[Congressional Record Volume 155, Number 3 (Thursday, January 8, 2009)]
[Senate]
[Pages S221-S222]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. FEINGOLD:
  S. 177. 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 these 
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 are all aware of the serious 
challenges our economy faces in the short term and the urgency of our 
need to promote job creation and economic development. I am committed 
to engaging in this broad effort with my colleagues on both sides of 
the aisle. But it is essential that our efforts not just be short term 
fixes--they must not only aim to create jobs and investment 
opportunities in the short term, they must be part of strategic efforts 
to strengthen our Nation's innovation capabilities and sustain long 
term economic development in a changing and competitive global 
environment. 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 
2009.
  Job growth, innovation and economic development are driven by our 
small

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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. 
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. 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, the 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. These small business allocations are not sufficient. We 
must diversify and strengthen innovation capabilities and our economic 
base, and to accomplish this we must extend and increase R&D 
allocations to our Nation's innovative small businesses.
  My bill does 3 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.
  The SBIR program is tested, successful and worthy of extension. In 
its comprehensive study of the SBIR program, the National Research 
Council found that the program ``is sound in concept and effective in 
practice''; 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 also found that universities and other non-profit 
research institutions would benefit significantly from the increase in 
both the SBIR and the STTR programs. In particular, 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. Many of the 
small businesses that receive SBIR funding are rooted in the university 
infrastructure so investigators and graduates from universities will 
have opportunities to be part of commercial developments. More than 
two-thirds 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 not only faces immediate economic and employment 
challenges, it faces major challenges in transportation, energy, 
domestic security and water quality and safety. 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 and job creation 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. This is not only a 
good investment in short term job creation; it is an imperative 
investment in our Nation's long term innovation prospects and economic 
development.
  The costs of my bill would be fully offset by cancellation of the 
airborne laser program. CBO estimates that cancelling that program will 
produce savings of over $2.6 billion.
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