[Congressional Record Volume 146, Number 94 (Wednesday, July 19, 2000)]
[Senate]
[Pages S7285-S7293]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SMALL BUSINESS INNOVATION RESEARCH PROGRAM REAUTHORIZATION ACT OF 2000
Mr. BURNS. Mr. President, I ask unanimous consent that the Senate now
proceed to the consideration of Calendar No. 541, H.R. 2392.
The PRESIDING OFFICER. The clerk will report the bill by title.
The legislative clerk read as follows:
A bill (H.R. 2392) to amend the Small Business Act to
extend the authorization for the Small Business Innovation
Research Program, and for other purposes, which had been
reported from the Committee on Small Business, with an
amendment, as follows:
(Strike out all after the enacting clause and insert the part printed
in italic.)
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Small
Business Innovation Research Program Reauthorization Act of
2000''.
(b) Table of Contents.--The table of contents for this Act
is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Extension of SBIR program.
Sec. 4. Third phase assistance.
Sec. 5. Rights to data.
Sec. 6. Report on programs for annual performance plan.
Sec. 7. Collection, reporting, and maintenance of information.
Sec. 8. Federal agency expenditures for the SBIR program.
Sec. 9. Federal and State technology partnership program.
Sec. 10. Mentoring Networks.
SEC. 2. FINDINGS.
Congress finds that--
(1) the small business innovation research program
established under the Small Business Innovation Development
Act of 1982, and reauthorized by the Small Business Research
and Development Enhancement Act of 1992 (referred to in this
section as ``SBIR'' or the ``SBIR program''), is highly
successful in involving small business concerns in federally
funded research and development;
(2) the SBIR program made the cost-effective and unique
research and development capabilities possessed by the small
business concerns of this Nation available to Federal
departments and agencies;
(3) the innovative goods and services developed by small
business concerns that participated in the SBIR program have
produced innovations of critical importance in a wide variety
of high-technology fields, including biology, medicine,
education, electronics, information technology, materials,
and defense;
(4) the SBIR program is a catalyst in the promotion of
research and development, the commercialization of innovative
technology, the development of new products and services, the
attraction of private investment, and the continued
excellence of the high-technology industries of this Nation;
and
(5) the continuation of the SBIR program will--
(A) provide expanded opportunities for one of the vital
resources of the Nation, its small business concerns;
(B) foster invention, research, and technology;
(C) create jobs; and
(D) increase economic growth and the competitiveness of
this Nation in international markets.
SEC. 3. EXTENSION OF SBIR PROGRAM.
Section 9(m) of the Small Business Act (15 U.S.C. 638(m))
is amended to read as follows:
``(m) Termination.--The authorization to carry out the
Small Business Innovation Research Program established under
this section shall terminate on September 30, 2010.''.
SEC. 4. THIRD PHASE ASSISTANCE.
Section 9(e)(4)(C)(i) of the Small Business Act (15 U.S.C.
638(e)(4)(C)(i)) is amended by striking ``; and'' and
inserting ``; or''.
SEC. 5. RIGHTS TO DATA.
Section 9(j) of the Small Business Act (15 U.S.C. 638(j))
is amended by adding at the end the following:
``(3) Additional modifications.--Not later than 120 days
after the date of enactment of the Small Business Innovation
Research Program Reauthorization Act of 2000, the
Administrator shall modify the policy directives issued under
this subsection to clarify that the rights provided for under
paragraph (2)(A) apply to all Federal funding awards,
including--
``(A) the first phase (as described in subsection
(e)(4)(A));
``(B) the second phase (as described in subsection
(e)(4)(B)); and
``(C) the third phase (as described in subsection
(e)(4)(C)).''.
SEC. 6. REPORT ON PROGRAMS FOR ANNUAL PERFORMANCE PLAN.
Section 9(o)(8) of the Small Business Act (15 U.S.C.
638(o)(8)) is amended--
(1) by striking ``its STTR program'' and inserting ``the
SBIR and STTR programs of the agency''; and
(2) by inserting before the semicolon ``, and to the
Administrator''.
SEC. 7. COLLECTION, REPORTING, AND MAINTENANCE OF
INFORMATION.
(a) Collection.--Section 9(g) of the Small Business Act (15
U.S.C. 638(g)) is amended--
(1) in paragraph (7), by striking ``and'' at the end;
(2) in paragraph (8), by striking the period at the end and
inserting ``; and''; and
(3) by adding at the end the following:
``(9) collect, and maintain in a common format, such
information from awardees as is necessary to assess the SBIR
program, including information necessary to maintain the
database described in subsection (k).''.
(b) Report to Congress.--Section 9(b)(7) of the Small
Business Act (15 U.S.C. 638(b)(7)) is amended by inserting
before the period at the end the following: ``, including the
information collected under subsections (g)(9) and (o)(9) and
a description of the extent to which Federal agencies are
providing in a timely manner information needed to maintain
the database described in subsection (k)''.
(c) Public Database.--Section 9(k) of the Small Business
Act (15 U.S.C. 638(k)) is amended to read as follows:
``(k) Public Database.--Not later than 180 days after the
date of enactment of the Small
[[Page S7286]]
Business Innovation Research Program Reauthorization Act of
2000, the Administrator shall develop, maintain, and make
available to the public a searchable, up-to-date, electronic
database that includes--
``(1) the name, size, location, and an identifying number
assigned by the Administrator, of each small business concern
that has received a first phase or second phase SBIR award
from a Federal agency;
``(2) a description of each first phase or second phase
SBIR award received by that small business concern,
including--
``(A) an abstract of the project funded by the award;
``(B) the Federal agency making the award; and
``(C) the date and amount of the award;
``(3) an identification of any business concern or
subsidiary established for the commercial application of a
product or service for which an SBIR award is made; and
``(4) information regarding mentors and Mentoring Networks,
as required by section 35(e).''.
SEC. 8. FEDERAL AGENCY EXPENDITURES FOR THE SBIR PROGRAM.
Section 9(i) of the Small Business Act (15 U.S.C. 638(i))
is amended--
(1) by striking ``(i) Each Federal'' and inserting the
following:
``(i) Annual Reporting.--
``(1) In general.--Each Federal''; and
(2) by adding at the end the following:
``(2) Calculation of extramural budget.--
``(A) Methodology.--Not later than 4 months after the date
of enactment of each appropriations Act for a Federal agency
required by this section to have an SBIR program, the
comptroller of that Federal agency shall submit to the
Administrator a report, which shall include a description of
the methodology used for calculating the amount of the
extramural budget of that Federal agency (as defined in
subsection (e)(1)).
``(B) Administrator's analysis.--The Administrator shall
include an analysis of the methodology received from each
Federal agency referred to in subparagraph (A) in the report
required by subsection (b)(7).''.
SEC. 9. FEDERAL AND STATE TECHNOLOGY PARTNERSHIP PROGRAM.
(a) Findings.--Congress finds that--
(1) programs to foster economic development among small
high-technology firms vary widely among the States;
(2) States that do not aggressively support the development
of small high-technology firms, including participation by
small business concerns in the Small Business Innovation
Research Program (referred to in this section as ``SBIR'' or
the ``SBIR program''), are at a competitive disadvantage in
establishing a business climate that is conducive to
technology development; and
(3) building stronger national, State, and local support
for science and technology research in these disadvantaged
States will expand economic opportunities in the United
States, create jobs, and increase the competitiveness of the
United States in the world market.
(b) Federal and State Technology Partnership Program.--The
Small Business Act (15 U.S.C. 631 et seq.) is amended--
(1) by redesignating section 34 as section 36; and
(2) by inserting after section 33 the following:
``SEC. 34. FEDERAL AND STATE TECHNOLOGY PARTNERSHIP PROGRAM.
``(a) Definitions.--In this section--
``(1) the term `applicant' means an entity, organization,
or individual that submits a proposal for an award or a
cooperative agreement under this section;
``(2) the terms `business advice and counseling', `mentor',
and `Mentoring Network' have the same meanings as in section
35(b);
``(3) the term `recipient' means a person that receives an
award or becomes party to a cooperative agreement under this
section;
``(4) the term `SBIR program' has the same meaning as in
section 9(e)(4);
``(5) the term `State' means any of the 50 States of the
United States, the District of Columbia, and Puerto Rico; and
``(6) the term `STTR program' has the same meaning as in
section 9(e)(6).
``(b) Establishment of Program.--The Administrator shall
establish a program to be known as the Federal and State
Technology Partnership Program (referred to in this section
as `FAST' ), the purpose of which shall be to strengthen the
technological competitiveness of small business concerns in
the States.
``(c) Grants and Cooperative Agreements.--
``(1) Joint review.--In carrying out the FAST program under
this section, the Administrator and the SBIR program managers
at the National Science Foundation and the Department of
Defense shall jointly review proposals submitted by
applicants and may make awards or enter into cooperative
agreements under this section based on the factors for
consideration set forth in paragraph (2), in order to enhance
or develop in a State--
``(A) technology research and development by small business
concerns;
``(B) technology transfer from university research to
technology-based small business concerns;
``(C) technology deployment and diffusion benefiting small
business concerns;
``(D) the technological capabilities of small business
concerns through the establishment or operation of consortia
comprised of entities, organizations, or individuals,
including--
``(i) State and local development agencies and entities;
``(ii) representatives of technology-based small business
concerns;
``(iii) industries and emerging companies;
``(iv) universities; and
``(v) small business development centers; and
``(E) outreach, financial support, and technical assistance
to technology-based small business concerns interested in
participating in the SBIR program, including initiatives--
``(i) to make grants or loans to companies to pay a portion
or all of the cost of developing SBIR proposals;
``(ii) to establish or operate a Mentoring Network within
the FAST program to provide business advice and counseling
that will assist small business concerns that have been
identified by FAST program participants, program managers of
participating SBIR agencies, the Administration, or other
entities that are knowledgeable about the SBIR and STTR
programs as good candidates for the SBIR and STTR programs,
and that would benefit from mentoring, in accordance with
section 35;
``(iii) to create or participate in a training program for
individuals providing SBIR outreach and assistance at the
State and local levels; and
``(iv) to encourage the commercialization of technology
developed through SBIR program funding.
``(2) Selection considerations.--In making awards or
entering into cooperative agreements under this section, the
Administrator and the SBIR program managers referred to in
paragraph (1)--
``(A) may only consider proposals by applicants that intend
to use a portion of the Federal assistance provided under
this section to provide outreach, financial support, or
technical assistance to technology-based small business
concerns participating in or interested in participating in
the SBIR program; and
``(B) shall consider, at a minimum--
``(i) whether--
``(I) the applicant has demonstrated that the assistance to
be provided would address unmet needs of small business
concerns in the community; and
``(II) it is important to use Federal funding for the
proposed activities;
``(ii) whether the applicant has demonstrated that a need
exists to increase the number and success of small high-
technology businesses in the State, as measured by the number
of first phase and second phase SBIR awards that have
historically been received by small business concerns in the
State;
``(iii) whether the projected costs of the proposed
activities are reasonable;
``(iv) whether the proposal integrates and coordinates the
proposed activities with other State and local programs
assisting small high-technology firms in the State; and
``(v) the manner in which the applicant will measure the
results of the activities to be conducted.
``(3) Proposal limit.--Not more than 1 proposal may be
submitted for inclusion in the FAST program under this
section to provide services in any one State in any fiscal
year.
``(4) Process.--Proposals and applications for assistance
under this section shall be in such form and subject to such
procedures as the Administrator shall establish.
``(d) Cooperation and Coordination.--In carrying out the
FAST program under this section, the Administrator shall
cooperate and coordinate with--
``(1) Federal agencies required by section 9 to have an
SBIR program; and
``(2) entities, organizations, and individuals actively
engaged in enhancing or developing the technological
capabilities of small business concerns, including--
``(A) State and local development agencies and entities;
``(B) State committees established under the Experimental
Program to Stimulate Competitive Research of the National
Science Foundation (as established under section 113 of the
National Science Foundation Authorization Act of 1988 (42
U.S.C. 1862g)), to the extent that such committees exist in
the States;
``(C) State science and technology councils, to the extent
that such councils exist in the States; and
``(D) representatives of technology-based small business
concerns.
``(e) Administrative Requirements.--
``(1) Competitive basis.--Awards and cooperative agreements
under this section shall be made or entered into, as
applicable, on a competitive basis.
``(2) Matching requirements.--
``(A) In general.--The non-Federal share of the cost of an
activity (other than a planning activity) carried out using
an award or under a cooperative agreement under this section
shall be--
``(i) 50 cents for each Federal dollar, in the case of a
recipient that will serve small business concerns located in
one of the 18 States receiving the fewest SBIR first phase
awards (as described in section 9(e)(4)(A));
``(ii) 1 dollar for each Federal dollar, in the case of a
recipient that will serve small business concerns located in
one of the 16 States receiving the greatest number of such
SBIR first phase awards; and
``(iii) 75 cents for each Federal dollar, in the case of a
recipient that will serve small business concerns located in
a State that is not described in clause (i) or (ii) that is
receiving such SBIR first phase awards.
``(B) Types of funding.--The non-Federal share of the cost
of an activity carried out by a recipient shall be comprised
of not less than 50 percent cash and not more than 50 percent
of indirect costs and in-kind contributions, except that no
such costs or contributions may be derived from funds from
any other Federal program.
``(C) Rankings.--For purposes of subparagraph (A), the
Administrator shall reevaluate the ranking of a State once
every 2 fiscal years, beginning with fiscal year 2001, based
on the most recent statistics compiled by the Administrator.
[[Page S7287]]
``(3) Duration.--Awards may be made or cooperative
agreements entered into under this section for multiple
years, not to exceed 3 years in total.
``(f) Reports.--
``(1) Initial report.--Not later than 120 days after the
date of enactment of the Small Business Innovation Research
Program Reauthorization Act of 2000, the Administrator shall
prepare and submit to the Committees on Small Business of the
Senate and the House of Representatives a report, which shall
include, with respect to the FAST program, including
Mentoring Networks (as defined in section 35)--
``(A) a description of the structure and procedures of the
program;
``(B) a management plan for the program; and
``(C) a description of the merit-based review process to be
used in the program.
``(2) Annual reports.--The Administrator shall submit an
annual report to the Committees on Small Business of the
Senate and the House of Representatives regarding--
``(A) the number and amount of awards provided and
cooperative agreements entered into under the FAST program
during the preceding year;
``(B) a list of recipients under this section, including
their location and the activities being performed with the
awards made or under the cooperative agreements entered into;
and
``(C) the Mentoring Networks and the mentoring data base,
as provided for under section 35, including--
``(i) the status of the inclusion of mentoring information
in the database required by section 9(k); and
``(ii) the status of the implementation and description of
the usage of the Mentoring Networks (as defined in section
35).
``(g) Reviews by Inspector General.--
``(1) In general.--The Office of the Inspector General of
the Administration shall conduct a review of--
``(A) the extent to which recipients under the FAST program
are measuring the performance of the activities being
conducted and the results of such measurements; and
``(B) the overall management and effectiveness of the FAST
program.
``(2) Report.--During the first quarter of fiscal year
2004, the Office of the Inspector General of the
Administration shall submit a report to the Committees on
Small Business of the Senate and the House of Representatives
on the review conducted under paragraph (1).
``(h) Program Levels.--
``(1) In general.--Subject to an appropriations Act, there
is authorized to be appropriated to carry out the FAST
program, including Mentoring Networks, under this section and
section 35, $10,000,000 for each of fiscal years 2001 through
2005.
``(2) Mentoring database.--Of the total amount made
available under paragraph (1) for fiscal years 2001 through
2005, a reasonable amount, not to exceed a total of $500,000,
may be used by the Administration to carry out section 35(e).
``(i) Termination.--The authorization to carry out the FAST
program under this section shall terminate on September 30,
2005.''.
(d) Coordination of Technology Development Programs.--
Section 9 of the Small Business Act (15 U.S.C. 638) is
amended by adding at the end the following:
``(u) Coordination of Technology Development Programs.--
``(1) Definition of technology development program.--In
this subsection, the term `technology development program'
means--
``(A) the Experimental Program to Stimulate Competitive
Research of the National Science Foundation, as established
under section 113 of the National Science Foundation
Authorization Act of 1988 (42 U.S.C. 1862g);
``(B) the Defense Experimental Program to Stimulate
Competitive Research of the Department of Defense;
``(C) the Experimental Program to Stimulate Competitive
Technology of the Department of Commerce;
``(D) the Experimental Program to Stimulate Competitive
Research of the Department of Energy;
``(E) the Experimental Program to Stimulate Competitive
Research of the Environmental Protection Agency;
``(F) the Experimental Program to Stimulate Competitive
Research of the National Air and Space Administration;
``(G) the Institutional Development Award Program of the
National Institutes of Health; and
``(H) the National Research Initiative Competitive Grants
Program of the Department of Agriculture.
``(2) Coordination requirements.--Each Federal agency that
is subject to subsection (f) and that has established a
technology development program shall, in each fiscal year--
``(A) review for funding under that technology development
program--
``(i) any proposal from an entity, organization, or
individual located in a State that is eligible to participate
in that program to provide outreach and assistance to 1 or
more small business concerns interested in participating in
the SBIR program, including any proposal to make a grant or
loan to a company to pay a portion or all of the cost of
developing an SBIR proposal; or
``(ii) any proposal for the first phase of the SBIR program
from a small business concern located in a State that is
eligible to participate in a technology development program
if the proposal, though meritorious, is not funded through
the SBIR program for that fiscal year due to funding
restraints; and
``(B) consider proposals described in subparagraph (A) to
be eligible for funding, as described in subparagraph (A), if
the applicant is located in a State that is an eligible
State.
``(3) Definition of `eligible state'.--In this subsection,
the term `eligible State' means a State in which the total
value of contracts awarded to small business concerns under
the SBIR program is less than the total value of contracts
awarded to small business concerns in a majority of other
States, as determined by the Administrator in biennial fiscal
years, beginning with fiscal year 2000, based on the most
recent statistics compiled by the Administrator.''.
SEC. 10. MENTORING NETWORKS.
The Small Business Act (15 U.S.C. 631 et seq.) is amended
by inserting before section 36, as redesignated by this Act,
the following:
``SEC. 35. MENTORING NETWORKS.
``(a) Findings.--Congress finds that--
``(1) the SBIR and STTR programs create jobs, increase
capacity for technological innovation, and boost
international competitiveness;
``(2) increasing the quantity of applications from all
States to the SBIR and STTR programs would enhance
competition for such awards and the quality of the completed
projects; and
``(3) mentoring is a natural complement to the FAST program
of reaching out to new companies regarding the SBIR and STTR
programs as an effective and low-cost way to improve the
likelihood that such companies will succeed in such programs
in developing and commercializing their research.
``(b) Definitions.--In this section--
``(1) the term `business advice and counseling' means
providing advice and assistance on matters described in
subsection (d)(2)(B) to small business concerns to guide them
through the SBIR and STTR program processes, from application
to award and successful completion of each phase of the
program;
``(2) the term `mentor' means an individual described in
subsection (d)(2); and
``(3) the term `Mentoring Network' means an association,
organization, coalition, or other entity (including an
individual) that meets the requirements of subsection (d).
``(c) Authorization for Mentoring Networks.--The recipient
of an award or participant in a cooperative agreement under
section 34 may use a reasonable amount of such assistance for
the establishment of a Mentoring Network under this section.
``(d) Criteria for Mentoring Networks.--A Mentoring Network
established using assistance under section 34 shall--
``(1) provide business advice and counseling to high
technology small business concerns located in the State or
region served by the network and identified under section
34(c)(1)(E)(ii) as potential candidates for the SBIR or STTR
programs;
``(2) identify volunteer mentors who--
``(A) are persons associated with a small business concern
that has successfully completed one or more SBIR or STTR
funding agreements; and
``(B) have agreed to guide small business concerns through
all stages of the SBIR or STTR program process, including
providing assistance relating to--
``(i) proposal writing;
``(ii) marketing;
``(iii) Government accounting;
``(iv) Government audits;
``(v) project facilities and equipment;
``(vi) human resources;
``(vii) phase III partners;
``(viii) commercialization;
``(ix) venture capital networking; and
``(x) other matters relevant to the SBIR and STTR programs;
``(3) have experience working with small business concerns
participating in the SBIR and STTR programs;
``(4) contribute information to the national database
referred to in subsection (e); and
``(5) agree to reimburse volunteer mentors for out-of-
pocket expenses related to service as a mentor under this
section.
``(e) Mentoring Database.--The Administrator shall--
``(1) include in the database required by section 9(k), in
cooperation with the SBIR, STTR, and FAST programs,
information on Mentoring Networks and mentors participating
under this section, including a description of their areas of
expertise;
``(2) work cooperatively with Mentoring Networks to
maintain and update the database;
``(3) take such action as may be necessary to aggressively
promote Mentoring Networks under this section; and
``(4) fulfill the requirements of this subsection either
directly or by contract.''.
There being no objection, the Senate proceeded to consider the bill.
Mr. BOND. Mr. President, the Small Business Innovation Research
Program Reauthorization Act of 2000 (H.R. 2392) was introduced on June
30, 1999, and referred to the House Committees on Small Business and
Science. Both Committees held hearings and the House Committee on Small
Business reported H.R. 2392 on September 23, 1999 (H. Rept. 106-329).
In the interest of moving the bill to the floor of the House of
Representatives promptly, the Committee on Science agreed not to
exercise its right to report the legislation, provided that the House
Committee on Small Business agreed to add the selected portions of the
Science Committee version of the legislation, as Sections 8 through 11
of the House floor text of H.R. 2392. H.R. 2392 passed the House
without further amendment on September 27. The Science Committee
provisions were explained in floor statements by Congressmen
Sensenbrenner, Morella, and Mark Udall.
[[Page S7288]]
On March 21, 2000, the Senate Committee marked up H.R. 2392 and on
May 10, 2000, reported the bill (S. Rept. 106-289). The Senate
Committee struck several of the sections originating from the House
Committee on Science and added sections not in the House-passed
legislation, including a requirement that Federal agencies with Small
Business Innovation Research (SBIR) programs report their methodology
for calculating their SBIR budgets to the Small Business Administration
(SBA) and a program to assist states in the development of small high-
technology businesses. Negotiations then began among the leadership of
the Senate and House Committees on Small Business and the House
Committee on Science (hereinafter referred to as the three committees).
The resultant compromise text contains all major House and Senate
provisions, some of which have been amended to reflect a compromise
position. A section-by-section explanation of the revised text follows.
For purposes of this statement, the bill passed by the House of
Representatives is referred to as the ``House version'' and the bill
reported by the Senate Committee on Small Business is referred to as
the ``Senate version.''
Section 1. Short Title; Table of Contents. The compromise
text uses the Senate short title: ``Small Business Innovation
Research Program Reauthorization Act of 2000.'' The table of
contents lists the sections in the compromise text.
Section 2. Findings. The House and Senate versions of the
findings are very similar. The compromise text uses the House
version of the findings.
Section 3. Extension of the SBIR Program. The House version
extends the SBIR program for seven years through September
30, 2007. The Senate version extends the program for ten
years through September 30, 2010. The compromise text extends
the program for eight years through September 30, 2008.
Section 4. Annual Report. The House version provides for
the annual report on the SBIR program prepared by the SBA to
be sent to the Committee on Science, as well as to the House
and Senate Committees on Small Business that currently
receive it. The Senate version did not include this section.
The compromise text adopts the House language.
Section 5. Third Phase Activities. The compromise text of
this technical amendment is identical to both the House and
Senate versions.
Section 6. Policy Directive Modifications. The House
version includes policy directive modifications in Section 9
and the requirement of a second phase commercial plan in
Section 10. The Senate version includes policy directive
modifications in Section 6. The Senate version and now the
compromise text require the Administrator to make
modifications to SBA's policy directives 120 days after the
date of enactment rather than the 30 days contained in the
House version. The compromise text drops the House policy
directive dealing with awards exceeding statutory dollar
amounts and time limits because this flexibility is already
being provided administratively. Addressed below is a
description of the policy directive modifications contained
in the compromise text that were not included in both the
Senate version and the House version.
Section 10 of the House version requires the SBA to modify
its policy directives to require that small businesses
provide a commercial plan with each application for a second-
phase award. The Senate version does not contain a similar
provision. The compromise text requires the SBA to modify its
policy directives to require that a small businesses provide
a ``succinct commercialization plan for each second phase
award moving towards commercialization.'' The three
committees acknowledge that commercialization is a current
element of the SBIR program. The statutory definition of
SBIR, which is not amended by H.R. 2392, includes ``a second
phase, to further develop proposals which meet particular
program needs, in which awards shall be made based on the
scientific and technical merit and feasibility of the
proposals, as evidenced by the first phase, considering among
other things the proposal's commercial potential'', and lists
evidence of commercial potential as the small business's
commercialization record, private sector funding commitments,
SBIR Phase III commitments, and the presence of other
indicators of the commercial potential. The three committees
do not intend that the addition of a commercialization plan
either increase or decrease the emphasis an agency places on
the commercialization when reviewing second-phase proposals.
Rather, the commercialization plan will give SBIR agencies a
means of determining the seriousness with which individual
applicants approach commercialization.
The commercialization plan, while concise, should show that
the business has thought through both the steps it must take
to prepare for the fruits of the SBIR award to enter the
commercial marketplace or government procurement and the
steps to build business expertise as needed during the SBIR
second phase time period. The three committees intend that
agencies take into consideration the stage of development of
the product or process in deciding whether an appropriate
commercialization plan has been submitted. In those instances
when at the time of the SBIR Phase II proposal, the grantee
cannot identify either a product or process with the
potential eventually to enter either the commercial or the
government marketplace, no commercialization plan is
required.
The compromise text also adds new provisions that were not
contained in either the Senate version or the House version.
Current law (Section 9(j)(3)(C) of the Small Business Act)
requires that the Administrator put in place procedures to
ensure, to the extent practicable, that an agency which
intends to pursue research, development or production of a
technology developed by a small business concern under an
SBIR program enter into follow-on, non-SBIR funding
agreements with the small business concern for such
research, development, or production. The three committees
are concerned that agencies sometimes provide these
follow-on activities to large companies who are in
incumbent positions or through contract bundling without
written justification or without the statutorily required
documentation of the impracticability of using the small
business for the work. So that the SBA and the Congress
can track the extent of this problem, the compromise text
requires agencies to record and report each such
occurrence and to describe in writing why it is
impractical to provide the research project to the
original SBIR company. Additionally, the compromise text
directs the SBA to develop policy directives to implement
the new subsection (v), Simplified Reporting Requirements.
This subsection requires that the directives regarding
collection of data be designed to minimize the burden on
small businesses; to permit the updating the database by
electronic means; and to use standardized procedures for
the collection and reporting of data.
Section 103(a)(2) of P.L. 102-564, which reauthorized the
SBIR program in 1992, added language to the description of a
third phase award which made it clear that the third phase is
intended to be a logical conclusion of research projects
selected through competitive procedures in phases one and
two. The Report of the House Committee on Small Business (H.
Rept. 102-554, Pt. I) provides that the purpose of that
clarification was to indicate the Committee's intent that an
agency which wishes to fund an SBIR project in phase three
(with non-SBIR monies) or enter into a follow-on procurement
contract with an SBIR company, need not conduct another
competition in order to satisfy the Federal Competition in
Contracting Act (CICA). Rather, by phase three the project
has survived two competitions and thus has already satisfied
the requirements of CICA, set forth in section 2302(2)(E) of
that Act, as they apply to the SBIR program. As there has
been confusion among SBIR agencies regarding the intent of
this change, the three committees reemphasize the intent
initially set forth in H. Rept. 102-554, Pt. 1, including the
clarification that follow-on phase three procurement
contracts with an SBIR company may include procurement of
products, services, research, or any combination intended for
use by the Federal government.
Section 7. Report on Programs for Annual Performance Plan.
This section requires each agency that participates in the
SBIR program to submit to Congress a performance plan
consistent with the Government Performance and Results Act.
The House and Senate versions have the same intent. The
compromise text uses the House version.
Section 8. Output and Outcome Data. Both the House and
Senate versions contain sections enabling the collection and
maintenance of information from awardees as is necessary to
assess the SBIR program. Both the Senate and House versions
require the SBA to maintain a public database at SBA
containing information on awardees from all SBIR agencies.
The Senate version adds paragraphs to the public database
section dealing with database identification of businesses or
subsidiaries established for the commercial application of
SBIR products or services and the inclusion of information
regarding mentors and mentoring networks. The House version
further requires the SBA to establish and maintain a
government database, which is exempt from the Freedom of
Information Act and is to be used solely for program
evaluation. Outside individuals must sign a non-disclosure
agreement before gaining access to the database. The
compromise text contains each of these provisions, with
certain modifications and clarifications, which are
addressed below.
With respect to the public database, the compromise text
makes clear that proprietary information, so identified by a
small business concern, will not be included in the public
database. With respect to the government database, the
compromise text clarifies that the inclusion of information
in the government database is not to be considered
publication for purposes of patent law. The compromise text
further permits the SBA to include in the government database
any information received in connection with an SBIR award the
SBA Administrator, in conjunction with the SBIR agency
program managers, consider to be relevant and appropriate or
that the Federal agency considers to be useful to SBIR
program evaluation.
[[Page S7289]]
With respect to small business reporting for the government
database, the compromise text directs that when a small
business applies for a second phase award it is required to
update information in the government database. If an
applicant for a second phase award receives the award, it
shall update information in the database concerning the award
at the termination of the award period and will be requested
to voluntarily update the information annually for an
additional period of five years. This reporting procedure is
similar to current Department of defense requirements for the
reporting of such information. When sales or additional
investment information is related to more than one second
phase award is involved, the compromise text permits a small
business to apportion the information among the awards in any
way it chooses, provided the apportionment is noted on all
awards so apportioned.
The three committees understand that receiving complete
commercialization data on the SBIR program is difficult,
regardless of any reasonable time frame that could be
established for the reporting of such data. Commercialization
may occur many years following the receipt of a research
grant and research from an award, while not directly
resulting in a marketable product, may set the groundwork for
additional research that leads to such a product.
Nevertheless, the three committees believe that the
government database will provide useful information for
program evaluation.
Section 9. National Research Council Reports. The House
version requires the four largest SBIR program agencies to
enter into an agreement with the National Research Council
(NRC) to conduct a comprehensive study of how the SBIR
program has stimulated technological innovation and used
small businesses to meet Federal research and development
needs and to make recommendations on potential improvements
to the program. The Senate version contains no similar
provision. The study was designed to answer questions
remaining from the House Committees' reviews of these
programs and to make sure that a current evaluation of the
program is available when the program next comes up for
reauthorization.
The compromise text makes several changes to the House
text. The compromise text adds the National Science
Foundation to the agencies entering the agreement with the
NRC and requires the agencies to consult with the SBA in
entering such agreement. It also expands on the House
version, which requires a review of the quality of SBIR
research, to require a comparison of the value of projects
conducted under SBIR with those funded by other Federal
research and development expenditures. The compromise text
further broadens the House versions' review of the
economic rate of return of the SBIR program to require an
evaluation of the economic benefits of the SBIR program,
including economic rate of return, and a comparison of the
economic benefits of the SBIR program with that of other
Federal research and development expenditures. The
compromise text allows the NRC to choose an appropriate
time-frame for such analysis that results in a fair
comparison.
The three committees believe that a comprehensive report on
the SBIR program and its relation to other Federal research
expenditures will be useful in program oversight and will
provide Congress with an understanding of the effects of
extramural Federal research and development funding provided
to large and small businesses and universities. The three
committees understand, however, that measuring the direct
benefits to the nation's economy from the SBIR program and
other Federal research expenditures may be difficult to
calculate and may not provide a complete portrayal of the
benefits achieved by the SBIR program. Accordingly, the
legislation requires the NRC also to review the non-economic
benefits of the SBIR program, which may include, among other
matters, the increase in scientific knowledge that has
resulted from the program. The paragraph in the compromise
text calling for recommendations remains the same as the
House version, except that the bill now asks the NRC to make
recommendations, should there be any.
While the study is to be carried out within National
Research Council study guidelines and procedures, the
compromise text requires the NRC to take the steps necessary
to ensure that individuals from the small business community
with expertise in the SBIR program are well represented in
the panel established for performing the study and among the
peer reviewers of the study. The NRC is to consult with the
consider the views of the SBA's Office of Technology and the
SBA's Office of Advocacy and to conduct the study in an open
manner that makes sure that the views and experiences of
small business involved in the program are carefully
considered in the design and execution of the study.
Extension of the SBIR program for eight years rather than the
five being contemplated when the House study provision was
initially written has necessitated some adjustments in the
study. The report is now required three years rather than
four years after the date of enactment of the Act and the NRC
is to update the report within six years of enactment. The
update is intended to bring current, any information from the
study relevant to the reauthorization of the SBIR program. It
is not intended to be a second full-fledged study. In
addition, semiannual progress reports by NRC to the three
committees are required.
Section 10. Federal Agency Expenditures for the SBIR
Program. The Senate version requires each Federal agency with
an SBIR program to provide the SBA with report describing its
methodology for calculating its extramural budget for
purposes of SBIR program set-aside and requires the
Administrator of the SBA to include an analysis of the
methodology from each agency in its annual report to the
Congress. The House version has no similar provision. The
compromise text follows the Senate text except that it
specifies that each agency, rather than the agency's
comptroller, shall submit the agency's report to the
Administrator. The three committees intend that each agency's
methodology include an itemization of each research program
that is excluded from the calculation of its extramural
budget for SBIR purposes as well as a brief explanation of
why the agency feels each excluded program meets a
particular exemption.
Section 11. Federal and State Technology Partnership
Program. This section establishes the FAST program from the
Senate version, which is a competitive matching grant program
to encourage states to assist in the development of high-
technology businesses. The House version does not contain a
similar provision. The most significant changes from the
Senate version in the compromise text are an extension of the
maximum duration of awards from three years to five and the
lowering of the matching requirement for funds assisting
businesses in low income areas to 50 cents per federal
dollar, as advocated by Ranking Member Velazquez of the House
Small Business Committee. The compromise text combines the
definitions found in the Senate version of this section and
the mentoring networks section.
Section 12. Mentoring Networks. The Senate version sets
forth criteria for mentoring networks that organizations are
encouraged to establish with matching funds from the FAST
program and creates a database of small businesses willing to
act as mentors. The compromise text, except for relocating
the program definitions to Section 11, is the same as the
Senate text. The House version did not contain a similar
provision.
Section 13. Simplified Reporting Requirements. This section
is not in either the House or the Senate versions. It
requires the SBA Administrator to work with SBIR program
agencies on standardizing SBIR reporting requirements with
the ultimate goal of making the SBA's SBIR database more user
friendly. This provision requires the SBA to consider the
needs of each agency when establishing and maintaining the
database. Additionally, it requires the SBA to take measures
to reduce the administrative burden on SBIR program
participants whenever possible including, for example,
permitting updating by electronic means.
Section 14. Rural Outreach Program Extension. This
provision, which was not in either the House or the Senate
versions, extends the life and authorization for
appropriations for the Rural Outreach Program of the Small
Business Administration for four additional years through
fiscal year 2005. It is the intent of the three committees
that this program be evaluated on the same schedule and in
the same manner as the FAST program. Among other things, the
evaluation should examine the extent to which the programs
complement or duplicate each other. The evaluation should
also include recommendations for improvements to the program,
if any.
Mr. KERRY. Mr. President, today I ask my colleagues to join me in
voting for H.R. 2392, the Small Business Innovation Research Program
Reauthorization Act of 2000. 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, the diverse missions of
the government, 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.
Technological advancement is a key element of economic growth.
According to a 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 principal driving forces for increases in our standard of
living.''
Mr. President, this bill, and the accompanying managers' amendment,
are the products of months and months of work between Democrats and
Republicans, House and Senate, SBIR companies and SBIR advocates, the
ten Federal agencies that participate in the SBIR program, and the
Small Business Administration's Office of Technology and the Office of
Advocacy.
I want to thank Senator Bond and Senator Levin, and the members of
the House Committees on Small Business
[[Page S7290]]
and Science, and their staffs, for their hard work on this bill. Many
of us had very different concerns regarding reauthorization of the SBIR
program, and I greatly appreciate everyone's willingness to find common
ground where possible and compromise.
We wrestled with tough questions. How long to reauthorize the
program? I wanted to make it permanent; it has a long and successful
track record. In fact, in 1998, the Senate Committee on Small Business
voted to do just that, but that legislation never passed the House.
This year the Committee agreed to reauthorize the program for ten
years, giving the agencies and innovative small businesses a good
measure of security to plan SBIR projects for the longer term. However,
the House Science Committee felt strongly that it should only be
reauthorized for seven years. In the end, as reflected in this bill, we
compromised on eight, reauthorizing the bill through September 30,
2008.
How to improve the quality and collection of data without
overburdening small businesses? GAO reports have found that the SBIR
program works well, but that the records are sometimes incomplete,
making it harder to evaluate the program and track awards. I fully
support the goal of collecting the best information possible to
evaluate the program, but I don't want small businesses owners to spend
more time filling out paper work than absolutely necessary for that
purpose. They are capable of developing cutting-edge research and
meeting national R&D needs and should spend the majority of their
efforts on that. As Ranking Member of the Small Business Committee and
a Senator from the state whose small, hi-tech companies win the second
largest amount of SBIR awards, I heard many, many complaints and
concerns about the possibility of excessive and burdensome reporting
requirements. I also heard complaints that the same level of reporting
is not required of universities and big business that get Federal R&D
dollars. There were real fears that Congress would require SBIR award
winners to continue reporting to the SBA on SBIR research for years
after a contract ended and that tracking commercialization out of
context would be used against the program and against individual SBIR
firms. Just knowing the ratio of awards to commercialization is not an
indicator of success. By its very nature, R&D has a low probability of
getting a product to market in relation to the investment in research.
It is the ratio of commercialization in the SBIR program compared to
that of big business, universities and the private sector that may be
one indicator of the program's value to the government and to the
nation. For example, one study shows that small businesses have 24
times as many innovations per R&D dollar as large businesses. In the
end, we agreed to collect basic, but useful, information about sales
and additional investment on Phase II awards. According to the
Department of Defense that currently requires similar information, it
generally takes less than 15 minutes to provide the information, and
companies are only required to give the information during the life of
the contract.
Probably the biggest question we dealt with was how to increase the
participation in the SBIR program in states, and areas of states, that
receive few or no awards. Though the number of awards given to a state
has been proportionate to the number of proposals submitted, according
to a GAO study, one-third of the states receive 85 percent of all SBIR
awards. And the states that submit the most proposals generally have
the right mix of small high-tech companies, an active venture capital
community, and universities that understand the benefits of technology
transfer, attract academic research funds and graduate a highly
qualified workforce. While Massachusetts does extremely well in this
program, for years I have recognized that the SBIR awards have been
concentrated in less than half the states. The problem has been how to
create a solution that helps small businesses in states that don't have
the necessary infrastructure without changing the program's reliance on
competition. Merit is the only way to maintain the integrity of the
research because the highly competitive nature of SBIR awards (only one
in seven or eight Phase I proposals is awarded) is one of the main
reasons the program has been so popular and successful.
This bill takes two innovative approaches to increasing nationwide
participation in the program. First, it establishes a peer volunteer
mentoring network, which Senator Levin and I originally introduced as
S. 1435 in 1999. Modeled after SBA's successful Service Corps of
Retired Executives or SCORE program, this mentoring program would
reimburse experienced SBIR companies that volunteer to assist one or
more newcomers to the program. They can help in a variety of ways,
whether it's writing proposals, understanding the Federal procurement
process or a particular agency, tapping into venture capital, or
commercializing their technologies. The bill also directs the SBA to
create a database with the names and profiles of successful SBIR
companies interested in mentoring struggling or prospective SBIR
companies. This will be used by the states to link companies to mentors
based on their needs.
Second, it creates the Federal and State Technology Partnership
(FAST) program. This program is a competitive matching-grant program to
encourage and help states cultivate high-tech small businesses and a
build a support infrastructure in the state. I feel strongly, as does
Senator Levin, and am very pleased, that all states, even the ones that
currently win the most SBIR awards, are eligible to compete for a FAST
matching grant so that they can help develop small, hi-tech companies
in areas of their states that don't have SBIR activity. For example, in
Massachusetts, most of our awards are in the Boston area. But with
these grants, working with one of the economic development arms of our
local government, we could coordinate and foster SBIR activity in the
Western part of the state close to Amherst and Northampton. Those
companies could create high-quality, high-wage jobs where the cost
structure for companies is less expensive but where we have numerous
universities and highly-skilled workers.
Given the strength of these initiatives, I do have some concerns
about mentoring getting lost in the states' FAST initiatives. For the
record, I ask that the SBA, the program managers of participating SBIR
agencies, and FAST entities promote this cost-effective tool. Take
advantage of the substantial pool of good-will and willingness to share
experiences of those who have been successful in the SBIR program. Let
SBIR companies know that they will be reimbursed for relevant out-of-
pocket expenses if they choose to become a volunteer mentor. It gives
them another stake in this program, and will strengthen the program on
many levels. And, SBA and SBIR agencies should let prospective or
struggling SBIR companies know that veteran SBIR companies are out
there willing to help them understand the world of SBIR and federal
procurement.
Mr. President, these research and development awards not only provide
dollars to small hi-tech companies that create quality jobs, but they
also help agencies meet their R&D needs. As one example, an Army SBIR
award played a role in the development of the B-2 Bomber. Specifically,
the research led to the development of a ``pilot alert'' system which
warns the pilot if the plane is about to produce a trail of
condensation that could be detected by enemy radar. Sales to date, to
both the Air Force and commercial customers, exceed $27 million. And
what about NASA? As the world watched the space shuttle Discovery in
1998, the feature elements of two of the shuttle's payloads were
developed with SBIR funds.
In Woburn, Massachusetts, NZ-Applied Technologies used its SBIR award
to help develop photonic components for optical telecommunications
applications. The company is so successful that Corning recently bought
it for $150 million. Further, the company was named as one of the top
50 fastest growing companies in New England and top 500 fastest growing
companies in the country.
I want to thank my colleagues for their support of the SBIR program
over the years. As always, I am pleased that we can work in a
bipartisan fashion.
Mr. LEVIN. Mr. President, I am pleased to be an original cosponsor of
the Small Business Innovation Research program (SBIR) reauthorization
[[Page S7291]]
bill (H.R. 2392) that will reauthorize the SBIR program for eight more
years. An eight year reauthorization will allow participating agencies
to continue to do long term planning for their research and development
(R&D) needs. I'm especially pleased that this legislation includes my
bill to establish a volunteer mentoring program.
The SBIR program, originally established in 1982 and reauthorized and
expanded in 1992, expires this year. This highly competitive program
has a well-deserved reputation for success and has enjoyed bipartisan
support over the years. It improves upon what is already a successful
program that gives small high technology companies access to federal
research and development dollars and the federal government access to
some of the world's best innovation. I am pleased the full Senate is
considering this legislation today and I hope House consideration will
swiftly follow so that contracting agencies can be assured funding will
be available in this contract cycle.
I am a long time supporter of the SBIR program. The SBIR program
creates jobs, increases our capacity for technological innovation and
boosts our international competitiveness. According to a recent GAO
study, about 50 percent of all 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 program is a highly successful program and we can make it
even more successful by establishing an outreach and volunteer
mentoring program to bring more high technology small businesses into
the program and help them successfully compete for awards. Many states
believe they can do better regarding the number of SBIR awards their
small businesses win. Since the SBIR program is a highly competitive
and merit-based program, I believe the best way to increase
participation is through outreach and mentoring. The SBIR
reauthorization bill before the Senate today creates programs to do
both.
The Federal and States Technology Partnership Program (FAST) included
in this bill establishes an outreach program through a technology
economic development program that aims to build more support for
science and technology research in states.
A natural complement to reaching out to new companies to tell them
about the SBIR program is the establishment of a ``mentoring network''
to increase their odds for success in that program. Many SBIR company
officials have benefitted from this R&D program, are committed to its
success and have told me they want to give something back by way of
mentoring small companies new to the SBIR program. Many attribute their
SBIR contracts with federal agencies as the main reason they have been
able to successfully commercialize their research, make a ``real''
product, and expand employment in their companies. Through my proposal,
mentoring networks will be established to match volunteer mentors with
new applicant high technology small businesses to help increase their
chances for success in the SBIR program, and, ultimately, the
commercialization of their research. A small business's failure to
obtain a phase I or phase II SBIR 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.
Mentoring will address this concern by matching the new company with
one that already knows the ropes of the SBIR program and federal
procurement process.
This is a cost effective program. Modeled after the successful SCORE
program, the mentoring networks' volunteer mentors would be reimbursed
only for their out-of-pocket expenses. Their time, energy and know-how
would be donated free-of-charge. Specifically, the bill provides for
the establishment of mentoring networks that are eligible for matching
grants within the FAST program in each state. The mentoring network (an
association, organization, coalition or other entity) will provide
business advice and counseling and assist small business concerns that
have been identified as good candidates for the SBIR program. Volunteer
mentors are people associated with small businesses that have
successfully competed one or more SBIR funding agreement and have
agreed to guide small business concerns through all stages of the SBIR
program process.
The mentoring networks program also establishes an important publicly
accessible national database housed at SBA to compile information on
mentoring networks and volunteer mentors. This database will provide an
important tool to increase small business' access to mentors. I urge
SBA to devote its full attention to getting it up and running upon
enactment of this legislation.
H.R. 2392 also expands the collection, reporting and maintenance of
information for an SBA database regarding SBIR awards. It fixes a
problem identified by GAO by requiring a uniform definition of
``extramural R&D budget,'' the formula used by each participating
agency to determine the level of funds dedicated to the SBIR program.
It establishes a five year competitive matching grant pilot program
administered by the SBA for an organization or consortia to perform
outreach and technology economic development within states, including
establishing or operating a mentoring network to provide advice and
counseling to SBIR applicants.
I urge my colleagues to support the reauthorization of this important
high technology small business procurement program and the improvements
to it that H.R. 2392 provides.
Amendment No. 3944
Mr. BURNS. Mr. President, I send an amendment to the desk and ask for
its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:
The Senator from Montana [Mr. Burns], for Mr. Bond, for
himself, and Mr. Kerry, proposes an amendment numbered 3944.
(The text of the amendment is printed in today's Record under
``Amendments Submitted.'')
Mr. BOND. Mr. President, the bill before us reauthorizes and improves
upon one of the most successful small business programs we have in the
Federal government--the Small Business Innovation Research (SBIR)
program. The Small Business Committee has spent close to nine months
deliberating and negotiating this important bill. My colleagues on the
Committee, and in particular, Senators Kerry, Burns, Levin, Snowe and
Enzi, have all been very cooperative and provided valuable assistance
in preparing this important piece of legislation. The product that has
resulted from the Committee's consideration is a bi-partisan bill that
should provide small businesses with confidence in the Congress' strong
support for this program.
Mr. President, this Managers' Amendment is the result of negotiations
conducted among my Committee and the Small Business and Science
Committees of the House of Representatives. The SBIR reauthorization
bill that originally passed the House contained certain provisions that
were not included in the bill reported by the Senate Committee on Small
Business. These provisions had been interpreted by many in the small
business community to place requirements on small businesses receiving
Federal research and development funds that are not placed on other
businesses or on universities that are also recipients of such dollars.
My Committee negotiated with the representatives of the House Science
Committee, which drafted these provisions, to come up with language
that would provide information to Congress that is necessary for its
oversight of this program, while ensuring that small businesses are not
subject to government mandates that would affect their ability to
perform high-quality research and development for the Federal
government. The House Science Committee has been very cooperative to
ensure that their provisions did not cause these unintended
consequences.
This bill, with the Managers' amendment will ensure that this
program, which has been proven successful over a long period of time,
can continue to be so. Seventeen years ago, President Reagan signed
into law the Small Business Innovation Development Act, which required
Federal agencies with extramural research and development
[[Page S7292]]
budgets of $100 million or more to set aside not less than 2/10th of
one percent of that amount for the first SBIR program. In 1992, the
program was reauthorized and Congress dictated that the program grow to
2.5 percent of the extramural research and development budgets.
Thousands of small firms have received research grants under the
programs since 1982, and more than $1 billion was awarded to small
businesses in Fiscal Year 1998 alone.
The original drafters of the SBIR program acknowledged that small
businesses are the primary source of our nation's innovations.
Accordingly, the SBIR program was created to stimulate technological
development by leveraging the capabilities of these small firms. The
goals of the program are threefold. First, the program assists the
government with its research and development needs. Second, the program
provides a catalyst to groundbreaking research and development. Third,
the program strengthens our economy by promoting the commercialization
of technologies developed through Federal research. The
commercialization of these technologies by small firms increases the
competitiveness of our country in the world economy and expands
employment opportunities.
A good example of the benefits that the SBIR program provides to
small businesses is the experience of Cutting Edge Optronics, a 49
employee firm in St. Charles, Missouri. Cutting Edge Optronics has
received several phase one and phase two SBIR awards with NASA and the
Air Force to develop high-output lasers with both military and
commercial applications.
The SBIR program has made the difference between Cutting Edge
Optronics growing its business and merely staying in business. The SBIR
program has allowed Cutting Edge to engage in state-of-the-art research
in a very competitive climate, which it otherwise would not have been
able to do. Moreover, if the Air Force research develops successfully,
Cutting Edge Optronics expects that the commercial applications of the
technology will spur astronomical growth of the company.
Mr. President, small businesses are the greatest job creators in our
economy. During the last seven years of economic growth, small
businesses have accounted for the vast majority of all the net new jobs
created. It is only rational that the Federal government distribute its
research funds in a way that will contribute to this job growth by
creating incentives to the private sector to market the technologies
developed. As the example of Cutting Edge Optronics demonstrates, the
SBIR program does just that.
There is abundant evidence that the SBIR program has been a success
both in assisting the government with its research and development
needs and in turning that research into new products and services.
Numerous studies have been conducted over the last several years that
bear this out. A 1989 General Accounting Office (GAO) study reported
that scientists and engineers at Federal agencies indicated that the
overall quality of the research performed under SBIR awards equaled,
and in some cases, exceeded the quality of other agency research they
monitored. As the program has grown in recent years, it does not appear
this conclusion has changed. A 1995 GAO study concluded that the
quality of SBIR research proposals has kept pace with the program's
expansion.
Morever, the small businesses that have received SBIR awards, have
had significant success in commercializing technology. This is
especially important considering that these firms are engaging in
cutting-edge research that will not always have a commercial
application. A 1997 internal Department of Defense study found that the
average phase-two SBIR award of $400,000 generated $760,000 in sales
and attracted approximately $600,000 in additional non-SBIR funding.
Additionally, the GAO has reported that the commercialization rate on
SBIR projects is close to 40 percent. There is no question that this
program's record of success easily justifies a long reauthorization.
While there is general agreement that the SBIR program is successful,
there have also been some concerns that this legislation is intended to
resolve. First, the GAO released a report in June 1998, indicating that
different agencies are using different interpretations of the term
``extramural budget.'' The use of different interpretations may lead to
inaccurate calculations of the amount of funds that should be allocated
to each agency's SBIR program. To remedy this situation, the bill
requires each SBIR program agency to provide the Small Business
Administration (SBA) and Congress with a description of its methodology
for calculating the amount of the extramural budget for that agency. It
is our hope that by closely analyzing how the agencies are calculating
their extramural budgets, we can be assured that each agency will adopt
a uniform definition of extramural budget that is consistent with the
statutory language and Congress' intent.
Second, the Committee on Small Business, which I chair, has received
from the GAO disturbing information regarding the SBA's collection and
maintenance of data on the SBIR program. Specifically, my Committee
learned that the GAO, in preparing its two most recent reports on the
SBIR program, spent substantial resources correcting and updating
information in the SBA's SBIR database. When the Federal government is
providing funds to third parties, whether in the private sector or to a
state or local government entity, the most basic rule of program
oversight is to monitor who has received those funds and what they have
done with the funds. Accordingly, this legislation establishes a
statutory duty on the SBIR program agencies to provide the SBA with
data on each SBIR award winner in a timely manner. Moreover, it
requires the SBA to maintain a comprehensive and public database of the
small firms that receive SBIR awards and the activities supported by
SBIR funds.
Finally, the GAO recently issued a report raising questions about the
geographic concentration of SBIR awards. From fiscal year 1993 through
1996, companies in one-third of the states received 85 percent of the
SBIR awards. Companies on the east and west coast received a vast
majority of these awards, while companies in the South, Midwest and
Rocky Mountain states generally received very few awards. For example,
the GAO reported that in fiscal year 1997, companies in Massachusetts
and California received 202 and 326 phase-two awards, respectively, out
of approximately 1,400 awards nationally. Thus, they received almost 38
percent of the awards.
Mr. President, if the SBIR program is going to continue to be
successful, it is incumbent on us to do more to reach out and provide
opportunities to firms in the South, the Midwest and the Rocky Mountain
states that can provide high-quality research and development and
provide them with the information and assistance they need so that they
may seize the opportunity to participate in the SBIR program. The SBIR
program was never intended to serve a limited group of small
businesses, and we must do all we can to increase the participation of
as many small businesses as possible.
Therefore, this legislation establishes a comprehensive program to
assist states in the development of high-technology businesses that
could participate in the SBIR program. Specifically, the bill creates a
matching-grant program for organizations at the state or local level
attempting to enhance or develop technology research and development by
small business concerns. This legislation acknowledges that states that
do not aggressively support the development of high-technology firms
are at a competitive disadvantage in establishing a business climate
conducive to technology development. More importantly, however,
building stronger support for high-technology firms will expand
economic opportunities for our country generally and will increase our
competitiveness in the world market.
The Small Business Innovation Research Program Reauthorization Act of
2000 is a necessary step to ensure that the Federal Government
continues to utilize the vast capabilities of high-technology small
businesses to meet its research and development goals. Moreover, it
ensures that these research funds are leveraged to strengthen our
Nation's economy and its position as the lead innovator in the world.
The bill in front of us, with the Managers' amendment, is a
reasonable
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compromise that will provide an effective structure for this program
for the next eight years. Given the hard work that has gone into this
compromise legislation, I trust that the House will act quickly on this
bill, so that small businesses involved in the SBIR program will have
confidence that the program will continue without interruption.
A bi-partisan statement has been drafted by the Senate Committee on
Small Business and the Committees on Science and Small Business of the
House of Representatives to explain provisions in the Managers'
amendment that are not addressed in either the Senate or House
Committee reports on H.R. 2392. I ask unanimous consent that,
immediately following my remarks, this Explanatory Statement of H.R.
2392 be included in the Record.
Thank you Mr. President and I ask for immediate consideration of the
bill and its approval.
Mr. BURNS. Mr. President, I ask unanimous consent that the amendment
be agreed to, the committee amendment, as amended, be agreed to, the
bill be considered read the third time and passed, as amended, and the
motion to reconsider be laid upon the table, and that any statements
relating to the bill be printed in the Record.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment (No. 3944) was agreed to.
The committee amendment, as amended, was agreed to.
The bill (H.R. 2392), as amended, was read the third time and passed.
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