[House Report 107-213]
[From the U.S. Government Publishing Office]
107th Congress Rept. 107-213
HOUSE OF REPRESENTATIVES
1st Session Part 1
======================================================================
SMALL BUSINESS TECHNOLOGY TRANSFER PROGRAM REAUTHORIZATION ACT OF 2001
_______
September 21, 2001.--Ordered to be printed
_______
Mr. Manzullo, from the Committee on Small Business, submitted the
following
R E P O R T
together with
ADDITIONAL VIEWS
[To accompany H.R. 1860]
[Including cost estimate of the Congressional Budget Office]
The Committee on Small Business, to whom was referred the
bill (H.R. 1860) to reauthorize the Small Business Technology
Transfer Program, and for other purposes, having considered the
same, reports favorably thereon with an amendment and
recommends that the bill as amended do pass.
The amendment is as follows:
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 section 4 of 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:
``(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 the
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 inserting ``and STTR'' after ``solely for
SBIR'';
(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 new
subsection:
``(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 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 LOW-INCOME AREAS.
(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 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 located in 1
or more qualified census tracts, as that term
is defined in section 42(d)(5)(C)(ii) of the
Internal Revenue Code of 1986.''.
(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).''.
Purpose
The purpose of H.R. 1860 is to amend the Small Business Act
to extend the Small Business Technology Transfer (STTR) Program
through the end of September, 2009. Under present law, the STTR
Program will terminate on September 30, 2001. The STTR Program
was created by Congress under the Small Business Research and
Development Enhancement Act of 1992 and was initially
authorized for three years beginning in FY1994. The program was
reauthorized for one additional year in 1996 and subsequently
extended for an additional four years, through the end of
FY2001, by the Small Business Reauthorization Act of 1997.
Besides extending the life of the program for eight additional
years, H.R. 1860 makes improvements to the program similar to
those made previously to the Small Business Innovative Research
(SBIR) Program.
Beginning in FY2004 the percentage of the extramural budget
required to be expended by agencies participating in the
program increases from 0.15 percent to 0.3 percent. The
permanent nature of the program is acknowledged by striking the
word ``pilot'' as previously used to describe the program.
Again, beginning in FY2004, the amount that a small business
can receive for a Phase II award is increased from $500,000 to
$750,000, in line with Phase II awards made under the SBIR
Program.
Participating agencies are directed to implement an
outreach program to research institutions and small business
concerns for the purpose of enhancing the STTR Program, in
conjunction with any outreach done for purposes of the SBIR
Program. The Administrator of the Small Business Administration
is directed to modify the STTR Program policy directive to
clarify that the rights to data provisions apply to all three
phases of the STTR Program. The Administrator is also required
to collect and maintain data in a common format necessary to
fairly evaluate the successes or shortcomings of the program
and to work with the participating agencies to simplify and
standardize the reporting requirements for the collection of
data from STTR applicants and awardees.
The provisions of the Federal and State Technology
Partnership (FAST) Program are amended to require that the
Administrator promulgate regulations establishing standards for
the consideration of proposals for funding under the FAST
Program and adds as one of the evaluation criteria whether the
proposal addresses the needs of small business concerns located
in one or more qualified census tracts. Reports to Congress
regarding awards under the SBIR and STTR Programs are required
to include information concerning the number of proposals
received from, and the total of awards to, HUBZone small
business concerns. The Administrator is directed to promulgate
an STTR Program-wide model agreement for intellectual property
rights.
Background
The STTR Program is independent of the SBIR Program with
which it is frequently confused. The STTR Program requires a
cooperative venture between a for-profit small business and a
researcher from a university, federal laboratory, or a non-
profit research institution for the purpose of developing
commercially viable products from ideas spawned in a laboratory
environment. The STTR Program builds on the well established
reputation that small businesses have for innovation and job
creation to the benefit of the economy, generally, and,
specifically, those who participate in the program.
The program also benefits from the vast wealth of
scientific knowledge that is available in this Nation's
research institutions that employ approximately one-fourth of
the scientists and engineers in the United States. Together,
small business concerns and the research community have proved
a successful vehicle for moving ideas from academic environs to
the practical, useful, commercial world to the benefit of the
U.S. economy and workers.
For the Federal agency to participate in the program, it
must have an extramural budget for research or research and
development that exceeds $1 billion for any fiscal year.
Presently, there are five federal agencies that meet the
funding requirement. They are: Department of Defense,
Department of Energy, Department of Health and Human Services,
National Aeronautics and Space Administration, and National
Science Foundation.
No new funding is required to reauthorize the program since
the program is funded as a percentage of the extramural
research and development funds annually appropriated by
Congress to those federal agencies meeting the funding
threshold. The percentage has increased from the initial amount
of no less than 0.05 percent for FY1994 to the present level of
no less than 0.15 percent.
To be eligible for an STTR award a small business must have
no more than 500 employees, and be independently owned and
operated with its principal place of business in the United
States. In addition, the small business may not be the dominant
entity in the field in which the project is contained and must
be primarily owned by U.S. citizens. To be eligible to
participate in the program, a research entity must be a non-
profit institution as defined by the Stevenson-Wyler Act of
1980 or a federally funded research and development center as
determined by the National Science Foundation under the
provisions of section 35(c)(1) of the Office of Federal
Procurement Policy Act.
The program requires that the project be research and
development conducted jointly by a small business and a
research institution in which not less than 40 percent of the
work is performed by the small business and that not less than
30 percent of the work is performed by the research
institution. Though the venture is cooperative in nature, the
small business is responsible for the overall management and
control of each project.
The statute mandates that each award go through three
phases. Phase I is the start-up part of a particular project
and entails, as may be possible, a determination of the
scientific, technical, and commercial merit of the concepts
underlying a particular award. Phase II provides an opportunity
to further develop the concepts to meet the objectives of the
particular award. Only projects that successfully complete
Phase I can be considered for funding under Phase II. Phase III
is the point at which the project moves from the laboratory to
commercial application or further cooperative research and
development. No STTR funds may be used to pay for Phase III.
The funding must come from the private sector or non-STTR
federal funding.
The five federal agencies presently participating in the
STTR Program determine the projects to be funded through the
program. In choosing those areas to be included, the
participating agencies are required to give special
consideration to research topics and critical technologies
identified by the National Critical Technologies Panel and the
Secretary of Defense. Each participating agency selects the
awardees to be funded based on proposals solicited, normally on
an annual basis, by the agency.
The Small Business Act requires each participating agency
to develop a model agreement, to be approved by the
Administrator, for allocating between small business concerns
and research institutions intellectual property rights and
rights, if any, to carry out follow-on research, development or
commercialization. The five agencies in the program issued two
model agreements that were approved by the Administrator, one
was promulgated by the Departments of Energy and Health and
Human Services and the other by the Department of Defense, the
National Science Foundation, and the National Aeronautics and
Space Administration. Use of the model agreements is not
mandatory. Small businesses, research institutions, and the
agencies may negotiate their own agreements which has led to a
lack of uniformity in the protection of rights of the parties
involved from agency-to-agency and from agreement-to-agreement.
To protect a small business from losing the benefit of
technical data generated in the course of a project, current
law provides that the rights in data generated by a small
business in the course of a STTR project shall be retained by
the small businesses for a period of not less than four years.
This provision authorizes a participating agency to protect
technical data generated by a small business while performing
under a STTR project agreement and to refrain from disclosing
such data to competitors of the small business. Some doubt had
been raised whether the four-year period applied to all three
phases of an STTR project. The provisions of H.R. 1860 make it
clear that the four-year period applies to all three phases.
The U.S. General Accounting Office recently completed a
report on the STTR Program dated June 4, 2001, based on 102
projects that had received Phase II awards in fiscal years 1995
through 1997, the first three years the awards were made. Among
the findings, the report states:
For the 102 partnerships that we reviewed, the
companies reported that both the companies and the
research institutions contributed significantly to the
R&D. For example, the companies believed that both
parties contributed significantly to the knowledge and/
or expertise essential to the project. Furthermore,
they generally believed that both parties contributed
significantly in constructing or testing prototypes and
in providing special equipment or facilities. However,
the companies reported that, in aggregate, the
companies played a substantially greater role in
originating the key ideas for the R&D: in their view,
they originated or were primarily responsible for
originating the key ideas in 72 percent of the
projects.
The companies reported a variety of results,
including sales of a product, process, or service, the
receipt of additional developmental funding, patents
granted, and discontinuance of projects. As of April
2001, the companies reported about $132 million in
total sales and about $53 million in additional
developmental funding. About two-thirds of the projects
with reported sales achieved their first sale in 1999
or 2000 and projected about $900 million in additional
sales by December 31, 2005. The companies also reported
receiving 41 patents for the core technologies
associated with their projects and the creation of 12
spin-off companies. Twenty-seven projects were
discontinued. When asked to identify those factors that
had a great role in the decision to discontinue the
project, companies most frequently cited insufficient
additional funding for further technical development.
(U.S. General Accounting Office, Survey of Companies
Receiving Small Business Technology Transfer (STTR)
Phase II Awards Fiscal Years 1995-1997, Letter to the
Honorable Christopher S. Bond and others, dated June 4,
2001, GAO-01-766R Small Business Technology Transfer
Program).
Committee Action
hearing on reauthorization of sttr program
On Wednesday, June 20, 2001, the Subcommittee on Workforce,
Empowerment and Government Programs and the Subcommittee on
Rural Enterprises, Agriculture and Technology of the Committee
on Small Business held a joint hearing, commencing at 3:00
p.m., to hear testimony with regard to the reauthorization of
the STTR Program. The Subcommittees received the testimony of
six witnesses: Mr. Maurice Swinton, Assistant Administrator,
Office of Technology, U.S. Small Business Administration; Mr.
Timothy Foremen, Director, Office of Small and Disadvantaged
Business Utilization, Department of Defense; Dr. Walter M.
Polansky, Office of Science, Department of Energy; Ms. Jo Anne
Goodnight, SBIR and STTR Program Coordinator, National
Institutes of Health, Department of Health and Human Services;
Mr. Anthony Camarota, President, Avtec Industries, Inc.,
Hudson, Massachusetts; and, Mr. Richard W. Carroll, Chief
Executive Officer, Digital System Resources, Inc., Fairfax,
Virginia.
The hearing stressed the urgency of reauthorizing the STTR
Program, the successful use of the program by Federal agencies
involved, and the success of the program in bringing new
technologies to the marketplace.
consideration of h.r. 1860
At 10:05 a.m. on August 1, 2001, the Committee on Small
Business met to consider and report four bills, including H.R.
1860. After consideration of H.R. 1860, Chairman Manzullo asked
unanimous consent that H.R. 1860 be considered as read and open
for amendment at any point. Chairman Manzullo and the ranking
minority Member, Ms. Velazquez, jointly offered an amendment in
the nature of a substitute. There were no amendments to the
amendment in the nature of a substitute. Chairman Manzullo
moved that the amendment in the nature of a substitute be
adopted and it was adopted unanimously by voice vote. The
Chairman then moved the bill to be reported, and at 10:45 a.m.,
by voice vote, a quorum being present, the Committee
unanimously passed H.R. 1860, as amended, and ordered it to be
reported.
section-by-section analysis
Section 1. Short title
This section establishes the short title as the ``Small
Business Technology Transfer Program Reauthorization Act.''
Section 2. Extension of program and expenditure amounts
Subsection (a) extends the STTR program, authorized by
section 9(n) of the Small Business Act, through September 30,
2009. The percentage of extramural budget required to be
expended by a participating agency annually on the program is
established at 0.15 percent for each fiscal year through 2003
and is increased to 0.3 percent for fiscal year 2004 and each
fiscal year thereafter. Subsection (b) strikes the word
``pilot,'' as it appears in section 9 of the Small Business
Act, to describe the previous, trial basis of the program, and,
thereby, establishes the permanent nature of the program.
Section 3. Increase in authorized Phase II awards
Subsection (a) increased from $500,000 to $750,000 the
amount that a participating agency may generally pay for a
Phase II award. Further, the subsection permits the
participating agency to shorten or lengthen the periods of
Phase I and Phase II awards where appropriate for particular
projects. Presently, a Phase I is a one-year award and a Phase
II is a two-year award.
Subsection (b) makes the amendments contained in subsection
(a), above, i.e., increasing the amount of a Phase II award and
making the length of Phase I and II awards more flexible,
effective beginning October 1, 2003.
Section 4. Agency outreach
This section requires that a participating agency implement
an outreach program to research institutions and small
businesses to increase participation and to enhance its STTR
Program. Such STTR outreach program is to be undertaken in
conjunction with an agency's outreach with respect to the SBIR
Program.
Section 5. Policy directive modification
This section amends section 9(p) of the Small Business Act
to require the Administrator of the SBA to clarify the policy
directive applicable to the STTR Program to insure that it is
clear that the retention by a small business of rights to data
generated by a small business in the performance of an STTR
project does not terminate for a period of not less than four
years after the small business completes participation in a
phase of the award.
Section 6. STTR Program data collection
Subsection (a) requires that SBA maintain sufficient data
to effectively evaluate the STTR Program.
Subsection (b) provides for the maintenance of an
electronic database of information about the STTR Program
similar to the database maintained for the SBIR Program. In
addition, in collecting information concerning the STTR
Program, the Administrator shall provide data concerning (1)
whether a small business or a research institution initiated
the collaboration with respect to a particular project, (2)
whether the small business or the research institution
originated the technology that is the subject of a project, (3)
the length of time it took to negotiate a licensing agreement
between the small business and the research institution, and
(4) how the proceeds from the commercialization, marketing, or
sale of technology resulting from each assisted STTR project
were allocated (by percentage) between the small business and
the research institution.
Subsection (c) requires that the Administrator work in
cooperation with the participating agencies to establish
standardized reporting requirements for the collection of data
from STTR applicants and awardees, taking into consideration
the unique needs of each agency, and where possible permitting
electronic updating to the maximum extent possible. Data
collection shall be designed to minimize the burden on small
businesses.
Subsection (d) requires that the Administrator in reporting
to Congress annually include in such reports the number of
proposals received from, and the number and total amounts of
awards to HUBZone small businesses under the SBIR and STTR
Programs.
Section 7. STTR program-wide model agreement for intellectual property
rights
Subsection (a) requires the Administrator to issues
regulations, after an opportunity for comment by affected
agencies, small businesses, research institutions, and other
interested parties, that establish one model agreement for use
by all participating agencies which allocates between small
businesses and research institutions intellectual property
rights and rights, if any, to carry out follow-on research,
development, or commercialization.
Subsection (b) requires participating agencies to adopt the
model agreement that the Administrator promulgates by
regulation
Section 8. FAST Program assistance to low-income areas
Subsection (a) amends the Federal and State Technology
(FAST) Partnership Program by adding a further criteria for
reviewing proposals for funding under the program. The
reviewers are to also consider whether the proposal addresses
the needs of small businesses located in one or more HUBZones.
Subsection (b) requires the Administrator to promulgate
regulations establishing the standards for consideration of
FAST Program proposals, including addressing the need of small
businesses located in one or more HUBZones.
U.S. Congress,
Congressional Budget Office,
Washington, DC, August 15, 2001.
Hon. Donald Manzullo,
Chairman, Committee on Small Business,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1860, the Small
Business Technology Transfer Program Reauthorization Act of
2001.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Ken Johnson.
Sincerely,
Dan L. Crippen,
Director.
Enclosure.
Congressional Budget Office Cost Estimate
H.R. 1860.--Small Business Technology Transfer Program Reauthorization
Act of 2001
Summary: H.R. 1860 would change the expiration date of the
Small Business Technology Transfer (STTR) program from 2001 to
2009. The STTR program requires federal agencies with annual
appropriations for extramural research of more than $1 billion
to set aside a portion of their extramural research budget for
cooperative research between small businesses and a federal
laboratory or nonprofit research institution. H.R. 1860 also
would modify the STTR program in several ways, including a
gradual increase in the percentage of extramural research funds
that would be set aside for the program.
Assuming appropriation of the necessary amounts, CBO
estimates that implementing H.R. 1860 would cost about $26
million over the 2002-2006 period. H.R. 1860 would not affect
direct spending or receipts; therefore, pay-as-you-go
procedures would not apply.
H.R. 1860 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
The bill would benefit state colleges and universities that
participate in the STTR program, and any related costs would be
incurred voluntarily.
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 1860 is shown in the following table.
The costs of this legislation fall within budget functions 370
(commerce and housing credit), 250 (general science, space, and
technology), 050 (national defense), 270 (energy), and 550
(health).
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------------------
2001 2002 2003 2004 2005 2006
----------------------------------------------------------------------------------------------------------------
SPENDING SUBJECT TO APPROPRIATION
STTR Spending Under Current Law:
Budget Authority \1\.................................. 4 0 0 0 0 0
Estimated Outlays..................................... 4 1 0 0 0 0
Proposed Changes:
Estimated Authorization Level......................... 0 5 4 6 6 6
Estimated Outlays..................................... 0 4 4 6 6 6
STTR Spending Under H.R. 1860:
Estimated Authorization Level......................... 4 5 4 6 6 6
Estimated Outlays..................................... 4 5 4 6 6 6
----------------------------------------------------------------------------------------------------------------
\1\ The 2001 level is the amount that CBO estimates was appropriated to administer the STTR program in 2001.
Basis of estimate: The five federal agencies that currently
participate in the program are the Department of Defense, the
Department of Energy, the Department of Health and Human
Services, the National Aeronautics and Space Administration,
and the National Science Foundation. Program oversight is
conducted by the Small Business Administration (SBA). The costs
of the STTR program to the participating agencies consist
primarily of salaries and expenses for personnel to evaluate
grant applications, associated overhead costs, printing costs,
and mailing expenses. The costs associated with administering
awards through the STTR program are slightly higher than
administering the same awards through regular program channels.
Based on information from SBA and the participating
agencies, CBO estimates that administering the STTR program
will cost a total of about $4 million this year. Therefore, CBO
estimates that extending the current program through 2009 would
cost these agencies approximately that amount each year,
assuming appropriation of the necessary amounts.
In addition, H.R. 1860 would increase the percentage of the
agencies' extramural research budgets that would be set aside
for the STTR program starting in 2004. Based on information
from the affected agencies, CBO expects that this provision
would cause the number of applications for STTR grants to
increase, thereby increasing the administrative cost of the
program. Based on information from SBA and the participating
agencies, CBO estimates that this expansion would cost an
additional $2 million a year during the 2004-2006 period,
subject to the appropriation of the necessary funds.
Finally, H.R. 1860 would modify the STTR program in three
other ways. The bill would expand the program's outreach
efforts to small businesses and the research community. The
legislation also would alter and expand the data that the
participating agencies would have to report to SBA each year as
part of its oversight responsibilities. Finally, H.R. 1860
would require SBA to issue a regulation that would establish a
model legal agreement for small businesses and research
institutions participating in STTR projects to delineate their
intellectual property rights. Based on information from the
affected agencies, CBO estimates that implementing these three
provisions would cost about $500,000 in 2002 and negligible
amounts in 2003 and each year thereafter, subject to the
availablilty of appropriated funds.
Pay-as-you-go considerations: None.
Intergovernmental and private-sector impact: H.R. 1860
contains no intergovernmental or private-sector mandates as
defined in UMRA. The bill would benefit state colleges and
universities that participate in the STTR program, and any
related costs would be incurred voluntarily.
Previous CBO estimate: On August 2, 2001, CBO transmitted a
cost estimate for S. 856, the Small Business Technology
Transfer Program Reauthorization Act of 2001, as ordered
reported by the Senate Committee on Small Business on July 19,
2001. S. 856 is very similar to H.R. 1860, with two exceptions.
S. 856 would reauthorize the STTR program for an additional
year and would not require the SBA to issue new regulations
related to the intellectual property rights. Therefore, CBO
estimates that the cost of implementing H.R. 1860 would be
slightly higher than for S. 856 over the 2002-2006 period, but
would be slightly lower over the 2002-2011 period, assuming the
appropriation of the necessary amounts.
Estimate prepared by: Federal Costs: Ken Johnson. Impact on
State, Local, and Tribal Governments: Susan Sieg Tompkins.
Impact on the Private Sector: Cecil McPherson.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.
committee correspondence
House of Representatives,
Committee on Science,
Washington, DC, September 21, 2001.
Hon. J. Dennis Hastert,
Speaker, Office of the Speaker,
House of Representatives, Washington, DC.
Dear Speaker Hastert: I am writing to inform you that the
Committee on Science has discharged from further consideration
H.R. 1860--a bill to reauthorize the Small Business Technology
Transfer Program, and for other purposes. H.R. 1860 was
referred to this Committee on May 16, 2001.
Sincerely,
Sherwood L. Boehlert,
Chairman.
committee estimate of costs
Pursuant to the Congressional Budget Act of 1974, the
Committee estimates that the amendments to the Small Business
Act contained in H.R. 1860 will not significantly increase
discretionary spending or appropriations over the next eight
fiscal years. Furthermore, pursuant to clause 3(d)(2)(A) of
rule XIII of the Rules of the House of Representatives, the
Committee estimates that implementation of H.R. 1860 will
increase the administrative costs, as set forth in the
Congressional Budget Office estimate.
oversight findings
In accordance with clause 4(c)(2) of rule X of the Rules of
the House of Representatives, the Committee states that no
oversight findings or recommendations have been made by the
Committee on Government Reform with respect to the subject
matter contained in H.R. 1860.
In accordance with clause 2(b)(1) of rule X of the Rules of
the House of Representatives, the oversight findings and
recommendations of the Committee on Small Business with respect
to the subject matter contained in H.R. 1860 are contained in
the descriptive portions of this report.
statement of constitutional authority
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds the authority for
this legislation in Article I, Section 8, Clause 18 of the
Constitution of the United States.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
SMALL BUSINESS ACT
* * * * * * *
Sec. 9. (a) * * *
(b) It shall be the duty of the Administration, and it is
hereby empowered--
(1) * * *
* * * * * * *
(4) to develop and maintain a source file and an
information program to assure each qualified and
interested small business concern the opportunity to
participate in Federal agency small business innovation
research programs and small business technology
transfer [pilot] programs;
* * * * * * *
(7) to report not less than annually to the Committee
on Small Business of the Senate, and to the Committee
on Science and the Committee on Small Business of the
House of Representatives, on the SBIR and STTR programs
of the Federal agencies and the Administration's
information and monitoring efforts related to the SBIR
and STTR programs, including the data on output and
outcomes collected pursuant to subsections (g)(10) [and
(o)(9),], (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, and a description of the
extent to which Federal agencies are providing in a
timely manner information needed to maintain the
database described in subsection (k).
* * * * * * *
(e) For the purpose of this section--
(1) * * *
* * * * * * *
(6) the term ``Small Business Technology Transfer
Program'' or ``STTR'' means a [pilot] program under
which a portion of a Federal agency's extramural
research or research and development effort is reserved
for award to small business concerns for cooperative
research and development through a uniform process
having--
* * * * * * *
(k) Database.--
(1) Public database.--Not later than 180 days after
the date of the enactment of the Small Business
Innovation Research Program Reauthorization Act of
2000, the Administrator shall develop, maintain, and
make available to the public a searchable, up-to-date,
electronic database that includes--
(A) the name, size, location, and an
identifying number assigned by the
Administrator, of each small business concern
that has received a first phase or second phase
SBIR or STTR award from a Federal agency;
(B) a description of each first phase or
second phase SBIR or STTR award received by
that small business concern, including--
* * * * * * *
(C) an identification of any business concern
or subsidiary established for the commercial
application of a product or service for which
an SBIR or STTR award is made; [and]
(D) information regarding mentors and
Mentoring Networks, as required by section
35(d)[.]; and
(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 the
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.
(2) Government database.--Not later than 180 days
after the date of the enactment of the Small Business
Innovation Research Program Reauthorization Act of
2000, the Administrator, in consultation with Federal
agencies required to have an SBIR program pursuant to
subsection (f )(1) or an STTR program pursuant to
subsection (n)(1), shall develop and maintain a
database to be used solely for SBIR and STTR program
evaluation that--
(A) contains for each second phase award made
by a Federal agency--
(i) * * *
* * * * * * *
(iii) any other information received
in connection with the award that the
Administrator, in conjunction with the
SBIR and STTR program managers of
Federal agencies, considers relevant
and appropriate;
* * * * * * *
(D) includes any other data collected by or
available to any Federal agency that such
agency considers may be useful for SBIR or STTR
program evaluation; and
* * * * * * *
(n) Required Expenditures for STTR by Federal Agencies.--
[(1) Required expenditure amounts.--With respect to
fiscal years 1998, 1999, 2000, and 2001, 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, is authorized to expend with
small business concerns not less than 0.15 percent of
that extramural budget specifically in connection with
STTR programs that meet the requirements of this
section and any policy directives and regulations
issued under this section.]
(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.
* * * * * * *
(o) Federal Agency STTR Authority.--Each Federal agency
required to establish an STTR program in accordance with
subsection (n) and regulations issued under this Act, shall--
(1) * * *
* * * * * * *
(11) [develop a model agreement not later than July
31, 1993, to be approved by the Administration,] adopt
the agreement developed by the Administrator under
subsection (w) as the agency's model agreement for
allocating between small business concerns and research
institutions intellectual property rights and rights,
if any, to carry out follow-on research, development,
or commercialization;
(12) develop, in consultation with the Office of
Federal Procurement Policy and the Office of Government
Ethics, procedures to ensure that federally funded
research and development centers (as defined in
subsection (e)(8)) that participate in STTR
agreements--
(A) * * *
* * * * * * *
(13) not later than July 31, 1993, develop procedures
for assessing the commercial merit and feasibility of
STTR proposals, as evidenced by--
(A) * * *
* * * * * * *
(D) the presence of other indicators of the
commercial potential of the idea[.];
(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
(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).
(p) STTR Policy Directive.--
(1) * * *
(2) Contents.--The policy directive required by
paragraph (1) shall provide for--
(A) * * *
(B) a simplified, standardized funding
process that provides for--
(i) * * *
* * * * * * *
(ix) 1-year awards for the first
phase of an STTR program, generally not
to exceed $100,000, and 2-year awards
for the second phase of an STTR
program, generally not to exceed
[$500,000] $750,000, greater or lesser
amounts to be awarded at the discretion
of the awarding agency, and shorter or
longer periods of time to be approved
at the discretion of the awarding
agency where appropriate for a
particular project;
* * * * * * *
(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)).
* * * * * * *
(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 affected agencies, small business
concerns, research institutions, and other interested
parties the opportunity to submit written comments.
* * * * * * *
SEC. 34. FEDERAL AND STATE TECHNOLOGY PARTNERSHIP PROGRAM.
(a) * * *
* * * * * * *
(c) Grants and Cooperative Agreements.--
(1) * * *
(2) Selection considerations.--In making awards or
entering into cooperative agreements under this
section, the Administrator and the SBIR program
managers referred to in paragraph (1)--
(A) * * *
(B) shall consider, at a minimum--
(i) * * *
* * * * * * *
(iv) whether the proposal integrates
and coordinates the proposed activities
with other State and local programs
assisting small high-technology firms
in the State; [and]
(v) the manner in which the applicant
will measure the results of the
activities to be conducted[.]; and
(vi) whether the proposal addresses
the needs of small business concerns
located in 1 or more qualified census
tracts, as that term is defined in
section 42(d)(5)(C)(ii) of the Internal
Revenue Code of 1986.
* * * * * * *
(4) Process.--Proposals and applications for
assistance under this section shall be in such form and
subject to such procedures as the Administrator shall
establish. 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).
* * * * * * *
ADDITIONAL VIEWS
Democratic Members of the Committee on Small Business are
well aware of the important role that technology plays in not
only developing small businesses, but in strengthening the
nation's economy. This was well-proven by the technology boom
of the 1990s, fueled by small businesses and, especially high-
tech firms. The strength of the economy, for such an
unprecedented time period, was directly related to the success
of the high-tech sector.
The Small Business Technology Transfer (STTR) Program, and
its sister program, the Small Business Innovation Research
(SBIR) Program, both work to foster the development of small
technology businesses. These businesses can, in turn, improve
the economic stability of their towns and communities.
Reauthorizing the STTR Program through fiscal year 2009, is an
important step in growing these small high-tech firms.
This reauthorization legislation also increases the
percentage of agency's extra-mural research budgets to be
devoted to the STTR Program from .15 percent to .3 percent
beginning in fiscal year 2004. This action doubles the amount
of research that the government will be devoting to small
firms.
By increasing the grant amount of Phase I awards from the
current $500,000 to $750,000 as proposed in the bill, small
businesses will have more funding with which to conduct their
research, thereby increasing the likelihood that their research
will result in useful items that will culminate with
commercialization.
Additionally, language in the bill includes provisions that
will assist with the assessment of the STTR program, by
requiring the collection and maintaining of pertinent data,
that can later be used to evaluate the program's strengths and
weaknesses.
Further, agency outreach for the STTR program has
traditionally been incorporated with that of the SBIR program
at many agencies. There have been numerous conferences for the
SBIR program over the years that focused on the SBIR program
only. The mandate to implement an outreach program to research
institutions and small businesses to increase participation in
the program is a necessary and much needed enhancement.
Democratic Committee Members included three very important
changes to encourage the growth of high-tech businesses. These
changes include developing an STTR Program-wide model
agreement, increasing awards to low-income areas, and tracking
low income awards.
The STTR Program operates by small businesses forming
partnerships with either research institutions, federally-
funded research and development centers (FFRDCs), or non-profit
organizations. This partnership then submits a proposal for
necessary federal research requirements. The partnership is
formalized with an agreement outlining the rights and
responsibilities of each partner, and addressing the
intellectual property rights and rights to carry out follow-on
research, development or commercialization, if any, that are
assigned to each partner.
It has come to the Committee's attention that each
participating agency has a model agreement, and many
universities and FFRDCs have model agreements. The result is an
exercise in which the small business and its research partner
must come to an agreement, and have that agreement parallel the
agency's agreement. The scenario often occurs wherein a small
business doing work for the same agency, but with multiple
research partners, must have multiple agreements, none of which
are standard. Ultimately, this results in time devoted to
developing partnership agreements when that time would be more
effectively used to actually conduct research.
Therefore, Committee Democrats have included language that
requires the Small Business Administration (SBA) to go through
a rule-making process to develop a single model agreement that
can be acceptably used by all small businesses, agencies, and
research partners. It is intended that this rule-making process
involve commentary from affected agencies, small business
owners, research institutions, and other interested parties.
The resulting model agreement shall be used by all agencies as
their model agreement so that small research firms can devote
their time to that which they do best--research.
Secondly, Committee Democrats have included language in the
STTR reauthorization bill to modify the Federal and State
Technology Partnership (FAST) Program that was made part of the
statute with the enactment of P.L. 106-554. This five-year
temporary program was designed to promote the development of
high-technology firms in states that have few SBIR awards, and
states that have few awards in low-income areas. Firms who
participate in the STTR Program will also benefit from this
Program.
Grants or loans under the FAST Program may be given to
companies to pay all or some of the cost of developing SBIR or
STTR proposals. Outreach, financial support and technical
assistance may be provided to establish a Mentoring Network
will be developed within the FAST program to assist small
businesses identified by FAST participants, SBIR agencies, the
Administrator or other entities; a training program for
individuals providing SBIR outreach and assistance at the state
level; and to ``encourage'' commercialization of SBIR-funded
technology.
There is a limit of one proposal for each state in the FAST
program in any fiscal year. The matching requirements for FAST
Program grants are as follows: Fifty cents private for each
federal dollar for the 18 states that receive the fewest SBIR
first phase awards. One dollar private for each federal dollars
for the 16 states receiving the greatest number of SBIR first
phase awards. For the rest of the states: 75 cents private for
each federal dollar.
Language was included in this Program by House Democrats on
the Committee on Small Business that allows a 50 cents private
for each federal dollar for assistance directed to low-income
areas--even if the state is a high-volume state as far as SBIR
awards. We were concerned when this language was included, that
it would not be implemented properly, and that not enough
emphasis would be placed on this issue. This has become a
reality in that the SBA did not include any reference to low-
income area assistance under the FAST Program in its recent
Policy Directive.
Therefore, at the insistence of Committee Democrats,
language was included in the STTR reauthorization legislation
to require that a separate evaluation criteria for FAST
proposals be developed to ensure that these proposals address
how they are going to increase technology in low income areas
of states--areas that have been historically underutilized as
far as the STTR and SBIR programs. It is the intent of the
proposal that the SBA go through a rule-making process to
determine the weight that this criteria should have compared to
other criteria, and to determine the standards by which these
proposals shall be evaluated.
Lastly, we included language in the STTR reauthorization to
require that the SBA report to Congress, on an annual basis, on
the number of SBIR and STTR awards made to small businesses
located in HUBZones. These ``Historically Underutilized
Business'' Zones are specifically defined as areas of high
unemployment and low income. These locations have been out of
the mainstream of economic growth that the nation has
experienced over the past 10 years, and, as such, would benefit
greatly from the economic strength that technology provides to
a community. Further, tracking awards made to these businesses
will assist in evaluating the success of the FAST Program.
From a program administration standpoint, we believe it is
important to address the staffing needs of the Office of
Technology within the SBA's Office of Government Contracting
and Business Development. We also believe it is important to
address the placement of the Office of Technology within the
SBA's current organizational structure. The Office of
Technology administers the SBIR and STTR Programs.
We are concerned that with a staff of six, with three
employees being support personnel, the Office of Technology is
approaching the point of critical under-staffing. This division
manages and administers the two research and development
programs, two outreach grant programs, the National Research
Council study on the SBIR Program, the public/private database,
submits annual reports for SBIR and STTR to Congress, conducts
outreach for technology programs to the ten participating
agencies and small businesses across the country, implements a
program policy directive, and administers an internal
initiative through Historically Black Colleges and
Universities. With all of these functions and only three
professional staff members, we believe that the success of the
programs could be doomed before all of the programs and
initiatives are fully implemented.
We are also concerned with the fact that the Office of
Technology is effectively buried within the Office of
Government Contracting and Business Development, under the
supervision of the Associate Administrator for the Office of
Policy Planning and Liaison. The SBIR and STTR Programs do not
have the same mission as the Office of Government Contracting
and Business Development. The purpose of the Office of
Government Contracting and Business Development is to ensure
that small businesses receive their fair share of contracts
with the Federal government. The SBIR and STTR Programs within
the Office of Technology are in place to improve the capacity
of small research and development companies, by ensuring that
small firms receive Federal R&D projects.
The SBA, overall, has a scatter-shot approach, at best, to
assisting small businesses with technology, and particularly
electronic commerce. This is especially disturbing to Committee
Democrats in light of a recent report by Forrester Research
that predicted online sales will reach $3 trillion by 2003.
SBA's electronic commerce initiatives include various memoranda
of understanding with private companies to provide training,
but no long-term strategic plan to increase the number of small
businesses who have the capacity to take advantage of
electronic commerce. Further, SBA appears to have no strategy
whatsoever to encourage small businesses to improve their
internal ordering mechanisms through business-to-business
electronic commerce. There is no focal point for the existing
electronic commerce-related initiatives other than directly
within the Administrator's office.
Therefore, we believe it is more reasonable to expand the
mission of the existing Office of Technology to include
electronic commerce and other technology-related issues and
place this Office under the direct supervision of the
Administrator, than to have the Office of Technology report to
the Office of Government Contracting and Business Development,
and to have no office evaluating electronic commerce and
business-to-business electronic commerce initiatives.
To conclude, Committee Democrats are committed to ensuring
that small businesses across the country are able to grow and
expand their technology capabilities. We know that not only do
small businesses, in general, employ more than half of the non-
farm workforce, but small businesses account for 38 percent of
the private sector workforce in the high tech industry. We
believe the STTR and SBIR Programs are critical to increasing
the capacity of small business technology companies, and that
these programs should continue to be monitored and evaluated,
and given the appropriate resources to ensure their continued
success.
Nydia M. Velazquez.