Care Association of America.
       Promotional Products Association International.
       The Retailer's Bakery Association.
       Saturation Mailers: Coalition.
       Small Business Council of America, Inc.
       Small Business Exporters Association.
       Small Business Technology Coalition.
       SMC Business Councils.
       Society of American Florists.
       Turfgrass Producers International.
       Tire Association of North America.
       United Motorcoach Association.

 Mr. KERRY. Mr. President, today I join my colleague from 
Michigan, Senator Levin, in introducing the Small Business Innovation 
Research (SBIR) and Small Technology Transfer (STTR) Volunteer 
Mentoring Program. This bill seeks to increase, through company-to-
company mentoring, the number of SBIR awards given to small businesses 
located in areas, known as ``low participation areas,'' where 
historically few awards have been made in proportion to other areas of 
the country.
  The Small Business Innovation Research (SBIR) program is a great 
example of how government and business can work together to advance the 
cause of science and a healthy economy. The results have been dramatic 
for small, high-technology companies participating in the program. 
Since 1983 when the program was started, some 16,000 small, high-
technology firms have received more than 46,000 SBIR research awards 
through 1997, totaling $7.5 billion.
  Complementing the SBIR program, we have the Small Business Technology 
Transfer (STTR) program, another important R&D opportunity for small 
businesses. It was established to provide a strong incentive for small 
businesses and technical experts at research institutions to team up 
and move ideas from the laboratory to the marketplace.
  Technological advancement is a key element of economic growth. 
According to a recent Congressional Research Service Report, Small, 
High Tech Companies and Their Role in the Economy: Issues in the 
Reauthorization of the Small Business Innovation (SBIR) Program, 
``technical progress is responsible for up to one-half the growth of 
the U.S. economy and is one of the principle driving forces for 
increases in our standard of living.''
  As Ranking Member of the Senate Small Business Committee, and a 
Senator representing a state with one of the most active hi-tech 
industries in the country, I am always interested in new initiatives, 
or improving existing ones, to develop and nurture technology-based 
companies throughout the region and the nation.
  The SBIR program has been good to my home state of Massachusetts. So 
good that we are the second largest recipient of SBIR awards in the 
country. In 1997, Massachusetts' small, hi-tech firms won 702 awards, 
totaling $164 million. But it's not by coincidence--it's because we 
have the right mix of small high-tech companies, an active venture 
capital community, and a cluster of universities that understand the 
benefits of technology transfer, attract academic research funds and 
graduate a highly qualified workforce.
  Similarly, a variation of that combination is also what cultivates 
and supports innovative hi-tech companies in states such as California, 
Virginia and Ohio that have historically been among the largest 
recipients of SBIR awards.
  We on the Senate Small Business Committee have the tough job of 
crafting a solution that helps small businesses in states that don't 
have this infrastructure. However, we should not change the program's 
reliance on competition. Merit is the only way to maintain the 
integrity of the research. Only one in seven or eight Phase I proposals 
is awarded. The highly competitive nature of SBIR awards is one of the 
main reasons the program has been so popular and successful.
  One of the experiments working around the country is mentoring--
experienced SBIR award winners helping SBIR applicants navigate the 
process. For example, Innovative Training Systems (ITS) in Newton, 
Mass., mentored Pro-Change Behavior Systems out of West Kingston, RI, 
when it applied for its first SBIR award. ITS specializes in health 
care multi-media programs such as smoking prevention and cessation for 
high school students and has gotten several SBIR awards from the 
National Institutes of Health (NIH). Pro-Change also specializes in 
health care multi-media for health behavior change and needed help 
getting an SBIR award for cancer prevention from NIH. Pro-Change says, 
among many things, the mentoring helped by explaining the rating system 
(it learned to target resources to those aspects of the proposal that 
counted most) and by saving the company time and reducing confusion on 
the financial and business requirements behind a proposal. As a 
representative for Pro-Change said, ``SBIR mentoring leads to long-
lasting business partnerships, spawning exciting new ventures.''
  Mentoring may not be exclusively responsible for Pro-Change's success 
in getting its first SBIR award, but it played an important role. Just 
look at the numbers. The process is highly competitive, with only one 
in seven or eight Phase I proposals getting funded. Furthermore, this 
company got another award in Rhode Island, a state where only six 
awards were given in 1997. Since that first award in 1998, Pro-Change 
has gone on to apply for three more Fast-Track Phase II proposals and 
one Phase I proposal to NIH. We can and should replicate and facilitate 
this process.
  This bill would elevate and reinforce that informal mentoring by 
authorizing competitive grants, ranging from $50,000 to $200,000, to 
any entity that represents small businesses that participate in SBIR or 
STTR programs. The entity would be obligated to match experienced, 
successful SBIR or STTR award winners with small businesses located in 
low SBIR-participation areas--advising and guiding them from 
application to award to project completion.
  Though it will be up to the SBA Administrator to define what areas 
receive a disproportionate amount of awards, this bill is intended to 
help states such as such as Maine and Montana, which received only five 
awards in 1997, and rural pockets of states such as Michigan and 
Massachusetts which do well overall in the program but get the 
concentration of awards in university towns or the largest city.
  Because founders of hi-tech companies are often more scientific 
inventors than business experts, the mentor companies could help with 
management assistance, proposal writing, commercialization or venture 
capital networking. The mentor companies would be volunteers, but would 
be eligible for reimbursement of out-of-pocket expenses, authorized 
travel and reasonable bills for telephone calls and faxes. And like the 
volunteers in SBA's successful volunteer business counselor program, 
the Service Corps of Retired Executives (SCORE), SBIR mentor volunteers 
would get automatic liability coverage.
  I know the Committee on Small Business will have a roundtable on 
August 4th to discuss with program managers, SBIR companies and SBIR 
advocates how to increase the low number of awards given in certain 
states, and I look forward to hearing comments on this bill and on any 
alternative programs.
  Mr. President, in closing, I want to thank Senator Levin for his work 
on this bill and ask that a letter of support from the Small Business 
Technology Coalition be included for the Record.

[[Page S9230]]

  The letter follows:

                                                    Small Business


                                         Technology Coalition,

                                    Washington, DC, July 16, 1999.
     Senator John Kerry,
     U.S. Senate, Russell Senate Office Building,
     Washington, DC.
       Dear Senator Kerry: The Small Business Technology Coalition 
     (SBTC) urges you to cosponsor Senator Levin's amendment to 
     the reauthorization of the Small Business Innovation Research 
     (SBIR) Program. The amendment would provide much needed 
     support to small businesses applying for grants under the 
     SBIR program.
       Senator Levin's amendment would establish a competitively 
     bid volunteer mentoring grant program for the SBIR. The Small 
     Business Administration would be responsible for 
     administering the program. Organizations representing SBIR 
     awardees could apply for grants ranging from $50,000 to 
     $500,000 to participate in the program. Qualifying 
     organizations would match small businesses new to the SBIR 
     process with CEOs and other of small, high-technology 
     companies that have been successful SBIR award winners. These 
     ``volunteer mentors'' would be reimbursed only for their out-
     of-pocket expenses incurred while mentoring, not for their 
     time. The program would be authorized at $1 million per year 
     to cover administration of the program and reimbursement of 
     volunteer mentors for their out-of-pocket expenses.
       As the nation-wide trade association of small high tech 
     business CEOs, SBTC can attest to the value of a mentoring 
     program to help small businesses new to the SBIR process. 
     SBTC members have hands-on experience and know the importance 
     of expert technical assistance in locating venture capital, 
     seeking Phase III partners and commercialization. SBTC speaks 
     for the small high tech business community and knows through 
     experience that mentoring is a key to success in the SBIR 
     process.
       The anticipated result of Senator Levin's amendment would 
     be an increase in SBIR awards to businesses in states which 
     traditionally have had low numbers of awards. With the 
     passage of this amendment, businesses in certain states that 
     do not have access to research or venture capital for 
     example, could connect with companies with demonstrated 
     expertise in those areas. Successful mentoring in these 
     states would broaden the geographic and demographic 
     distribution of SBIR awards.
       As the leading industry association representing the 
     interest and needs of small, emerging, research-intensive, 
     technology-based companies, we urge you to cosponsor Senator 
     Levin's amendment and help businesses in rural areas compete 
     in the SBIR program.
           Sincerely,
                                                        Jeff Noah,
                                       Executive Director.
                                 ______