[Congressional Record (Bound Edition), Volume 157 (2011), Part 4]
[Senate]
[Pages 5639-5640]
[From the U.S. Government Publishing Office, www.gpo.gov]




                               SBIR/STTR

  Mrs. HUTCHISON. Mr. President, today, I rise to speak to an amendment 
I believe addresses three underlying issues in S. 493, the Small 
Business Innovation Research Program, SBIR, and the Small Business 
Technology Transfer Program, STTR, Reauthorization Act.
  First, this amendment reduces the reauthorization of these programs 
from 8 years down to 3 years. This reauthorization bill, S. 493, makes 
substantial changes to the SBIR and STTR programs, and it is important 
for the reauthorization timeline to reflect that. The changes could 
dramatically improve the program, but in case there are additional 
changes that need to be to ensure they remain successful and effective, 
it is in the best interest of the participating agencies and the 
participants in the programs that there is an opportunity to make 
adjustments after a few years.
  Second, my amendment strikes the mandatory increase agencies must set 
aside from their budgets to fund both the SBIR and STTR programs. 
Currently, these programs are funded through the participating agencies 
setting aside 2.5 percent of their total research budgets for the SBIR 
program and 0.3 percent for the STTR program. S. 493 would require this 
set aside be increased to 3.5 percent and 0.6 percent over a period of 
time for the SBIR and STTR programs, respectively.
  In this current budget environment, when all agency budgets are 
feeling the pinch, increasing this mandatory set aside will mean fewer 
dollars are available for other research. These programs focus on 
commercialization of cutting edge innovation, which is critical to our 
country's global competitiveness. However, this mandatory increase 
would mean funding cuts to other life saving research. For the National 
Institutes of Health this 1 percent increase to fund the SBIR program 
would mean there would be about $300 million less for other NIH 
research, research focused on finding new cures. For example, NIH 
spends about $300 million per year on prostate cancer, a little less 
than that on lymphoma research and spends only half of that on autism 
research every year.
  There is no evidence that agencies must turn away high-quality 
applicants or underfund them because there is a lack of funding. In 
fact, agencies that participate in these programs currently have the 
discretion to spend more on the SBIR or STTR programs if they deem it 
appropriate. The current set aside is a floor, not a ceiling. This 
amendment does nothing to change that. However, I believe mandating the 
increase, especially in this current budget environment, especially for 
8 years, could greatly disrupt Federal funding for other critical 
research.
  The third provision of my amendment addresses the reality that 
bringing an idea to market is a complex process that often requires 
several rounds of financing. This amendment ensures that all small 
businesses are given an opportunity to compete for these grants 
regardless of their financial makeup, as long as they are a small 
business. Years ago there was an administrative change made to the 
eligibility criteria for these programs that has severely restricted 
the ability of quality applicants to compete for funding. That change 
has unilaterally excluded companies solely due to their financial 
structure and not due to the size of their company. Small businesses 
are small businesses because of the number of people they employ, not 
because they have received their start up money through a venture 
capitalist, or an angel investor or from winning the lottery. This 
sentiment was echoed by the Director of the Office of Science and 
Technology Policy, John Holdren, in a letter sent to Chairman Landrieu 
in 2009. Mr. Holdren stated that ``it is critical for the U.S. economy 
and global competitiveness that the very best companies are sustained 
and the most promising small companies are not arbitrarily restricted 
or excluded because of their capital structure.''
  Arbitrary exclusion from these programs has affected small businesses 
all over the country. Too many times it has become a defining part of 
the story of too many promising small businesses. One such story is 
that of ActaCell, Inc. It is a company started with leading research in 
the lithium ion materials field from the University of Texas in 2007. 
When ActaCell applied for an SBIR grant through the Department of 
Defense, it met the new eligibility standards required by the program; 
both in its size and its financial structure. However, as the 
application was pending, ActaCell needed to secure additional financing 
in order to continue its operations and therefore fell outside of these 
new arbitrary guidelines. The result was the Federal Government missed 
out on an opportunity to fund promising research, solely due to this 
arbitrary financial restriction.
  The Austin Chamber of Commerce wrote a letter to my office with their 
many concerns regarding this provision. They stated that the problem is 
compounded by the fact that the majority venture capitalist-funded 
companies can house multiple unfunded ideas

[[Page 5640]]

that are ultimately all excluded from the program. This occurs, even 
though research shows great promise, only because a business's overall 
financial structure offends this financial restriction. Their letter 
states that ``Small businesses should not be forced to choose between 
the SBIR program and venture capital funding. To accelerate American 
technological innovation, Federal efforts must promote the importance 
of both public and private sector sources of capital and 
partnerships.''
  Yesterday, in front of the House Small Business Committee, another 
Texan told his story of how these restrictions have hurt innovation. 
Mr. Glenn Norem cofounded Totus Lighting Solutions, a company that 
manufactures and markets products that integrate surveillance with 
sensor monitoring on intelligent lighting platforms. Because of these 
arbitrary financial restrictions in the SBIR program, Mr. Norem had to 
chose between venture capital funding and Federal grants. When asked 
what impact that decision has had on his company and other companies 
similarly situated, he stated, that it delayed commercialization. 
Allowing companies to partner with all available options enables 
innovation, which grows companies and creates jobs.
  This amendment is supported by the University of Texas, Austin 
Chamber of Commerce, Rice University, the Association of American 
Universities and the Association of Public and Land-grant Universities.
  I will be proud to offer this amendment that will improve the 
underlying legislation and help ensure that absolute best research gets 
funded by American tax dollars, so that innovation can lead to 
commercialization as quickly as possible. Our country's job creators 
need us to do our jobs so they can do theirs.

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