[Congressional Record Volume 154, Number 124 (Saturday, July 26, 2008)]
[Senate]
[Pages S7528-S7531]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. LANDRIEU:
  S. 3342. A bill to improve access to technology by and increase 
entrepreneurship among small businesses located in rural communities, 
and for other purposes; to the Committee on Small Business and 
Entrepreneurship.
  Ms. LANDRIEU. Mr. President, I come to the floor today to speak on 
behalf of small businesses in the rural areas of my State, as well as 
rural small businesses nationwide. This is because small businesses are 
crucial to rural communities as they account for 90 percent of all 
rural establishments. In 1998, small firms employed 60 percent of rural 
workers and over 1.2 million small firms were located in rural areas. 
While Louisiana has major metropolitan areas such as New Orleans, Baton 
Rouge, Shreveport, and Lafayette, my State has countless rural 
communities which are vital to our State's economy. In fact, Louisiana 
has 13.8 million acres of hardwood and softwood forests, in addition to 
the fact that the State is one of the 10 largest producers of 
agricultural products. These include cotton, sugar cane, rice, pecans, 
soybeans, strawberries, and cattle. We are proud of our natural and 
agricultural resources, just as Louisianans are proud of our culture 
and cuisine.
  As I mentioned, rural small businesses are key to the economy in my 
State, just as they are in other States. While the Department of 
Agriculture has various programs to help rural communities, the Small 
Business Administration, SBA, remains the primary Federal agency 
focused on promoting small businesses. From my positions on the Senate 
Committee on Small Business and Entrepreneurship as well as the Senate 
Appropriations Subcommittee on Financial Services and General 
Government, I have focused on improving SBA's ability to serve small 
businesses in Louisiana. One area that I believe this Congress can 
truly make a difference in addressing the main challenges facing rural 
small businesses. In talking to various stakeholders, I have repeatedly 
heard that two of the traditional obstacles to small business expansion 
in rural areas are lack of access to technology and capital.
  For my part, I would like to offer some commonsense solutions to help 
address these and other challenges facing our rural small businesses. 
These businesses are the backbone of our economy so we should give them 
every opportunity to succeed. In particular, I am proud to introduce 
today the, ``Rural Small Business Enhancement Act of 2008.'' This bill 
provides necessary improvements to SBA programs to help the agency 
better assist rural small businesses.
  First, as you may know, in 1982 Congress established a 5-year 
government-wide Small Business Innovation Research, SBIR, program. This 
program has been extended three times, most recently by Public Law 106-
554, which continues the SBIR program through September 30, 2008. The 
SBIR program was created to help meet the Federal Government's research 
and development needs. Among other things, the SBIR program was 
established to stimulate technological innovation related to each 
participating agency's goals and missions, to encourage agencies to use 
small businesses to meet Federal research and development needs, and to 
increase private sector commercialization of innovation derived from 
Federal research and development. The SBIR program had awarded over $17 
billion to more than 82,000 projects from its inception to 2004.
  In addition to the SBIR program, Congress also created the Small 
Business Technology Transfer, STTR, program. STTR is another important 
small business program that expands funding opportunities for small 
business in the area of Federal research and development. This program 
expands the public/private sector partnership to include joint venture 
opportunities for small businesses and nonprofit research institutions. 
For example, our university labs are important to the country in that 
they provide the engine for high-technology innovation. However, if 
innovation cannot be translated from the classroom or the lab to the 
marketplace, it cannot benefit the lives of everyday people. STTR 
combines the strengths of small businesses and universities to transfer 
technology/products from the lab to the marketplace. The small 
businesses in particular benefit from commercialization, which supports 
jobs and the U.S. economy.

  As part of the 2000 Reauthorization of the SBIR program, Congress 
also created the Federal and State Technology Partnership Program, or 
FAST. FAST was created to strengthen the technological competitiveness 
of small business concerns by providing competitive grants to States to 
help support the SBIR program. These grants are traditionally used to 
assist technology transfers by universities to small businesses, 
provide technical assistance to firms participating in the SBIR 
program, and encourage commercialization of technology developed 
through SBIR funding. The FAST program has proven vital to States like 
Louisiana, which have traditionally been in the lower tier of States in 
terms of SBIR/STTR awards and total dollars. For example, in fiscal 
year 2003, Louisiana ranked 44 in terms of total SBIR award dollars out 
of the other 50 States, Puerto Rico and the District of Columbia. That 
year Louisiana had 14 Phase I and II awards for a total of $2,373,062. 
Compare that to the 3 ranked State of Maryland which had 325 awards for 
$96,533,591. For this reason, technical assistance provided under FAST 
grants is extremely important to businesses in my State. In general, 
the more SBIR

[[Page S7529]]

applications that are submitted by small businesses in a State, the 
more SBIR awards are made in that State.
  The FAST program has allowed the Louisiana Business and Technology 
Center, LBTC, located at Louisiana State University in Baton Rouge, to 
establish the Louisiana SBIR/STTR Phase Zero Program. This program 
allows LBTC to grant up to $3,000 to companies needed help in writing 
SBIR Phase One grant applications and up to $5,000 for Phase Two 
proposals. One of the companies that benefitted from FAST and the Phase 
Zero Program was Mezzo Systems. Mezzo Systems is a provider of design 
analysis and prototyping services for micro fluidic, optic, magneto, 
and electronic devices. The company was an incubator tenant of the LBTC 
at LSU and I was able to visit with them at the center in 2003. With 
the support of my office and the LBTC, Mezzo won five SBIR awards 
totalling $1.3 million. One of these awards was an SBIR grant from the 
Department of Defense Missile Defense Agency totalling $750,000.
  Through the FAST program, several spinoff companies at Louisiana 
Technical University in Ruston, Louisiana have also received SBIR 
funding to support research and development related to commercial 
application of their innovations. This is because Louisiana Tech 
recognizes the value of expanding the local service network for 
technology-based, small and rural businesses through programs like 
FAST.
  While my State has utilized the FAST program successfully in the 
past, I believe that rural areas, such as Louisiana, need additional 
technical assistance to help our small businesses compete in the SBIR 
program. In particular, I am concerned about the non-Federal match that 
is required for this program. Currently, each participating State that 
receives FAST awards is required to match each Federal dollar that is 
provided with their own funds. I do not oppose this approach as each 
recipient should put up funds as the Federal Government is putting up 
the majority of funds for these activities. However, as currently 
structured, each State in the bottom 18 States receiving the fewest 
SBIR Phase I awards is required to put up 50 cents for each Federal 
dollar. This makes sense as the lower tier of States need additional 
technical assistance so they should have an incentive to apply for 
these grants. Next, each State in 1 of the 16 States receiving the 
greatest number of Phase I awards are required to match dollar for 
dollar each Federal dollar awarded. States not included in either of 
these two categories, those in the middle tier, are required to match 
75 cents for each Federal dollar. There was also included a special 
match requirement for low-income areas, which is 50 cents for each 
Federal dollar.

  In reviewing this current structure, it is clear that rural areas and 
rural small businesses could benefit from a reduced match requirement 
for the FAST program. Just as low-income areas and States which are the 
bottom 18 States for SBIR awards are provided a 50-cent match 
requirement, FAST award recipients in rural areas should be provided a 
reduced match requirement. My bill would make this important revision 
and would also further reduce the match requirement, to 35 cents, for 
FAST grants from rural areas which are also in the bottom 18 States. 
This increased technical assistance would go a long way and really 
provide assistance where it is most needed--our rural small businesses 
and universities. Furthermore, this change does not affect the 
allocation of SBIR program awards but does provide rural areas with a 
level playing field when competing for these awards.
  As I mentioned, the SBIR program is set to expire on September 30, 
2008. It is important that we reauthorize this program given its 
importance to our country, universities and small businesses. Almost as 
important as reauthorizing this program is ensuring that the necessary 
technical assistance programs are also extended. Small business owners 
often lack the resources and expertise necessary to improve the quality 
of their proposals. That is where programs such as FAST come in to 
help. For SBIR/STTR, Congress also created a program which was 
particularly helpful to rural small businesses. In particular, the 
Rural Outreach Program was created by Senator Kit Bond in 1997 to help 
the lower tier SBIR/STTR States increase their participation and 
success in both programs. Funds under this program helped these 25 
underrepresented States establish or expand programs to assist small 
high technology businesses through training, counselling, and outreach. 
Activities included workshops, one-on-one counselling for small 
businesses, and the expansion of the base of high-technology/economic 
development service providers.
  While this program was extremely helpful to rural States like 
Louisiana, President Bush each year tried to cut the program in his 
budget. Along with Senator John Kerry and six other Senators, in 2004 I 
sent a letter to then SBA Administrator Hector Barreto urging him to 
restore Rural Outreach Program funds in his fiscal year 2005 budget. 
Unfortunately, it is my understanding that no additional funding was 
provided and the program was not reauthorized. In my bill I include a 
reauthorization of the Rural Outreach Program. It is my hope to work 
closely with Senators Bond and Kerry to reauthorize this important 
program when we reauthorize the overall SBIR program. I would also note 
that I believe the Rural Outreach program, which I understand may have 
been intended to phase out as the FAST program ramped up, can coexist 
with the FAST program. With the change included in this bill for the 
FAST program, along with reauthorizing the Rural Outreach Program, the 
States at the lower tier of SBIR awards would receive the help needed 
most--technical assistance. Rural States and those at the bottom of the 
rankings in SBIR awards deserve more, not less, technical assistance 
dollars. That is so that they can provide the help necessary to foster 
innovation and commercialization in their States.

  Next, both the SBIR and STTR programs are administered by the SBA 
Office of Technology. Eleven agencies participate in the SBIR program 
and five agencies participate in the $2 billion STTR program, yet I 
have repeatedly heard concerns from stakeholders that the Office of 
Technology is understaffed and overwhelmed. The employees in this 
office deserve tremendous credit for their service in running these 
vital programs but they also deserve additional help. Groups in my 
State have told me about calling the office for assistance with 
understanding SBIR/STTR rules. They indicated that the office was 
helpful, but slow. For example, when an award is granted, the agency 
administering the award provides the names of numerous staff members 
that may be contacted for SBIR reporting, funds management, technical 
assistance, and other needs. There does not appear to be the same 
capacity for assistance or outreach in the Office of Technology. If one 
considers that both SBIR/STTR provide hundreds of awards worth hundreds 
of millions of dollars each year, additional funds for staff to oversee 
these programs is a wise investment of taxpayer funds. The bill I am 
introducing today would require SBA to hire five additional employees 
and provide the agency with the funds to hire them.
  While the Rural Small Business Enhancement Act includes these 
provisions which focus on existing SBA programs, there also is a need 
for new programs to help our rural small businesses. The Federal 
Government disposes of or sells thousands of unused computers each 
year. Some of this technology could be better utilized in the hands of 
entrepreneurs in rural communities. Recently, the SBA Office of 
Advocacy worked with U.S. Department of Agriculture to donate a 
warehouse of used Department of Health and Human Services computers to 
rural communities. Given that the SBA is charged with promoting 
entrepreneurship in low-income and rural communities, it is a natural 
agency to spearhead an initiative to donate/discount used Federal 
computers to rural/low-income areas. According to information provided 
to my office by SBA, the agency currently has about 7,000 desktop 
personal computers and 2,700 laptops. Some estimates say that perhaps 
as many as 10 percent of these computers are targeted for disposal 
every month or so. When SBA disposes of these computers, they follow 
General Services Administration guidelines to either dispose of them 
through excess property auctions or through contractors. I would like 
to see SBA

[[Page S7530]]

help address the technology challenges of rural small businesses by 
donating these used computers to these businesses or offering them at 
discounted prices. As such, my bill creates a 3 year pilot program at 
SBA where the agency would provide not less than 1,000 excess 
government computers each year to small businesses in rural areas.
  Lastly, rural small businesses, just as with businesses in 
metropolitan areas, need capital to expand or survive. Unfortunately, 
many smaller lenders which have served rural areas have merged with 
larger banks in recent years. These local banks are traditionally the 
only source of capital in the community. To address this issue, my bill 
directs the Administrator to establish a rural lending outreach 
program. This program would provide not more than an 85 percent 
guaranty for loans of $250,000 or less. Since the program is targeted 
for rural areas, there is a requirement that the program be carried out 
only through lenders in rural areas. I would note that this particular 
provision is also included in a bill which I have cosponsored, S. 2920, 
the ``SBA Reauthorization and Improvement Act'' which was introduced by 
Senators Kerry, Snowe, and Levin.

  In the coming 2 months, both the House and Senate will be working to 
reauthorize the SBIR program. As we reauthorize the SBIR program, 
Congress should not forget the role that rural small businesses and 
universities play in fostering innovation and development. For example, 
in Louisiana, we have multiple universities participating in these 
programs and collaborating with local small businesses. I have already 
mentioned LSU and Louisiana Tech. Louisiana Tech in particular has 
steadily increased its activity in the SBIR program at a key time for 
the region. This is because the Barksdale Air Force base located in 
Shreveport, which is 70 miles from Ruston, is looking to secure the 
permanent Cyber Command. This command would protect the United States 
from cyber warfare. All of the universities, colleges, and parishes in 
this area are collaborating on securing this command, which could mean 
thousands of jobs for the region. As they look to attract additional 
technology-based businesses, the SBIR/STTR program has proven to be an 
important economic development tool for local businesses and 
communities. For my part, I want to ensure that universities like 
Louisiana Tech in rural areas have every opportunity to compete on a 
level playing field for SBIR dollars. I also would like to provide our 
rural small businesses with the tools necessary to partner with these 
institutions to commercialize the products of their research. The bill 
I introduce today would accomplish both of these goals and, in the 
process, it would improve the ability of SBA to assist rural small 
businesses. I urge my colleagues to support this commonsense 
legislation as we must foster development in our rural small 
businesses. Without these businesses, our country cannot truly compete 
on the international stage. This is because our Fortune 500 companies 
and large urban areas are instrumental in the success of the United 
States but rural small businesses and rural areas form the backbone of 
this country.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3342

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Rural Small Business 
     Enhancement Act of 2008''.

     SEC. 2. DEFINITIONS.

       In this Act, the terms ``Administration'' and 
     ``Administrator'' mean the Small Business Administration and 
     the Administrator thereof, respectively.

     SEC. 3. RURAL AREAS.

       Section 34(e)(2) of the Small Business Act (15 U.S.C. 
     6657d(e)(2)) is amended--
       (1) by redesignating subparagraphs (C) and (D) as 
     subparagraphs (D) and (E), respectively; and
       (2) by inserting after subparagraph (B) the following:
       ``(C) Rural areas.--
       ``(i) In general.--Except as provided in clause (ii), the 
     non-Federal share of the cost of the activity carried out 
     using an award or under a cooperative agreement under this 
     section shall be 50 cents for each Federal dollar that will 
     be directly allocated by a recipient described in paragraph 
     (A) to serve small business concerns located in a rural area.
       ``(ii) SBIR awards.--For a recipient located in a rural 
     area that is located in a States as described in subparagraph 
     (A)(i), the non-Federal share of the cost of the activity 
     carried out using an award or under a cooperative agreement 
     under this section shall be 35 cents for each Federal dollar 
     that will be directly allocated by a recipient described in 
     paragraph (A) to serve small business concerns located in the 
     rural area.
       ``(iii) Definition of rural area.--In this subparagraph, 
     the term `rural area' has the meaning given that term in 
     section 1393(a)(2)) of the Internal Revenue Code of 1986.''.

     SEC. 4. RURAL OUTREACH PROGRAM.

       Section 9 of the Small Business Act (15 U.S.C. 638) is 
     amended by inserting after subsection (r) the following:
       ``(s) Outreach.--
       ``(1) Definition of eligible state.--In this subsection, 
     the term `eligible State' means a State--
       ``(A) if the total value of contracts awarded to the State 
     during fiscal year 2004 under this section was less than 
     $10,000,000; and
       ``(B) that certifies to the Administration described in 
     paragraph (2) that the State will, upon receipt of assistance 
     under this subsection, provide matching funds from non-
     Federal sources in an amount that is not less than 50 percent 
     of the amount provided under this subsection.
       ``(2) Program authority.--Of amounts made available to 
     carry out this section for each of the fiscal years 2009 
     through 2020, the Administrator may expend with eligible 
     States not more than $2,000,000 in each such fiscal year in 
     order to increase the participation of small business 
     concerns located in those States in the programs under this 
     section.
       ``(3) Amount of assistance.--The amount of assistance 
     provided to an eligible State under this subsection in any 
     fiscal year--
       ``(A) shall be equal to twice the total amount of matching 
     funds from non-Federal sources provided by the State; and
       ``(B) shall not exceed $100,000.
       ``(4) Use of assistance.--Assistance provided to an 
     eligible State under this subsection shall be used by the 
     State, in consultation with State and local departments and 
     agencies, for programs and activities to increase the 
     participation of small business concerns located in the State 
     in the programs under this section, including--
       ``(A) the establishment of quantifiable performance goals, 
     including goals relating to
       ``(i) the number of program awards under this section made 
     to small business concerns in the State; and
       ``(ii) the total amount of Federal research and development 
     contracts awarded to small business concerns in the State;
       ``(B) the provision of competition outreach support to 
     small business concerns in the State that are involved in 
     research and development; and
       ``(C) the development and dissemination of educational and 
     promotional information relating to the programs under this 
     section to small business concerns in the State.''.

     SEC. 5. RURAL SMALL BUSINESS TECHNOLOGY PILOT PROGRAM.

       (a) Definitions.--In this section--
       (1) the term ``qualified small business concern'' means a 
     small business concern located in a rural area;
       (2) the term ``rural area'' has the meaning given that term 
     in section 1393(a)(2)) of the Internal Revenue Code of 1986; 
     and
       (3) the term ``small business concern'' has the same 
     meaning as under section 3 of the Small Business Act (15 
     U.S.C. 632).
       (b) Report.--Not later than 120 days after the date of 
     enactment of this Act, the Administrator, in coordination 
     with the Administrator of General Services, shall submit to 
     the Committee on Small Business and Entrepreneurship of the 
     Senate and the Committee on Small Business of the House of 
     Representatives a report describing--
       (1) the number of Government-owned computers in the 
     possession of the Administration, including the number of 
     working computers, nonworking computers, desktop computers, 
     and laptop computers;
       (2) the number of Government-owned computers disposed of by 
     the Administration during the 5-year period ending on the 
     date of enactment of this Act, including the number of such 
     computers that were working computers, nonworking computers, 
     desktop computers, or laptop computers;
       (3) the procedures of the Administration for the disposal 
     of Government-owned computers;
       (4) the plans of the Administrator for carrying out the 
     pilot program under subsection (c).
       (c) Pilot Program.--
       (1) Establishment.--Not later than 180 days after the date 
     of enactment of this Act, the Administrator shall establish a 
     pilot program to provide not more than 1,000 excess 
     Government-owned computers each year to qualified small 
     business concerns at no cost or a reduced cost.
       (2) Purposes of program.--The pilot program established 
     under paragraph (1) shall be designed to--
       (A) encourage entrepreneurship in rural areas;
       (B) assist small business concerns in accessing technology; 
     and
       (C) accelerate the growth of qualified small business 
     concerns.

[[Page S7531]]

       (3) Termination.--The authority to conduct the pilot 
     program under this subsection shall terminate 3 years after 
     the date of enactment of this Act.
       (d) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Administrator such sums as are 
     necessary to carry out this section.

     SEC. 6. OFFICE OF TECHNOLOGY.

       (a) In General.--The Administrator shall hire not less than 
     5 additional full-time equivalent employees for the Office of 
     Technology of the Administration.
       (b) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Administrator such sums as are 
     necessary to carry out this section.

     SEC. 7. RURAL LENDING OUTREACH PROGRAM.

       Section 7(a) of the Small Business Act (15 U.S.C. 636(a)) 
     is amended--
       (1) by striking paragraph (25)(C);
       (2) by redesignating paragraph (32) relating to increased 
     veteran participation, as added by section 208 of the 
     Military Reservist and Veteran Small Business Reauthorization 
     and Opportunity Act of 2008 (Public Law 110-186; 122 Stat. 
     631), as paragraph (33);
       (3) by adding at the end the following:
       ``(34) Rural lending outreach program.--
       ``(A) In general.--The Administrator shall carry out a 
     rural lending outreach program to provide not more than an 85 
     percent guaranty for loans of not more than $250,000. The 
     program shall be carried out only through lenders located in 
     rural areas (as the term `rural' is defined in section 501(f) 
     of the Small Business Investment Act of 1958 (15 U.S.C. 
     695(f))).
       ``(B) Loan terms.--For a loan made through the program 
     under this paragraph--
       ``(i) the Administrator shall approve or disapprove the 
     loan within 36 hours of the time the Administrator receives 
     the application;
       ``(ii) the program shall use abbreviated application and 
     documentation requirements; and
       ``(iii) minimum credit standards, as the Administrator 
     considers necessary to limit the rate of default on loans 
     made under the program, shall apply.''.
                                 ______