[House Report 110-603]
[From the U.S. Government Publishing Office]



110th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     110-603

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PROVIDING FOR CONSIDERATION OF THE BILL (H.R. 5819) TO AMEND THE SMALL 
 BUSINESS ACT TO IMPROVE THE SMALL BUSINESS INNOVATION RESEARCH (SBIR) 
PROGRAM AND THE SMALL BUSINESS TECHNOLOGY TRANSFER (STTR) PROGRAM, AND 
                           FOR OTHER PURPOSES

                                _______
                                

   April 22, 2008.--Referred to the House Calendar and ordered to be 
                                printed

                                _______
                                

    Mr. Welch, from the Committee on Rules, submitted the following

                              R E P O R T

                      [To accompany H. Res. 1125]

    The Committee on Rules, having had under consideration 
House Resolution 1125, by a non-record vote, report the same to 
the House with the recommendation that the resolution be 
adopted.

                SUMMARY OF PROVISIONS OF THE RESOLUTION

    The resolution provides for consideration of H.R. 5819, the 
SBIR/STTR Reauthorization Act, under a structured rule. The 
rule provides one hour of general debate, with 40 minutes 
equally divided and controlled by the chairman and ranking 
minority member of the Committee on Small Business and 20 
minutes equally divided and controlled by the chairman and 
ranking minority member of the Committee on Science and 
Technology. The rule waives all points of order against 
consideration of the bill except clauses 9 and 10 of rule XXI. 
The rule provides that the amendment in the nature of a 
substitute recommended by the Committee on Small Business now 
printed in the bill shall be considered as an original bill for 
the purpose of amendment and shall be considered as read. The 
rule waives all points of order against the amendment in the 
nature of a substitute except for clause 10 of rule XXI. This 
waiver does not affect the point of order available under 
clause 9 of rule XXI (regarding earmark disclosure).
    The rule makes in order only those amendments printed in 
this report. The amendments made in order may be offered only 
in the order printed in this report, may be offered only by a 
Member designated in this report, shall be considered as read, 
shall be debatable for the time specified in this report 
equally divided and controlled by the proponent and an 
opponent, shall not be subject to amendment, and shall not be 
subject to a demand for a division of the question in the House 
or in the Committee of the Whole. All points of order against 
the amendments except for clauses 9 and 10 of rule XXI are 
waived. The rule provides one motion to recommit with or 
without instructions. The rule provides that, notwithstanding 
the operation of the previous question, the Chair may postpone 
further consideration of the bill to a time designated by the 
Speaker.

                         EXPLANATION OF WAIVERS

    The waiver of all points of order against consideration of 
the bill (except for clauses 9 and 10 of rule XXI) includes a 
waiver of clause 3(e) of rule XIII requiring the inclusion of a 
comparative print of any part of the bill or joint resolution 
proposing to amend the statute and of the statute or part 
thereof proposed to be amended, and a waiver of clause 3(d)(2) 
of rule XIII requiring the inclusion of an estimate by the 
committee of the costs that would be incurred in carrying out 
the bill or joint resolution in the fiscal year in which it is 
reported and in each of the five fiscal years following that 
fiscal year. Although the rule waives of all points of order 
against the committee amendment in the nature of a substitute 
(except for clause 10 of rule XXI), the committee is not aware 
of any points of order against the substitute. The waiver is 
prophylactic.

                  SUMMARY OF AMENDMENTS MADE IN ORDER

    (Summaries derived from information provided by sponsors.)
    1. Boswell (IA)/Sutton (OH): The amendment would give 
priority to applications from companies located in areas that 
have lost a major source of employment. (10 minutes)
    2. Ehlers (MI): The amendment strikes section 102--doing so 
leaves the current set-asides for SBIR and STTR unchanged. (10 
minutes)
    3. Sestak (PA): The amendment notifies an applicant to the 
SBIR and STTR programs, who is not successful in receiving an 
award, that the applicant can request an explanation of why the 
applicant did not receive the award. (10 minutes)
    4. Matheson (UT): The amendment gives priority to small 
businesses and organizations, in the awarding of SBIR, STTR, 
and FAST grants, that are making significant contributions 
towards energy efficiency, including those that are making 
efforts to reduce their carbon footprint or are carbon neutral. 
(10 minutes)
    5. Giffords (AZ): The amendment would mandate that SBIR 
awardees must be entities with their primary business 
operations in the United States. (10 minutes)
    6. Graves (MO): The amendment strikes and replaces Title 
II, regarding venture capital investment standards. (10 
minutes)
    7. Matsui (CA): The amendment adds business incubators as 
eligible for the partnerships with SBIR awardees that are 
required by section 404. The amendment also defines the term 
``business incubators'' for this purpose. (10 minutes)
    8. Sutton (OH): The amendment provides that veterans will 
be given priority when applying for SBIR and STTR awards. (10 
minutes)
    9. Sutton (OH): The amendment requires agencies that 
administer SBIR programs to give special consideration to 
pressing transportation and infrastructure research activities, 
as identified by reports issued by the Department of 
Transportation and National Academy of Sciences. (10 minutes)
    10. Barrow (GA): The amendment establishes a pilot program 
to make grants to minority institutions that partner with 
nonprofit organizations that have experience developing 
relationships between industry, minority institutions, and 
other entities. (10 minutes)
    11. Capito (WV): The amendment changes section 104, 
regarding the SBIR Advisory Board. It would add to small 
business concerns owned and controlled by service-disabled 
veterans to the groups to be targeted by the board to make 
applications for SBIR grants. (10 minutes)
    12. Carney (PA): The amendment would allow the 
Administrator of the SBA to view favorably FAST grant 
applicants that use accredited SBDC's in determining the award 
of a FAST grant. (10 minutes)
    13. Gillibrand (NY): The amendment requires a veteran 
small-business owner must be at least one of the people 
appointed to the advisory board overseeing the Small Business 
Innovation Research Program Grants. (10 minutes)
    14. Walz (MN): The amendment would require the Small 
Business Administration to consult with the Secretary of 
Veterans Affairs to develop an outreach program to publicize 
the Small Business Innovation Research program to veterans 
returning from service and encourage veterans with appropriate 
technical skills to apply for SBIR grants. (10 minutes)
    15. Foster (IL)/Ellsworth (IN)/Altmire (PA): The amendment 
requires SBIR awardees to be owned and controlled by at least 
one individual, or a business concern owned and controlled by 
individuals, who are a citizens of, or permanent resident 
aliens in, the United States. Any applicant found knowingly 
hiring, recruiting, or referring for a fee, an unauthorized 
alien shall not be eligible for the receipt of future awards. 
(10 minutes)
    16. Welch (VT): The amendment strikes language that allows 
firms not receiving SBIR/STTR Phase I grants to be eligible to 
receive Phase II. (10 minutes)
    17. Welch (VT): The amendment limits to half the amount of 
an agency's SBIR budget that could go to grant awards that 
exceed $200,000 for Phase I, and $1,500,000 for Phase II. (10 
minutes)

            TEXT OF AMENDMENTS MADE IN ORDER UNDER THE RULE

1. An Amendment To Be Offered by Representative Boswell of Iowa, or His 
                   Designee, Debatable for 10 Minutes

  In title V of the bill, add at the end the following (and 
conform the table of contents accordingly):

SEC. 506. PRIORITY FOR AREAS THAT HAVE LOST A MAJOR SOURCE OF 
                    EMPLOYMENT.

  Section 9 of the Small Business Act (15 U.S.C. 638) is 
amended by adding at the end the following:
  ``(ee) Priority for Areas That Have Lost a Major Source of 
Employment.--In making awards under this section, Federal 
agencies shall give priority to applications from companies 
located in geographic areas that, as determined by the 
Administrator, have lost a major source of employment. Not 
later than 90 days after the date of the enactment of this 
subsection, the Administrator shall promulgate rules for making 
the determination required by this subsection.''.
                              ----------                              


2. An Amendment To Be Offered by Representative Ehlers of Michigan, or 
                 His Designee, Debatable for 10 Minutes

  Page 3, line 10, through page 4, line 17, strike section 102, 
and redesignate the subsequent sections accordingly.
                              ----------                              


3. An Amendment To Be Offered By Representative Sestak of Pennsylvania, 
               of His Designee, Debatable for 10 Minutes

  At the end of title I of the bill, insert the following:

SEC. 1___. PROVIDING EXPLANATIONS TO UNSUCCESSFUL APPLICANTS.

  Section 9 of the Small Business Act (15 U.S.C. 638) is 
amended by adding at the end the following:
  ``(dd) Providing Explanations to Unsuccessful Applicants.--
Whenever an entity applies for, but does not receive, an award 
under an SBIR or STTR program under this section, the Federal 
agency conducting the program shall--
          ``(1) in a plain and conspicuous manner, notify that 
        entity that it can request an explanation (which must 
        be of a constructive nature) of the reasons why the 
        entity did not receive the award; and
          ``(2) provide such an explanation to that entity, if 
        the entity so requests.''.
                              ----------                              


 4. An Amendment To Be Offered by Representative Matheson of Utah, or 
                 His Designee, Debatable for 10 Minutes

  At the end of title V of the bill, add the following (and 
conform the table of contents accordingly):

SEC. __. PREFERENCE FOR ORGANIZATIONS THAT ARE MAKING SIGNIFICANT 
                    CONTRIBUTIONS TOWARDS ENERGY EFFICIENCY.

  Section 9 of the Small Business Act (15 U.S.C. 638) is 
further amended by adding at the end the following:
  ``(ff) Preference for Organizations That Are Making 
Significant Contributions Towards Energy Efficiency.--In making 
awards under this section, Federal agencies shall give priority 
to applications so as to increase the number of SBIR, STTR, and 
FAST award recipients from organizations that are making 
significant contributions towards energy efficiency, including 
organizations that are making efforts to reduce their carbon 
footprint or are carbon neutral.''.
                              ----------                              


5. An Amendment To Be Offered by Representative Giffords of Arizona, or 
                 Her Designee, Debatable for 10 Minutes

  At the end of the bill, insert the following (and amend the 
table of contents accordingly):

SEC. ___. SBIR AWARDEE BUSINESS OPERATIONS.

  Section 9 of the Small Business Act is further amended by 
adding at the end the following:
  ``(ee) SBIR Awardee Business Operations.--
          ``(1) In general.--To be eligible to receive an SBIR 
        award, an awardee must have its primary business 
        operations in the United States.
          ``(2) Definition.--In this subsection, the term 
        `United States' includes the District of Columbia, the 
        Commonwealth of Puerto Rico, and any other territory or 
        possession of the United States.''.
                              ----------                              


 6. An Amendment To Be Offered by Representative Graves of Missouri, or 
                 His Designee, Debatable for 10 Minutes

  Strike title II of the bill and insert the following:

             TITLE II--VENTURE CAPITAL INVESTMENT STANDARDS

SEC. 201. ENSURING THAT INNOVATIVE SMALL BUSINESSES WITH SUBSTANTIAL 
                    INVESTMENT FROM VENTURE CAPITAL OPERATING COMPANIES 
                    ARE ABLE TO PARTICIPATE IN THE SBIR PROGRAM.

  Section 9(e) of the Small Business Act (15 U.S.C. 638(e)) is 
amended by striking ``and'' at the end of paragraph (8), 
striking the period at the end of paragraph (9) and inserting 
``; and'', and adding at the end the following:
          ``(10) effective only for the SBIR and STTR programs, 
        notwithstanding any other amendment made by the SBIR/
        STTR Reauthorization Act, the following shall apply:
                  ``(A) A business concern that has more than 
                500 employees shall not qualify as a small 
                business concern.
                  ``(B) In determining whether a small business 
                concern is independently owned and operated 
                under section 3(a)(1) or meets the small 
                business size standards instituted under 
                section 3(a)(2), the Administrator shall not 
                consider a business concern to be affiliated 
                with a venture capital operating company (or 
                with any other business that the venture 
                capital operating company has financed) if--
                          ``(i) the venture capital operating 
                        company does not own 50 percent or more 
                        of the business concern; and
                          ``(ii) employees of the venture 
                        capital operating company do not 
                        constitute a majority of the board of 
                        directors of the business concern.
                  ``(C) A business concern shall be deemed to 
                be `independently owned and operated' if--
                          ``(i) it is owned in majority part by 
                        one or more natural persons or venture 
                        capital operating companies;
                          ``(ii) there is no single venture 
                        capital operating company that owns 50 
                        percent or more of the business 
                        concern; and
                          ``(iii) there is no single venture 
                        capital operating company the employees 
                        of which constitute a majority of the 
                        board of directors of the business 
                        concern.
                  ``(D) If a venture capital operating company 
                controlled by a business with more than 500 
                employees (in this subparagraph referred to as 
                a `VCOC under large business control') has an 
                ownership interest in a small business concern 
                that is owned in majority part by venture 
                capital operating companies, the small business 
                concern is eligible to receive an award under 
                the SBIR or STTR program only if--
                          ``(i) not more than two VCOCs under 
                        large business control have an 
                        ownership interest in the small 
                        business concern;
                          ``(ii) the VCOCs under large business 
                        control do not collectively own more 
                        than 20 percent of the small business 
                        concern; and
                          ``(iii) the VCOCs under large 
                        business control do not collaborate 
                        with each other to exercise more 
                        control over the small business concern 
                        than they could otherwise exercise 
                        individually.
                  ``(E) The term `venture capital operating 
                company' means a business concern--
                          ``(i) that--
                                  ``(I) is a Venture Capital 
                                Operating Company, as that term 
                                is defined in regulations 
                                promulgated by the Secretary of 
                                Labor; or
                                  ``(II) is an entity that--
                                          ``(aa) is registered 
                                        under the Investment 
                                        Company Act of 1940 (15 
                                        U.S.C. 80a-51 et seq.); 
                                        or
                                          ``(bb) is an 
                                        investment company, as 
                                        defined in section 
                                        3(c)(14) of such Act 
                                        (15 U.S.C. 80a-
                                        3(c)(14)), which is not 
                                        registered under such 
                                        Act because it is 
                                        beneficially owned by 
                                        less than 100 persons; 
                                        and
                          ``(ii) that is itself organized or 
                        incorporated and domiciled in the 
                        United States, or is controlled by a 
                        business concern that is incorporated 
                        and domiciled in the United States.''.
                              ----------                              


 7. An Amendment To Be Offered by Representative Matsui of California, 
               or Her Designee, Debatable for 10 Minutes

  Page 33, line 13, insert ``(A)'' before ``Each''.

  Page 33, line 17, after ``venture capital investment 
companies,'' insert ``business incubators,''.

  Page 33, after line 24, insert the following:

          ``(B) Definition.--In this paragraph, the term 
        `business incubator' means an entity that provides 
        coordinated and specialized services to entrepreneurial 
        businesses which meet selected criteria during the 
        businesses' startup phases, including providing 
        services such as shared office space and office 
        services, access to equipment, access to 
        telecommunications and technology services, flexible 
        leases, specialized management assistance, access to 
        financing, mentoring and training services, or other 
        coordinated business or technical support services 
        designed to provide business development assistance to 
        entrepreneurial businesses during these businesses' 
        startup phases.''.
                              ----------                              


8. An Amendment To Be Offered by Representative Sutton of Ohio, or Her 
                   Designee, Debatable for 10 Minutes

  At the end of title V of the bill, insert the following (and 
conform the table of contents accordingly):

SEC. ___. VETERANS PREFERENCE.

  Section 9 of the Small Business Act (15 U.S.C. 638) is 
further amended by adding at the end the following:
  ``(ff) Veterans Preference.--In making awards under this 
section, Federal agencies shall give priority to applications 
from veterans, as defined in section 101(2) of title 38, United 
States Code, so as to increase the number of SBIR and STTR 
award recipients who are veterans.''.
                              ----------                              


9. An Amendment To Be Offered by Representative Sutton of Ohio, or Her 
                   Designee, Debatable for 10 Minutes

  In section 107(3) of the bill, in the quoted matter, strike 
``or'' at the end of subparagraph (D), and insert after 
subparagraph (D) the following:

                  (E) the National Academy of Sciences, in the 
                final report issued by the `Transit Research 
                and Development: Federal Role in the National 
                Program' project and the `Transportation 
                Research, Development and Technology Strategic 
                Plan (2006-2010)' issued by the United States 
                Department of Transportation Research and 
                Innovative Technology Administration, and in 
                subsequent reports issued by the National 
                Academy of Sciences and United States 
                Department of Transportation on transportation 
                and infrastructure; or

  In section 504(a) of the bill, in the quoted matter, 
redesignate (E) as (F).
                              ----------                              


10. An Amendment To Be Offered by Representative Barrow of Georgia, or 
                 His Designee, Debatable for 10 Minutes

  Page 36, after line 2, insert the following:

                  (D) Minority institution pilot program.--
                          (i) Establishment.--From amounts made 
                        available to carry out this 
                        subparagraph, the Administrator shall 
                        establish and carry out a pilot program 
                        to make grants to minority institutions 
                        that partner with nonprofit 
                        organizations that have experience 
                        developing relationships between 
                        industry, minority institutions, and 
                        other entities, for the purpose of 
                        increasing the number of SBIR and STTR 
                        program applications by minority-owned 
                        small businesses.
                          (ii) Application.--To be eligible to 
                        receive a grant under the pilot program 
                        established in clause (i), a minority 
                        institution shall submit an application 
                        to the Administrator at such time, in 
                        such manner, and containing such 
                        information and assurances as the 
                        Administrator may require.
                          (iii) Matching requirement.--As a 
                        condition of a grant under the pilot 
                        program, the Administrator shall 
                        require that a matching amount be 
                        provided from a source other than the 
                        Federal Government that is equal to the 
                        amount of the grant.
                          (iv) Minority institution.--In this 
                        subparagraph, the term ``minority 
                        institution'' has the meaning given 
                        that term in section 365(3) of the 
                        Higher Education Act of 1965 (20 U.S.C. 
                        1067k(3)).
                          (v) Funding.--For each of fiscal 
                        years 2009 through 2012, of the amounts 
                        appropriated pursuant to the 
                        authorization of appropriations in 
                        subparagraph (C), up to $4,000,000 
                        shall be available to carry out this 
                        subparagraph.
                              ----------                              


    11. An Amendment To Be Offered by Representative Capito of West 
          Virginia, or Her Designee, Debatable for 10 Minutes

  Page 8, line 10, after ``minorities,'' insert the following: 
``small business concerns owned and controlled by service-
disabled veterans,''.
                              ----------                              


      12. An Amendment To Be Offered by Representative Carney of 
        Pennsylvania, or His Designee, Debatable for 10 Minutes


  Page 26, line 2, strike ``and'' at the end.

  Page 26, line 5, strike the period at the end and insert ``; 
and''.

  Page 26, after line 5, insert the following:

                  ``(D) criteria designed to give preference to 
                applicants who include an SBDC program that is 
                accredited for its technology services.''.
                              ----------                              


  13. An Amendment To Be Offered by Representative Gillibrand of New 
            York, or Her Designee, Debatable for 10 Minutes


  Page 7, line 9, strike ``and''.

  Page 7, after line 9, insert the following:

                  (C) at least one individual who is a veteran 
                who owns a small business concern owned and 
                controlled by veterans; and

  Page 7, line 10, redesignate (C) as (D).
                              ----------                              


14. An Amendment To Be Offered by Representative Walz of Minnesota, or 
                 His Designee, Debatable for 10 Minutes


  At the end of title V of the bill, add the following (and 
conform the table of contents accordingly):

SEC. 506. INITIATIVE TO PUBLICIZE THE SBIR PROGRAM TO VETERANS.

  The Administrator of the Small Business Administration, in 
consultation with the Secretary of Veterans Affairs, shall 
develop an initiative to publicize the SBIR program to veterans 
returning from service and encourage those veterans with 
applicable technical skills to apply for SBIR grants.
                              ----------                              


15. An Amendment To Be Offered by Representative Foster of Illinois, or 
                 His Designee, Debatable for 10 Minutes

  At the end of the bill, add the following (and amend the 
table of contents accordingly):

SEC. __. PROHIBITION OF AWARDS TO ALIENS UNLAWFULLY PRESENT IN THE 
                    UNITED STATES.

  Section 9 of the Small Business Act is amended by adding at 
the end the following:
  ``(ee) Prohibition of Awards to Aliens Unlawfully Present in 
the United States.--A concern is not eligible to receive an 
award under this section if an individual who is an alien 
unlawfully present in the United States--
          ``(1) has an ownership interest in that concern; or
          ``(2) has an ownership interest in another concern 
        that itself has an ownership interest in that 
        concern.''.

SEC. __. PROHIBITION ON AWARDS TO FIRMS IN VIOLATION OF IMMIGRATION 
                    LAWS.

  Any applicant found, based on a determination by the 
Secretary of Homeland Security or the Attorney General to have 
engaged in a pattern or practice of hiring, recruiting or 
referring for a fee, for employment in the United States an 
alien knowing the person is an unauthorized alien shall not be 
eligible for the receipt of future awards under section 9 of 
the Small Business Act.
                              ----------                              


 16. An Amendment To Be Offered by Representative Welch of Vermont, or 
                 His Designee, Debatable for 10 Minutes

  Page 16, strike line 16 and all that follows through page 17, 
line 5.
                              ----------                              


 17. An Amendment To Be Offered by Representative Welch of Vermont, or 
                 His Designee, Debatable for 10 Minutes

  Page 6, after line 16, insert the following:
          ``(3) Additional limitation.--A Federal agency shall 
        not use more than one-half of its SBIR budget 
        established pursuant to subsection (f)(1) for the 
        purpose of funding the following awards:
                  ``(A) Any award in the first phase of the 
                SBIR program that exceeds $200,000.
                  ``(B) Any award in the second phase of the 
                SBIR program that exceeds $1,500,000.''.

                                  
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