[Congressional Record Volume 154, Number 141 (Monday, September 8, 2008)]
[Senate]
[Page S8134]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. FEINGOLD:
  S. 3451. A bill to amend the Small Business Act to extend the Small 
Business Innovation Research and Small Business Technology Transfer 
programs, to increase the allocation of Federal agency grants for those 
programs, to add water, energy, transportation, and domestic security 
related research to the list of topics deserving special consideration, 
and for other purposes; to the Committee on Small Business and 
Entrepreneurship.
  Mr. FEINGOLD. Mr. President, we need to take strong steps to promote 
job creation, innovation and sustainable long term economic development 
and there is no better way to do this than by stimulating and 
supporting small business innovation, especially in areas of national 
priority. As part of this effort, today I am introducing the 
Strengthening Our Economy Through Small Business Innovation Act of 
2008.
  Job growth, innovation and economic development are driven by our 
small businesses. Small businesses also tend to be based in our cities 
and communities and so they are major contributors to our local 
economies. Half of our county's payroll jobs and most of our new job 
opportunities are provided by small businesses. Small businesses are 
proven innovators and drive commercialization of cutting edge 
technologies. They also are effective partners with universities to 
enhance product creation, develop university income and attract 
university graduates and faculty through increased innovative job 
opportunities.
  Over the last 25 years, through the Small Business Innovation and 
Research program, SBIR, and, more recently, Small Business Technology 
Transfer program, STTR, up to 2.5 percent and 0.3 percent, 
respectively, of Federal R&D funds from 11 Federal agencies have been 
specifically allocated to our Nation's small businesses to fund 
innovation.
  My bill does three things. First, it extends the SBIR and STTR 
programs for a further 14 years so that small businesses, as well as 
universities and non-profit research organizations that collaborate 
with small businesses, can continue to leverage Federal research and 
development funding.
  Second, it significantly increases the allocation of funds and the 
awards from large Federal research and development budgets to small 
businesses through the SBIR and STTR programs. It would increase the 
SBIR allocation from its current 2.5 percent to 10 percent and the STTR 
allocation from 0.3 percent to 1.0 percent over a 3 year period. It 
would increase SBIR phase I awards from $100,000 to $300,000 and phase 
II awards from $750,000 to $2.2 million. Third, it identifies specific 
funding priorities for energy innovation; safe and secure water; 
domestic security; and transportation.
  Not only are small businesses our major source of employment, they 
employ about one third of our country's scientists and engineers and 
generate more patents on a per capita basis than large businesses and 
universities. This is simply a good investment in sustained job 
creation and innovation.
  Studies by both the independent Government Accountability Office and 
The National Research Council have established that these programs are 
very effective in addressing their stated purposes. The NRC's 
comprehensive study, which was completed last year, found that the SBIR 
program ``is sound in concept and effective in practice.'' It also 
found that the program was ``stimulating technological innovation''; 
``linking universities to the public and private markets''; 
``increasing private sector commercialization of innovations'' at an 
``impressive'' rate; and ``providing widely distributed support for 
innovation activity.'' The study concluded that:

       [T]he program is proving effective in meeting Congressional 
     objectives. It is increasing innovation, encouraging 
     participation by small companies in R&D, providing support 
     for small firms owned by minorities and women, and resolving 
     research questions for mission agencies in a cost effective 
     manner. Should the Congress wish to provide additional funds 
     for the program in support of these objectives, those funds 
     could be employed effectively by the nation's SBIR.

  The NRC's study found that universities and other non-profit research 
institutions will benefit significantly from the increase in both the 
SBIR and the STTR programs. The STTR allocation increase will directly 
benefit universities and efforts to bring university-based research 
into the commercial marketplace, as a partnership with a non-profit 
research institution, such as a university, is a requirement of all 
STTR award recipients.
  The NRC study also found that many of the small businesses that 
receive SBIR funding are rooted in the university infrastructure so 
there will be synergies as investigators and graduates from 
universities, will have opportunities to be part of commercial 
developments. More than \2/3\ of SBIR companies report that at least 
one founder was previously an academic. About one-third of SBIR company 
founders were most recently employed as academics before founding the 
company. Over a third of SBIR projects cite direct university 
involvement with: 27 percent of projects having university faculty as 
contractors on the project; 17 percent using universities themselves as 
subcontractors; and 15 percent employing graduate students.
  In its report accompanying reauthorization legislation, the Senate 
Small Business and Entrepreneurship Committee recently concluded that:

       increases in the SBIR allocation will invest money in 
     research, contracting, internships, and other collaborative 
     activities done with universities, with the contracting and 
     patenting activities with SBIR companies being a sizable 
     source of revenue for universities as well. The university-
     industry partnerships that SBIR creates are crucial in that 
     they provide an applied research and commercialization focus 
     that otherwise likely would not be present in university 
     research. More specifically, the partnerships are important 
     in exposing faculty and the next generation of scientists and 
     engineers to commercial research and development. SBIR 
     businesses provide graduate and undergraduate students with 
     hands-on experience and job opportunities that universities 
     would be unable to provide alone.

  Our country faces some major challenges in which targeted research 
and development will be critical. Congress, with non-partisan expert 
guidance, has a role to play in guiding our national research and 
development priorities and, in this case, stimulating small business 
innovation in specific areas of critical national need. The National 
Academies of Science and other independent government research 
organizations provide us with carefully researched and considered 
recommendations on how we can address these priorities, so my bill 
draws on their recommendations to develop innovative energy 
technologies; enhance water quality and security; strengthen domestic 
security; and address transportation priorities. I urge my colleagues 
to support my legislation.

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