[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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