[Congressional Record Volume 147, Number 119 (Thursday, September 13, 2001)]
[Senate]
[Pages S9406-S9409]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SMALL BUSINESS TECHNOLOGY TRANSFER PROGRAM REAUTHORIZATION ACT OF 2001
Mr. REID. Mr. President, I ask unanimous consent that the Senate
proceed to the immediate consideration of Calendar No. 142, S. 856.
The PRESIDING OFFICER. The clerk will report the bill by title.
The legislative clerk read as follows:
A bill (S. 856) to reauthorize the Small Business
Technology Transfer Program, and for other purposes.
There being no objection, the Senate proceeded to consider the bill.
Amendment No. 1569
Mr. REID. Mr. President, I understand Senators Kerry and Bond have a
substitute amendment at the desk.
The PRESIDING OFFICER. The clerk will report the amendment.
The legislative clerk read as follows:
The Senator from Nevada [Mr. REID], for Mr. Kerry, for
himself and Mr. Bond, proposes an amendment numbered 1569.
The amendment is as follows:
(Purpose: To provide for a complete substitute)
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Small Business Technology
Transfer Program Reauthorization Act of 2001''.
SEC. 2. EXTENSION OF PROGRAM AND EXPENDITURE AMOUNTS.
(a) In General.--Section 9(n)(1) of the Small Business Act
(15 U.S.C. 638(n)(1)) is amended to read as follows:
``(1) Required expenditure amounts.--
``(A) In general.--With respect to each fiscal year through
fiscal year 2009, each Federal agency that has an extramural
budget for research, or research and development, in excess
of $1,000,000,000 for that fiscal year, shall expend with
small business concerns not less than the percentage of that
extramural budget specified in subparagraph (B), specifically
in connection with STTR programs that meet the requirements
of this section and any policy directives and regulations
issued under this section.
``(B) Expenditure amounts.--The percentage of the
extramural budget required to be expended by an agency in
accordance with subparagraph (A) shall be--
``(i) 0.15 percent for each fiscal year through fiscal year
2003; and
``(ii) 0.3 percent for fiscal year 2004 and each fiscal
year thereafter.''.
(b) Conforming Amendment.--Section 9 of the Small Business
Act (15 U.S.C. 638) is amended in subsections (b)(4) and
(e)(6), by striking ``pilot'' each place it appears.
SEC. 3. INCREASE IN AUTHORIZED PHASE II AWARDS.
(a) In General.--Section 9(p)(2)(B)(ix) of the Small
Business Act (15 U.S.C. 638(p)(2)(B)(ix)) is amended--
(1) by striking ``$500,000'' and inserting ``$750,000'';
and
(2) by inserting before the semicolon at the end the
following: ``, and shorter or longer periods of time to be
approved at the discretion of the awarding agency where
appropriate for a particular project''.
(b) Effective Date.--The amendments made by subsection (a)
shall be effective beginning in fiscal year 2004.
SEC. 4. AGENCY OUTREACH.
Section 9(o) of the Small Business Act (15 U.S.C. 638(o))
is amended--
(1) in paragraph (12), by striking ``and'' at the end;
(2) in paragraph (13), by striking the period at the end
and inserting a semicolon; and
(3) by adding at the end the following:
``(14) implement an outreach program to research
institutions and small business concerns for the purpose of
enhancing its STTR program, in conjunction with any such
outreach done for purposes of the SBIR program; and''.
SEC. 5. POLICY DIRECTIVE MODIFICATIONS.
Section 9(p) of the Small Business Act (15 U.S.C. 638(p))
is amended by adding at the end the following:
``(3) Modifications.--Not later than 120 days after the
date of enactment of this paragraph, the Administrator shall
modify the policy directive issued pursuant to this
subsection to clarify that the rights provided for under
paragraph (2)(B)(v) apply to all Federal funding awards under
this section, including the first phase (as described in
subsection (e)(6)(A)), the second phase (as described in
subsection (e)(6)(B)), and the third phase (as described in
subsection (e)(6)(C)).''.
SEC. 6. STTR PROGRAM DATA COLLECTION.
(a) In General.--Section 9(o) of the Small Business Act (15
U.S.C. 638(o)), as amended by this Act, is amended by adding
at the end the following:
``(15) collect, and maintain in a common format in
accordance with subsection (v), such information from
awardees as is necessary to assess the STTR program,
including information necessary to maintain the database
described in subsection (k).''.
(b) Database.--Section 9(k) of the Small Business Act (15
U.S.C. 638(k)) is amended--
(1) in paragraph (1)--
(A) by inserting ``or STTR'' after ``SBIR'' each place it
appears;
(B) in subparagraph (C), by striking ``and'' at the end;
(C) in subparagraph (D), by striking the period at the end
and inserting ``; and''; and
(D) by adding at the end the following:
[[Page S9407]]
``(E) with respect to assistance under the STTR program
only--
``(i) whether the small business concern or the research
institution initiated their collaboration on each assisted
STTR project;
``(ii) whether the small business concern or the research
institution originated any technology relating to the
assisted STTR project;
``(iii) the length of time it took to negotiate any
licensing agreement between the small business concern and
the research institution under each assisted STTR project;
and
``(iv) how the proceeds from commercialization, marketing,
or sale of technology resulting from each assisted STTR
project were allocated (by percentage) between the small
business concern and the research institution.''; and
(2) in paragraph (2)--
(A) by inserting ``or an STTR program pursuant to
subsection (n)(1)'' after ``(f)(1)'';
(B) by striking ``solely for SBIR'' and inserting
``exclusively for SBIR and STTR'';
(C) in subparagraph (A)(iii), by inserting ``and STTR''
after ``SBIR''; and
(D) in subparagraph (D), by inserting ``or STTR'' after
``SBIR''.
(c) Simplified Reporting Requirements.--Section 9(v) of the
Small Business Act (15 U.S.C. 638(v)) is amended by inserting
``or STTR'' after ``SBIR'' each place it appears.
(d) Reports to Congress.--Section 9(b)(7) of the Small
Business Act (15 U.S.C. 638(b)(7)) is amended by striking
``and (o)(9),'' and inserting ``, (o)(9), and (o)(15), the
number of proposals received from, and the number and total
amount of awards to, HUBZone small business concerns under
each of the SBIR and STTR programs,''.
SEC. 7. STTR PROGRAM-WIDE MODEL AGREEMENT FOR INTELLECTUAL
PROPERTY RIGHTS.
(a) Development of Model Agreement.--Section 9 of the Small
Business Act (15 U.S.C. 638) is amended by adding at the end
the following:
``(w) STTR Model Agreement for Intellectual Property
Rights.--
``(1) In general.--The Administrator shall promulgate
regulations establishing a single model agreement for use in
the STTR program that allocates between small business
concerns and research institutions intellectual property
rights and rights, if any, to carry out follow-on research,
development, or commercialization.
``(2) Opportunity for comment.--In promulgating regulations
under paragraph (1), the Administrator shall provide to
affected agencies, small business concerns, research
institutions, and other interested parties the opportunity to
submit written comments.''.
(b) Adoption of Model Agreement by Federal Agencies.--
Section 9(o)(11) of the Small Business Act (15 U.S.C.
638(o)(11)) is amended by striking ``develop a model
agreement not later than July 31, 1993, to be approved by the
Administration,'' and inserting ``adopt the agreement
developed by the Administrator under subsection (w) as the
agency's model agreement''.
SEC. 8. FAST PROGRAM ASSISTANCE TO WOMEN-OWNED AND MINORITY-
OWNED SMALL BUSINESS CONCERNS AND CONCERNS
LOCATED IN AREAS NOT PARTICIPATING IN SBIR AND
STTR.
(a) Selection Consideration.--Section 34(c)(2)(B) of the
Small Business Act (15 U.S.C. 657d(c)(2)(B)) is amended--
(1) in clause (iv), by striking ``and'' at the end;
(2) in clause (v), by striking the period at the end and
inserting ``; and''; and
(3) by adding at the end the following new clause:
``(vi) whether the proposal addresses the needs of small
business concerns--
``(I) owned and controlled by women;
``(II) owned and controlled by minorities; and
``(III) located in areas that have historically not
participated in the SBIR and STTR programs.''.
(b) Regulations.--Section 34(c)(4) of the Small Business
Act (15 U.S.C. 657d(c)(4)) is amended by adding at the end
the following: ``The Administrator shall promulgate
regulations establishing standards for the consideration of
proposals under paragraph (2), including standards regarding
each of the considerations identified in paragraph (2)(B).''.
Mr. KERRY. Mr. President, today I rise to urge passage of S. 856, the
Small Business Technology Transfer (STTR) Program Reauthorization Act
of 2001. This legislation reauthorizes the Small Business
Administration's highly successful Small Business Technology Transfer
(STTR) Program for an additional eight years. Absent legislative action
to reauthorize the Small Business Technology Transfer (STTR) program,
it will expire on September 30, 2001.
On July 19, 2001, the Committee on Small Business and
Entrepreneurship (Committee) considered S. 856, the Small Business
Technology Transfer (STTR) Program Reauthorization Act of 2001,
unanimously reported the bill and recommended its passage. This
legislation also makes changes to the STTR program to facilitate more
effective collaboration between small businesses and research
institutions.
The STTR program funds research and development (R&D) projects
performed jointly by small companies and research institutions as an
incentive to advance the nation's technological progress and the
government's research and development goals. It complements the Small
Business Innovation Research (SBIR) program, which was reauthorized
last year. Whereas the SBIR program funds R&D projects at small
companies, STTR funds cooperative R&D projects between a small company
and a research institution, such as a university or a Federally funded
R&D lab. Like SBIR R&D projects, STTR projects help participating
agencies achieve their missions in the research and development arena.
It was also designed to convert the billions of dollars invested in
research and development at our nation's universities. Federal
laboratories and non-profit research institutions into new commercial
technologies.
The STTR program was started as a pilot in 1992, and the first grants
were made in 1994. The program was reauthorized in 1997 for four years.
The program is not funded out of the Small Business Administration's
(SBA) budget, but out of the extramural R&D budgets of Federal agencies
or departments with extramural R&D budgets of $1 billion or more. Such
agencies must award at least .15 percent of that money for STTR
projects. Five agencies currently qualify: the Department of Defense
(DoD); the National Institutes of Health (NIH); the National
Aeronautics and Space Administration (NASA); the National Science
Foundation (NSF); and the Department of Energy (DoE).
There are three phases of the program. Phase I is a one-year grant
for $100,000, and its purpose is to determine the scientific and
commercial merits of an idea. Phase II is a two-year grant for
$500,000, and its purpose is to further develop the idea. Phase III is
used to pursue commercial applications of the idea and cannot be funded
with STTR funds. Only private-sector and non-STTR Federal funds may be
used in Phase III.
At the Committee on Small Business and Entrepreneurship hearing on S.
856 we heard from Dr. Anthony N. Pirri, Director of the Division of
Technology Transfer at Northeastern University in Boston, Mass.; Mr.
Clifford C. Hoyt, Vice President and Chief Technology Officer of
Cambridge Research and Instrumentation in Woburn, Mass.; Dr. Barna
Szabo, Founder and Chairman of Engineering Software Research and
Development Inc. in St. Louis, Mo.; Mr. Kirk Ririe, President and CEO
of Idaho Technology, Inc. in Salt Lake City, Utah; Mr. Maurice Swinton,
Assistant Administrator for the Office of Technology at the Small
Business Administration; and Mr. Jim Wells, Director of Natural
Resources and Environment at the General Accounting Office.
There was consensus that the program is meeting its objectives,
should be continued, and the Phase II award amount should be increased.
Examples were given of technological advances which improved
industries, grew businesses, created jobs and more than returned the
Federal government's investment. One comment, in particular, from Mr.
Kirk Ririe of Idaho Technology Inc., which started modestly in a potato
shed and now has locations in Idaho and Utah, demonstrates the power of
the STTR program:
We were a tiny company--six people working with the
university group. We were able to, within two years, launch
(with about $100,000 in funding) a product that basically
filled a hole in biotechnology research and development . . .
that has gone on to generate over $100 million in sales . . .
The GAO figures may not [reflect this, but] I guarantee that
we have paid a lot more money back to the government in taxes
than we received in any of the funding . . . The program has
been absolutely crucial to us. If we had not had this
program, we would still be in the potato shed . . .
At the request of the Chairman and Ranking member of the Committee,
GAO surveyed all companies which had received Phase II awards from 1995
to 1997. GAO chose these years because they were the first years of the
program and it generally takes three to nine years for a company to
progress from basic research of a concept to commercialization of a
developed product. Though this program is still relatively young, the
survey results indicate it is working effectively. Of the 102 companies
participating in the survey, 53.5 percent had either commercialized the
technology or received follow-on funding for the technology.
[[Page S9408]]
These companies had approximately $132 million in sales and $53 million
in additional funding. These STTR winners expect additional sales of
more than $90 million dollars by 2005. Putting this into perspective,
the Government's total awards to these companies were less than $60
million, less than half of the sales to date and about five percent of
the expected sales by 2005.
While S. 856 as reported reauthorized the program for nine years, the
Manager's amendment reduces this to eight years. This was done in order
to reach consensus promptly and enable the bill to pass both houses--
before the expiration date of the program.
In FY2004 and thereafter the bill increases from .15 to .3 percent of
Federal extramural research and development funds going to this
program. Recently the program was made $65 million annually for STTR
awards. Based on that amount, increasing the percentage to .3 percent
would make $130 million available annually for small business
technology transfer. The Committee originally reported language that
would have increased the percentage to .5 percent in 2007. In order to
reach consensus, we agreed to delete the final incremental increase
from the bill until we have more experience and information.
The bill also raises the Phase II grant award amount from $500,000 to
$750,000. This change was intended to address concerns by the small
businesses and the research institutions that $500,000 typically is no
longer enough for this stage of research and development. As Dr. Pirri
of Northeastern said at the hearing, ``By expanding the STTR program,
funding levels will become more adequate to take technologies through
the prototype stage and increase their probability of commercial
success.'' Raising Phase II STTR awards to $750,000 makes them
consistent with the Small Business Innovation Research (SBIR) program's
Phase II awards.
GAO reported that only about 250 universities have participated in
the program so far. The Committee believes, and GAO concurs, that there
is tremendous potential to involve more universities in partnering with
small businesses to convert research into new technologies. One of the
goals of the STTR program is to create economic development around
universities, Federal laboratories and non-profit research institutions
across the country are attempting to duplicate the successful clusters
similarly developed along Massachusetts' Route 128 and in California's
Silicon Valley. In order to increase participation by a larger number
of universities, S. 856 includes a provision encouraging the STTR
agencies to reach out to universities to raise awareness of the program
and to provide information to their faculty members.
S. 856 also strengthens the data rights protection for companies and
research institutions that conduct STTR projects. The change in data
rights is important because it clarifies that STTR companies, like SBIR
companies, retain the data rights to their technology through all
phases of a STTR project. Unfortunately some agencies have been
interpreting the law to mean that STTR companies only retain their data
rights through Phases I and II.
This clarification helps protect STTR companies from losing control
of their research so that they have a greater chance of commercializing
their technology themselves. This clarification is important because
the Committee has learned some agencies are providing the data to
bigger contractors for development, thereby cutting out the small
business. This unfortunate situation not only robs small businesses of
revenues, but it also results in expensive legal costs for small
businesses to protect their data rights.
As last year's legislation did for the SBIR program, this bill
strengthens the data collection requirements regarding awards and the
data rights for companies and research institutions that conduct STTR
projects. The goal is to collect better information about the companies
doing the projects, as well as the research and development, so we can
measure success and track technologies. The Manager's amendment expands
the reporting requirements to include reporting on HUBZones small
businesses under the SBIR and STTR programs. The amendment also
requires the SBA and the agencies to develop a model agreement for
intellectual property rights. Finally, the Manager's amendment includes
a provision that requires SBA, when considering proposals under the
recently enacted Federal and State Technology Partnership Program
(FAST), to consider whether the proposals address the needs of small
business concerns: (I) owned and controlled by women; (II) owned and
controlled by minorities; and (III) concerns located in areas that have
historically not participated in the SBIR and STTR Programs.
This bill will ensure that this successful program is continued and
expanded. It will also provide Congress with important information and
data on the program and encourage more outreach to small businesses and
research institutions.
Mr. President, I want to encourage my colleagues to learn about this
program, to find out the benefits to their state's hi-tech small
business, research universities and labs, and to join me in passing
this legislation in the Senate. To my friend from Missouri, Senator
Bond, I want to thank you and your staff for working with me and my
staff to build this country's technological progress. I especially want
to thank one member of Senator Bond's staff, David Bohley. Dave has
worked tirelessly and effectively for the technology and small business
community. He is leaving the Committee, and we will all miss working
with him. I wish him well in his new job at the Federal National
Mortgage Association (FNMA). I also want to thank all of the members of
the Committee for their work on this legislation and for helping small
business. All 19 members of the Committee voted for and supported this
legislation.
Mr. President, I urge the Senate to pass S. 856, as amended.
Mr. BOND. Mr. President, I rise to lend my strong support to S. 856,
the Small Business Technology Transfer Program Reauthorization Act of
2001. The Committee on Small Business and Entrepreneurship has closely
reviewed the STTR program this year and found the STTR program to be
highly successful. This important bill acknowledges that success by
expanding the program.
This bill, like most bills considered by the Small Business and
Entrepreneurship Committee, was crafted in a bipartisan manner and
approved by a unanimous vote. I would like to thank Senator Kerry, and
chairman of the committee, for his leadership and cooperation in this
effort. I am pleased to have worked closely with him on this bill, and
I trust our colleagues will overwhelmingly support this legislation.
The STTR Program was created in 1992 to stimulate technology transfer
from research institutions to small firms while, at the same time,
accomplishing the Federal government's research and development goals.
The program is designed to convert the billions of dollars invested in
research and development at our nation's universities, federal
laboratories and nonprofit research institutions into new commercial
technologies. It does this by joining the ideas and resources of
research institutions with the commercialization experience of small
companies.
To receive an award under the STTR Program, a research institution
and a small firm jointly submit a proposal to conduct research on a
topic that reflects an agency's mission and research and development
needs. The proposals are then peer-reviewed and judged on their
scientific, technical and commercial merit.
Numerous benefits result from the Federal government fostering
collaborations between research institutions and small firms. Small
firms have shown themselves to be excellent at commercializing research
when they are provided the opportunity to take advantage of the
expertise and resources that reside in our nation's universities. A
recent report by the Small Business Administration's Office of Advocacy
reviewed the rate of return for research and development by large and
small firms both with and without university partners. When these firms
do not have university partners, their rate of return is 14 percent.
When a collaboration is formed between universities and small firms,
however, the rate of return jumps to 44 percent. By contrast, the rate
of return only increases
[[Page S9409]]
to 30 percent when large firms and universities collaborate.
Moreover, partnerships between small firms and universities have led
to world-class high-technology economic development. Numerous studies
cite the emergence of Silicon Valley and the Route 128 corridor in
Massachusetts as directly resulting from the partnerships and
technology transfer that occurred, and are still occurring, among small
firms, Stanford University and the Massachusetts Institute of
Technology. The cooperation between industry and these universities has
strengthened considerably our economic competitiveness in the world.
The STTR Program seeks to foster this same type of economic development
in the hundreds of communities around the country that contain
universities and federal laboratories. Further, the STTR Program has
proven to be immensely successful at growing small firms from these
types of partnerships.
In a Committee hearing this year on the STTR Program, the General
Accounting Office (GAO) reported on the commercial success of small
firms participating in the STTR program between 1995 and 1997. The
GAO's findings are truly remarkable. Of the 102 projects surveyed in
that time-frame, over 53 percent had either resulted in sales or
follow-on developmental funding for the technology. Through 2000, these
projects had resulted in $132 million from sales and $53 million in
additional developmental funding. Moreover, the GAO reported that the
companies that received the STTR awards are projecting an additional
$186 million in sales in 2001 and an estimated additional $900 million
in sales by 2005. These numbers are even more outstanding since it
typically takes between 7 to 10 years to commercialize new technologies
successfully.
In addition to proving to be an amazing commercial success, the STTR
Program has also provided high-quality research to the Federal
government. The GAO has reported in the past that Federal agencies give
high ratings to the technical quality of STTR research proposals. The
Department of Energy, for example, rated the quality of the proposed
research in the top ten percent of all research funded by the
Department.
A good example of the benefits that the STTR Program provides to
small firms and universities is the experience of Engineering Software
Research and Development, Inc. in St. Louis, Missouri. The chairman and
founder of that company, Dr. Barna Szabo, testified on the STTR program
before the Committee in July of this year. Engineering Software, in
partnership with Washington University in St. Louis, received a phase
two award from the Air Force to develop an innovative method of
analyzing the stresses placed on composite materials. While this
technology is currently being used in the aeronautics industry, it has
many other practical applications.
The STTR Program permitted Dr. Szabo, who had originated an algorithm
he developed at Washington University, to transfer the technology to
Engineering Software, which had the software infrastructure to
transition the technology from an academic to a practical commercial
application. According to Dr. Szabo, Engineering Software has received
an estimated $1.25 million in sales and follow-on developmental funding
resulting from the technology funded by the STTR award and that the
STTR Program was of great assistance in transferring the technology
from the academic environment to actual use and application.
Based on the proven success of the STTR Program to date this
legislation increases the funds allocated for the program from .15
percent to .3 percent of an agency's extramural research and
development budget. This increase will not require any additional
appropriations but merely will reallocate funds in the participating
agencies to this successful program. I thank Senator Levin and Senator
Warner on the Armed Services Committee for working closely with Senator
Kerry and me to make such an increase possible. When a program is
working as well as the STTR Program, it would be a mistake if Congress
did not build on its success.
This is especially true for Federal investment in small business
research and development. Despite report after report demonstrating
that small businesses innovate at a greater rate that large firms,
small businesses receive less than four percent of all Federal research
and development dollars. This number has remained essentially unchanged
for the past 22 years. Increasing funds for the STTR Program sends a
strong message that the Federal government acknowledges the
contributions that small businesses have made and will continue to make
to government research and development efforts and to our nation's
economy.
Mr. President, Senator Kerry and I have worked together to produce a
sound, bipartisan bill. This legislation is good for the small business
high-technology community and will ensure that our Federal research and
development needs are well met in the next decade. I trust that the
bill will receive the overwhelming support of my colleagues.
Mr. REID. Mr. President, I ask unanimous consent that the substitute
amendment be agreed to, the bill, as amended, be considered read a
third time and passed, 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. 1569) was agreed to.
The bill (S. 856), as amended, was read the third time and passed.
____________________