[House Report 111-190]
[From the U.S. Government Publishing Office]
111th Congress Rept. 111-190
HOUSE OF REPRESENTATIVES
1st Session Part 2
======================================================================
ENHANCING SMALL BUSINESS RESEARCH AND INNOVATION ACT OF 2009
_______
July 7, 2009.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Gordon of Tennessee, from the Committee on Science and Technology,
submitted the following
R E P O R T
together with
[To accompany H.R. 2965]
[Including cost estimate of the Congressional Budget Office]
The Committee on Science and Technology, to whom was
referred the bill (H.R. 2965) to amend the Small Business Act
with respect to the Small Business Innovation Research Program
and the Small Business Technology Transfer Program, and for
other purposes, having considered the same, report favorably
thereon with an amendment and recommend that the bill as
amended do pass.
CONTENTS
Page
I. Bill............................................................2
II. Purpose of the Bill............................................11
III. Background and Need for Legislation............................11
IV. Hearing Summaries..............................................13
V. Committee Actions..............................................15
VI. Summary of Major Provisions....................................16
VII. Section-by-Section Analysis (by Title and Section).............16
VIII. Committee Views................................................22
IX. Cost Estimate..................................................23
X. Congressional Budget Office Cost Estimate......................24
XI. Compliance with Public Law 104-4...............................27
XII. Committee Oversight Findings and Recommendations...............27
XIII. Statement on General Performance Goals and Objectives..........27
XIV. Constitutional Authority Statement.............................27
XV. Federal Advisory Committee Statement...........................27
XVI. Congressional Accountability Act...............................27
XVII. Statement on Preemption of State, Local, or Tribal Law.........27
XVIII.Earmark Identification.........................................27
XIX. Changes in Existing Law Made by the Bill, as Reported..........28
XX. Committee Recommendations......................................40
XXI. Proceedings of the Full Committee Markup.......................40
I. Bill
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Enhancing Small
Business Research and Innovation Act of 2009''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--PROGRAM EXTENSION AND VENTURE CAPITAL OPERATING COMPANY
INVOLVEMENT
Sec. 101. Extension of termination dates.
Sec. 102. Ensuring that innovative small businesses with substantial
investment from venture capital operating companies are able to
participate in the SBIR and STTR programs.
TITLE II--COMMERCIALIZATION ACTIVITIES AND RESEARCH TOPICS DESERVING
SPECIAL CONSIDERATION
Sec. 201. Focus on commercialization.
Sec. 202. Inclusion of energy-related research topics and rare disease-
related research topics as deserving ``special consideration'' as SBIR
research topics.
Sec. 203. Nanotechnology-related research topics.
Sec. 204. Clarifying the definition of ``Phase Three''.
Sec. 205. Agency research goals.
Sec. 206. Commercialization programs.
TITLE III--RURAL DEVELOPMENT AND OUTREACH
Sec. 301. Outreach and support activities.
Sec. 302. Rural preference.
Sec. 303. Obtaining SBIR applicant's consent to release contact
information to economic development organizations.
Sec. 304. Increased partnerships between SBIR awardees and prime
contractors, venture capital investment companies, and larger
businesses.
TITLE IV--SBIR AND STTR ENHANCEMENT
Sec. 401. Increased number of research topic solicitations annually and
shortened period for final decisions on applications.
Sec. 402. Agencies should fund vital R&D projects with the potential
for commercialization.
Sec. 403. Federal agency engagement with SBIR awardees that have been
awarded multiple Phase One awards but have not been awarded Phase Two
awards.
Sec. 404. Funding for administrative, oversight, and contract
processing costs.
Sec. 405. Comptroller general audit of how Federal agencies calculate
extramural research budgets.
Sec. 406. Agency databases to support program evaluation.
Sec. 407. Agency databases to support technology utilization.
Sec. 408. Interagency Policy Committee.
Sec. 409. National Research Council SBIR Study.
Sec. 410. Express authority to ``fast-track'' Phase Two awards for
promising Phase One research.
Sec. 411. Increased SBIR and STTR award levels.
Sec. 412. Express authority for an agency to award sequential Phase Two
awards for SBIR-funded projects.
Sec. 413. First phase required.
TITLE I--PROGRAM EXTENSION AND VENTURE CAPITAL OPERATING COMPANY
INVOLVEMENT
SEC. 101. EXTENSION OF TERMINATION DATES.
(a) SBIR.--Section 9(m) of the Small Business Act (15 U.S.C. 638(m))
is amended by striking ``2008'' and inserting ``2011''.
(b) STTR.--Section 9(n)(1)(A) of the Small Business Act (15 U.S.C.
638(n)(1)(A)) is amended by striking ``2009'' and inserting ``2011''.
SEC. 102. ENSURING THAT INNOVATIVE SMALL BUSINESSES WITH SUBSTANTIAL
INVESTMENT FROM VENTURE CAPITAL OPERATING COMPANIES
ARE ABLE TO PARTICIPATE IN THE SBIR AND STTR
PROGRAMS.
Section 9 of the Small Business Act (15 U.S.C. 638) is amended by
adding at the end the following:
``(aa) Venture Capital Operating Companies.--Effective only for the
SBIR and STTR programs the following shall apply:
``(1) A business concern that has more than 500 employees
shall not qualify as a small business concern.
``(2) 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--
``(A) the venture capital operating company does not
own 50 percent or more of the business concern; and
``(B) employees of the venture capital operating
company do not constitute a majority of the board of
directors of the business concern.
``(3) A business concern shall be deemed to be `independently
owned and operated' if--
``(A) it is owned in majority part by one or more
natural persons or venture capital operating companies;
``(B) there is no single venture capital operating
company that owns 50 percent or more of the business
concern; and
``(C) there is no single venture capital operating
company the employees of which constitute a majority of
the board of directors of the business concern.
``(4) If a venture capital operating company controlled by a
business with more than 500 employees (in this paragraph
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--
``(A) not more than two VCOCs under large business
control have an ownership interest in the small
business concern; and
``(B) the VCOCs under large business control do not
collectively own more than 20 percent of the small
business concern.
``(5) The term `venture capital operating company' means a
business concern--
``(A) 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--
``(I) is registered under the
Investment Company Act of 1940 (15
U.S.C. 80a-51 et seq.); or
``(II) is an investment company, as
defined in section 3(c)(1) of such Act
(15 U.S.C. 80a-3(c)(1)), which is not
registered under such Act because it is
beneficially owned by less than 100
persons; and
``(B) 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.''.
TITLE II--COMMERCIALIZATION ACTIVITIES AND RESEARCH TOPICS DESERVING
SPECIAL CONSIDERATION
SEC. 201. FOCUS ON COMMERCIALIZATION.
Section 9(a) of the Small Business Act (15 U.S.C. 638(a)) is amended
by adding at the end the following: ``It is further the policy of
Congress that the programs established in this section should focus on
promoting research and development of projects governed by commercial
business plans, which have significant potential to produce products or
services for the marketplace or for acquisition by Federal agencies.''.
SEC. 202. INCLUSION OF ENERGY-RELATED RESEARCH TOPICS AND RARE DISEASE-
RELATED RESEARCH TOPICS AS DESERVING ``SPECIAL
CONSIDERATION'' AS SBIR RESEARCH TOPICS.
Section 9(g)(3) of the Small Business Act (15 U.S.C. 638(g)(3)) is
amended--
(1) in the matter preceding subparagraph (A) by inserting
after ``critical technologies'' the following: ``or pressing
research priorities'';
(2) in subparagraph (A) by striking ``or'' at the end; and
(3) by adding at the end the following:
``(C) the National Academy of Sciences, in the final
report issued by the `America's Energy Future:
Technology Opportunities, Risks, and Tradeoffs'
project, and in subsequent reports issued by the
National Academy of Sciences on sustainability, energy,
and alternative fuels;
``(D) the National Institutes of Health, in the
annual report on the rare diseases research activities
of the National Institutes of Health for fiscal year
2005, and in subsequent reports issued by the National
Institutes of Health on rare diseases research
activities; or
``(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;''.
SEC. 203. NANOTECHNOLOGY-RELATED RESEARCH TOPICS.
(a) SBIR.--Section 9(g)(3) of the Small Business Act (15 U.S.C.
638(g)(3)), as amended, is further amended--
(1) in subparagraph (D) by striking ``or'' at the end;
(2) in subparagraph (E) by adding ``or'' at the end; and
(3) by adding at the end the following:
``(F) the national nanotechnology strategic plan
required under section 2(c)(4) of the 21st Century
Nanotechnology Research and Development Act (15 U.S.C.
7501(c)(4)) and in subsequent reports issued by the
National Science and Technology Council Committee on
Technology, focusing on areas of nanotechnology
identified in such plan;''.
(b) STTR.--Section 9(o)(3) of the Small Business Act (15 U.S.C.
638(o)(3)) is amended--
(1) in subparagraph (A) by striking ``or'' at the end;
(2) in subparagraph (B) by adding ``or'' at the end; and
(3) by adding at the end the following:
``(C) by the national nanotechnology strategic plan
required under section 2(c)(4) of the 21st Century
Nanotechnology Research and Development Act (15 U.S.C.
7501(c)(4)) and in subsequent reports issued by the
National Science and Technology Council Committee on
Technology, focusing on areas of nanotechnology
identified in such plan;''.
SEC. 204. CLARIFYING THE DEFINITION OF ``PHASE THREE''.
Section 9(e) of the Small Business Act (15 U.S.C. 638(e)) is
amended--
(1) in paragraph (4)(C) in the matter preceding clause (i) by
inserting after ``a third phase'' the following: ``, which
shall consist of work that derives from, extends, or logically
concludes efforts performed under prior SBIR funding agreements
(which may be referred to as `Phase III')'';
(2) in paragraph (8) by striking ``and'' at the end;
(3) in paragraph (9) by striking the period at the end and
inserting ``; and''; and
(4) by adding at the end the following:
``(10) the term `commercialization' means the process of
developing marketable products or services and producing and
delivering products or services for sale (whether by the
originating party or by others) to government or commercial
markets.''.
SEC. 205. AGENCY RESEARCH GOALS.
Section 9 of the Small Business Act (15 U.S.C. 638), as amended, is
further amended by striking subsection (h) and inserting the following:
``(h) Agency Research Goals.--
``(1) In general.--In addition to the requirements of
subsection (f), each Federal agency that is required by this
section to have an SBIR program and that awards annually
$5,000,000,000 or more in procurement contracts shall,
effective for fiscal year 2010 and each fiscal year thereafter,
establish annual goals for commercialization of projects funded
by SBIR awards.
``(2) Specific goals.--The goals required by paragraph (1)
shall include specific goals for each of the following:
``(A) The percentage of SBIR projects that receive
funding for the third phase (as defined in subsection
(e)(4)(C)).
``(B) The percentage of SBIR projects that are
successfully integrated into a program of record.
``(C) The amount of Federal dollars received by SBIR
projects through Federal contracts, not including
dollars received through the SBIR program.
``(3) Submission to committees.--For each fiscal year for
which goals are required by paragraph (1), the agency shall
submit to the Committee on Small Business and the Committee on
Science and Technology of the House of Representatives and the
Committee on Small Business and Entrepreneurship of the
Senate--
``(A) not later than 60 days after the beginning of
the fiscal year, the goals; and
``(B) not later than 90 days after the end of the
fiscal year, data on the extent to which the goals were
met and a description of the methodology used to
collect such data.''.
SEC. 206. COMMERCIALIZATION PROGRAMS.
Section 9 of the Small Business Act (15 U.S.C. 638) as amended, is
further amended, by adding at the end the following:
``(bb) Commercialization Programs.--
``(1) In general.--Each agency required by this section to
conduct an SBIR program shall establish a commercialization
program that supports the progress of SBIR awardees to the
third phase. The commercialization program may include
activities such as partnership databases, partnership
conferences, multiple second phases, mentoring between prime
contractors and SBIR awardees, multiple second phases with
matching private investment requirements, jumbo awards, SBIR
helpdesks, and transition assistance programs. The agency shall
include in its annual report an analysis of the various
activities considered for inclusion in the commercialization
program and a statement of the reasons why each activity
considered was included or not included, as the case may be.
``(2) Funding for commercialization programs.--
``(A) In general.--From amounts made available to
carry out this paragraph, the Administrator may, on
petition by agencies required by this section to
conduct an SBIR program, transfer funds to such
agencies to support the commercialization programs of
such agencies.
``(B) Petitions.--The Administrator shall establish
rules for making transfers under subparagraph (A). The
initial set of rules shall be promulgated not later
than 90 days after the date of the enactment of this
paragraph.
``(C) Authorization of appropriations.--There is
authorized to be appropriated to the Administrator to
carry out this paragraph $27,500,000 for fiscal year
2010 and each fiscal year thereafter.
``(3) Funding limitation.--For payment of expenses incurred
to administer the commercialization programs described in
paragraphs (1) and (2), the head of an agency may use not more
than an amount equal to 1 percent of the funds set aside for
the agency's Small Business Innovation Research program. Such
funds--
``(A) shall not be subject to the limitations on the
use of funds in subsection (f)(2); and
``(B) shall not be used for the purpose of funding
costs associated with salaries and expenses of
employees of the Federal Government.''.
TITLE III--RURAL DEVELOPMENT AND OUTREACH
SEC. 301. OUTREACH AND SUPPORT ACTIVITIES.
Section 9 of the Small Business Act (15 U.S.C. 638), as amended, is
further amended by inserting after subsection (r) the following:
``(s) Outreach and Support Activities.--
``(1) In general.--Subject to the other provisions of this
subsection, the Administrator shall make grants on a
competitive basis to organizations, to be used by the
organizations to do one or both of the following:
``(A) To conduct outreach efforts to increase
participation in the programs under this section.
``(B) To provide application support and
entrepreneurial and business skills support to
prospective participants in the programs under this
section.
``(2) Authorization of appropriations.--There is authorized
to be appropriated to the Administrator $10,000,000 to carry
out paragraph (1) for each of fiscal years 2010 and 2011.
``(3) Amount of assistance.--For each of subparagraphs (A)
and (B) of paragraph (1), the amount of assistance provided to
an organization under that subparagraph in any fiscal year--
``(A) shall be equal to the total amount of matching
funds from non-Federal sources provided by the
organization; and
``(B) shall not exceed $250,000.
``(4) Direction.--An organization receiving funds under
paragraph (1) shall, in using those funds, direct its
activities at one or both of the following:
``(A) Small business concerns located in geographic
areas that are underrepresented in the programs under
this section.
``(B) Small business concerns owned and controlled by
women, small business concerns owned and controlled by
service-disabled veterans, and small business concerns
owned and controlled by minorities.
``(5) Advisory board.--
``(A) Establishment.--Not later than 90 days after
the date of the enactment of this subsection, the
Administrator shall establish an advisory board for the
activities carried out under this subsection.
``(B) Non-applicability of faca.--The Federal
Advisory Committee Act (5 U.S.C. App.) shall not apply
to the advisory board.
``(C) Members.--The members of the advisory board
shall include the following:
``(i) The Administrator (or the
Administrator's designee).
``(ii) For each Federal agency required by
this section to conduct an SBIR program, the
head of the agency (or the designee of the head
of the agency).
``(iii) Representatives of small business
concerns that are current or former recipients
of SBIR awards, or representatives of
organizations of such concerns.
``(iv) Representatives of service providers
of SBIR outreach and assistance, or
representatives of organizations of such
service providers.
``(D) Duties.--The advisory board shall have the
following duties:
``(i) To develop guidelines for awards under
paragraph (1), including guidelines relating to
award sizes, proposal requirements, measures
for monitoring awardee performance, and
measures for determining the overall value of
the activities carried out by the awardees.
``(ii) To identify opportunities for
coordinated outreach, technical assistance, and
commercialization activities among Federal
agencies, the recipients of the awards under
paragraph (1), and applicants and recipients of
SBIR awards, including opportunities such as--
``(I) podcasting or webcasting for
conferences, training workshops, and
other events;
``(II) shared online resources to
match prospective applicants with the
network of paragraph (1) recipients;
and
``(III) venture capital conferences
tied to technologies and sectors that
cross agencies.
``(iii) To review and recommend revisions to
activities under paragraph (1).
``(iv) To submit to the Committee on Small
Business and Entrepreneurship of the Senate and
the Committee on Small Business and the
Committee on Science and Technology of the
House of Representatives an annual report on
the activities carried out under paragraph (1)
and the effectiveness and impact of those
activities.
``(6) Selection criteria.--In awarding grants under this
subsection, the Administrator shall use selection criteria
developed by the advisory board established under paragraph
(5). The criteria shall include--
``(A) criteria designed to give preference to
applicants who propose to carry out activities that
will reach either an underperforming geographic area or
an underrepresented population group (as measured by
the number of SBIR applicants);
``(B) criteria designed to give preference to
applicants who propose to carry out activities that
complement, and are integrated into, the existing
public-private innovation support system for the
targeted region or population;
``(C) criteria designed to give preference to
applicants who propose to measure the effectiveness of
the proposed activities; and
``(D) criteria designed to give preference to
applicants who include a Small Business Development
Center program that is accredited for its technology
services.
``(7) Peer review.--In awarding grants under this subsection,
the Administrator shall use a peer review process. Reviewers
shall include--
``(A) SBIR program managers for agencies required by
this section to conduct SBIR programs; and
``(B) private individuals and organizations that are
knowledgeable about SBIR, the innovation process,
technology commercialization, and State and regional
technology-based economic development programs.
``(8) Per-state limitations.--
``(A) In general.--To be eligible to receive a grant
under this subsection, the applicant must have the
written endorsement of the Governor of the State where
the targeted regions or populations are located (if the
regions or populations are located in more than one
State, the applicant must have the written endorsement
of the Governor of each such State). Such an
endorsement must indicate that the Governor will ensure
that the activities to be carried out under the grant
will be integrated with the balance of the State's
portfolio of investments to help small business
concerns commercialize technology.
``(B) Limitation.--Each fiscal year, a Governor may
have in effect not more than one written endorsement
for a grant under paragraph (1)(A), and not more than
one written endorsement for a grant under paragraph
(1)(B).
``(9) Specific requirements for awards.--In making awards
under paragraph (1) the Administrator shall ensure that each
award shall be for a period of 2 fiscal years. The
Administrator shall establish rules and performance goals for
the disbursement of funds for the second fiscal year, and funds
shall not be disbursed to a recipient for such a fiscal year
until after the advisory board established under this
subsection has determined that the recipient is in compliance
with the rules and performance goals.''.
SEC. 302. RURAL PREFERENCE.
Section 9 of the Small Business Act (15 U.S.C. 638), as amended, is
further amended by adding at the end the following:
``(cc) Rural Preference.--In making awards under this section,
Federal agencies shall give priority to applications so as to increase
the number of SBIR and STTR award recipients from rural areas.''.
SEC. 303. OBTAINING SBIR APPLICANT'S CONSENT TO RELEASE CONTACT
INFORMATION TO ECONOMIC DEVELOPMENT ORGANIZATIONS.
Section 9 of the Small Business Act (15 U.S.C. 638), as amended, is
further amended by adding at the end the following:
``(dd) Consent To Release Contact Information to Organizations.--
``(1) Enabling concern to give consent.--Each Federal agency
required by this section to conduct an SBIR program shall
enable a small business concern that is an SBIR applicant to
indicate to the agency whether the agency has its consent to--
``(A) identify the concern to appropriate local and
State-level economic development organizations as an
SBIR applicant; and
``(B) release the concern's contact information to
such organizations.
``(2) Rules.--The Administrator shall establish rules to
implement this subsection. The rules shall include a
requirement that the agency include in its SBIR application
forms a provision through which the applicant can indicate
consent for purposes of paragraph (1).''.
SEC. 304. INCREASED PARTNERSHIPS BETWEEN SBIR AWARDEES AND PRIME
CONTRACTORS, VENTURE CAPITAL INVESTMENT COMPANIES,
AND LARGER BUSINESSES.
Section 9 of the Small Business Act (15 U.S.C. 638), as amended, is
further amended by adding at the end the following:
``(ee) Increased Partnerships.--
``(1) In general.--Each agency required by this section to
conduct an SBIR program shall establish initiatives by which
the agency encourages partnerships between SBIR awardees and
prime contractors, venture capital investment companies,
business incubators, and larger businesses, for the purpose of
facilitating the progress of the SBIR awardees to the third
phase.
``(2) Definition.--In this subsection, 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.''.
TITLE IV--SBIR AND STTR ENHANCEMENT
SEC. 401. INCREASED NUMBER OF RESEARCH TOPIC SOLICITATIONS ANNUALLY AND
SHORTENED PERIOD FOR FINAL DECISIONS ON
APPLICATIONS.
(a) Increased Number of Research Topic Solicitations Annually.--
Section 9(g)(2) of the Small Business Act (15 U.S.C. 638(g)(2)) is
amended by inserting before the semicolon at the end the following: ``,
but not less often than twice per year''.
(b) Shortened Period for Final Decisions on Applications.--Section
9(g)(4) of the Small Business Act (15 U.S.C. 638(g)(4)) is amended by
inserting before the semicolon at the end the following: ``, but a
final decision on each proposal shall be rendered not later than 90
days after the date on which the solicitation closes unless the
Administrator determines, on a case by case basis, that a decision may
be extended from 90 days to 180 days''.
SEC. 402. AGENCIES SHOULD FUND VITAL R&D PROJECTS WITH THE POTENTIAL
FOR COMMERCIALIZATION.
Section 9 of the Small Business Act (15 U.S.C. 638), as amended, is
further amended by adding at the end the following:
``(ff) Multiple First Phase SBIR Awards Report.--The Administrator
shall, on an annual basis, submit to the Committee on Small Business
and the Committee on Science and Technology of the House of
Representatives and the Committee on Small Business and
Entrepreneurship of the Senate a list identifying each small business
concern that, for the period covered by the preceding 5 fiscal years,
received 15 or more first phase SBIR awards and no second phase SBIR
awards.''.
SEC. 403. FEDERAL AGENCY ENGAGEMENT WITH SBIR AWARDEES THAT HAVE BEEN
AWARDED MULTIPLE PHASE ONE AWARDS BUT HAVE NOT BEEN
AWARDED PHASE TWO AWARDS.
Section 9 of the Small Business Act (15 U.S.C. 638), as amended, is
further amended by adding at the end the following:
``(gg) Requirements Relating to Federal Agency Engagement With
Certain First Phase SBIR Awardees.--Each Federal agency required by
this section to conduct an SBIR program shall engage with SBIR awardees
that have been awarded multiple first phase SBIR awards but have not
been awarded any second phase SBIR awards and shall develop performance
measures with respect to awardee progression in the SBIR program.''.
SEC. 404. FUNDING FOR ADMINISTRATIVE, OVERSIGHT, AND CONTRACT
PROCESSING COSTS.
Section 9 of the Small Business Act (15 U.S.C. 638), as amended, is
further amended by adding at the end the following:
``(hh) Assistance for Administrative, Oversight, and Contract
Processing Costs.--
``(1) In general.--From amounts made available to carry out
this subsection, the Administrator may, on petition by Federal
agencies required by this section to conduct an SBIR program,
transfer funds to such agencies to assist with the
administrative, oversight, and contract processing costs
relating to such program.
``(2) Petitions.--The Administrator shall establish rules for
making transfers under paragraph (1). The initial set of rules
shall be promulgated not later than 180 days after the date of
the enactment of this subsection.
``(3) Limit on transfer.--A Federal agency may not receive
under this subsection in a fiscal year an amount greater than 3
percent of the SBIR budget of such agency for such fiscal year.
``(4) Authorization of appropriations.--There is authorized
to be appropriated to the Administrator to carry out this
subsection $27,500,000 for each of fiscal years 2010 and
2011.''.
SEC. 405. COMPTROLLER GENERAL AUDIT OF HOW FEDERAL AGENCIES CALCULATE
EXTRAMURAL RESEARCH BUDGETS.
The Comptroller General of the United States shall carry out a
detailed audit of how Federal agencies calculate extramural research
budgets for purposes of calculating the size of the agencies' Small
Business Innovation Research Program and Small Business Technology
Transfer Program budgets. Not later than 1 year after the date of the
enactment of this Act, the Comptroller General shall submit to the
Committee on Small Business and the Committee on Science and Technology
of the House of Representatives and the Committee on Small Business and
Entrepreneurship of the Senate a report on the results of the audit.
SEC. 406. AGENCY DATABASES TO SUPPORT PROGRAM EVALUATION.
Section 9(k) of the Small Business Act (15 U.S.C. 638(k)) is
amended--
(1) in paragraph (2)(A)--
(A) by striking ``and'' at the end of clause (ii);
(B) by inserting ``and'' at the end of clause (iii);
and
(C) by adding at the end the following new clause:
``(iv) information on the ownership structure
of award recipients, both at the time of
receipt of the award and upon completion of the
award period;'';
(2) by amending paragraph (3) to read as follows:
``(3) Updating information for database.--
``(A) In general.--A Federal agency shall not make a
Phase I or Phase II payment to a small business concern
under this section unless the small business concern
has provided all information required under this
subsection and available at the time with respect to
the award under which the payment is made, and with
respect to any other award under this section
previously received by the small business concern or a
predecessor in interest to the small business concern.
``(B) Apportionment.--In complying with this
paragraph, a small business concern may apportion sales
or additional investment information relating to more
than one second phase award among those awards, if it
notes the apportionment for each award.
``(C) Annual updates upon termination.--A small
business concern receiving an award under this section
shall--
``(i) in the case of a second phase award,
update information in the databases required
under paragraphs (2) and (6) concerning that
award at the termination of the award period;
``(ii) in the case of award recipients not
described in clause (iii), be requested to
voluntarily update such information annually
thereafter for a period of 5 years; and
``(iii) in the case of a small business
concern applying for a subsequent first phase
or second phase award, be required to update
such information annually thereafter for a
period of 5 years.''; and
(3) by adding at the end the following new paragraph:
``(6) Agency program evaluation databases.--Each Federal
agency required to establish an SBIR or STTR program under this
section shall develop and maintain, for the purpose of
evaluating such programs, a database containing information
required to be contained in the database under paragraph (2).
Each such database shall be designed to be accessible to other
agencies that are required to maintain a database under this
paragraph. Each such database shall be developed and operated
in a manner to ensure that each such database is relevant to
and contributes to the agency's oversight and evaluation of the
SBIR and STTR programs. Paragraphs (4) and (5) apply to each
database under this paragraph.''.
SEC. 407. AGENCY DATABASES TO SUPPORT TECHNOLOGY UTILIZATION.
Section 9(k) of the Small Business Act (15 U.S.C. 638(k)), as
amended, is further amended by adding at the end the following new
paragraph:
``(7) Agency databases to support technology utilization.--
Each Federal agency with an SBIR or STTR program shall create
and maintain a technology utilization database, which shall be
available to the public and shall contain data supplied by the
award recipients specifically to help them attract customers
for the products and services generated under the SBIR or STTR
project, and to attract additional investors and business
partners. Each database created under this paragraph shall
include information on the other databases created under this
paragraph by other Federal agencies. Participation in a
database under this paragraph shall be voluntary, except that
such participation is required of all award recipients who
received supplemental payments from SBIR and STTR program funds
above their initial Phase II award. Each database created under
this paragraph shall be developed and operated in a manner to
ensure that each such database is relevant to and contributes
to the agency's oversight and evaluation of the SBIR and STTR
programs.''.
SEC. 408. INTERAGENCY POLICY COMMITTEE.
(a) Establishment.--The Director of the Office of Science and
Technology Policy shall establish an Interagency SBIR/STTR Policy
Committee comprised of one representative from each Federal agency with
an SBIR program and the Office of Management and Budget.
(b) Cochairs.--The Director of the Office of Science and Technology
Policy and the Director of the National Institute of Standards and
Technology shall jointly chair the Interagency SBIR/STTR Policy
Committee.
(c) Duties.--The Interagency SBIR/STTR Policy Committee shall review
the following issues and make policy recommendations on ways to improve
program effectiveness and efficiency:
(1) The public and government databases described in section
9(k) (1) and (2) of the Small Business Act (15 U.S.C. 638(k)
(1) and (2)).
(2) Federal agency flexibility in establishing Phase I and II
award sizes, and appropriate criteria to exercise such
flexibility.
(3) Commercialization assistance best practices in Federal
agencies with significant potential to be employed by other
agencies, and the appropriate steps to achieve that leverage,
as well as proposals for new initiatives to address funding
gaps business concerns face after Phase II but before
commercialization.
(4) Development and incorporation of a standard evaluation
framework to enable systematic assessment of SBIR and STTR,
including through improved tracking of awards and outcomes and
development of performance measures for individual agency
programs.
(d) Reports.--The Interagency SBIR/STTR Policy Committee shall
transmit to the Committee on Science and Technology and the Committee
on Small Business of the House of Representatives, and to the Committee
on Small Business and Entrepreneurship of the Senate--
(1) a report on its review and recommendations under
subsections (c)(1) and (c)(4) not later than 1 year after the
date of enactment of this Act;
(2) a report on its review and recommendations under
subsection (c)(2) not later than 18 months after the date of
enactment of this Act; and
(3) a report on its review and recommendations under
subsection (c)(3) not later than 2 years after the date of
enactment of this Act.
SEC. 409. NATIONAL RESEARCH COUNCIL SBIR STUDY.
Section 108(d) of the Small Business Reauthorization Act of 2000 (15
U.S.C. 638 note), enacted into law by reference under section 1(a)(9)
of the Consolidated Appropriations Act, 2001 (Public Law 106-554), is
amended--
(1) by striking ``of the Senate'' and all that follows
through ``not later than 3'' and inserting ``of the Senate, not
later than 3''; and
(2) by striking ``; and'' and all that follows through
``update of such report''.
SEC. 410. EXPRESS AUTHORITY TO ``FAST-TRACK'' PHASE TWO AWARDS FOR
PROMISING PHASE ONE RESEARCH.
Section 9 of the Small Business Act (15 U.S.C. 638), as amended, is
further amended by adding at the end the following:
``(ii) Authority To `Fast-track' Phase Two Awards for Promising Phase
One Research.--To address the delay between an award for the first
phase of an SBIR program and the application for and extension of an
award for the second phase of such program, each Federal agency with an
SBIR program may develop `fast-track' programs to eliminate such delay
by issuing second phase SBIR awards as soon as practicable, including
in appropriate cases simultaneously with the issuance of the first
phase SBIR award. The Administrator shall encourage the development of
such `fast-track' programs.''.
SEC. 411. INCREASED SBIR AND STTR AWARD LEVELS.
(a) SBIR Award Level and Annual Adjustments.--Section 9(j) of the
Small Business Act (15 U.S.C. 638(j)) is amended by adding at the end
the following:
``(4) Further Additional Modifications.--Not later than 180 days
after the date of enactment of this paragraph and notwithstanding
paragraph (2)(D), the Administrator shall modify the policy directives
issued pursuant to this subsection to provide for an increase to
$250,000 in the amount of funds which an agency may award in the first
phase of an SBIR program, and to $2,000,000 in the second phase of an
SBIR program, and a mandatory annual adjustment of such amounts to
reflect economic adjustments and programmatic considerations.''.
(b) STTR Award Level and Annual Adjustments.--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 ``$100,000'' and ``$750,000'' and inserting
``$250,000'' and ``$2,000,000'', respectively; and
(2) by striking ``greater or lesser amounts'' and inserting
``with a mandatory annual adjustment of such amounts to reflect
economic adjustments and programmatic considerations, and with
lesser amounts''.
(c) Limitation on Certain Awards.--Section 9 of the Small Business
Act (15 U.S.C. 638), as amended, is further amended by adding at the
end the following:
``(jj) Limitation on Phase I and II Awards.--No Federal agency shall
issue an award under the SBIR program or the STTR program if the size
of the award exceeds the amounts established under subsections (j)(4)
and (p)(2)(B)(ix).''.
SEC. 412. EXPRESS AUTHORITY FOR AN AGENCY TO AWARD SEQUENTIAL PHASE TWO
AWARDS FOR SBIR-FUNDED PROJECTS.
Section 9 of the Small Business Act (15 U.S.C. 638), as amended, is
further amended by adding at the end the following:
``(kk) Requirements Relating to Additional Second Phase SBIR
Awards.--
``(1) In general.--A small business concern that receives a
second phase SBIR award for a project remains eligible to
receive additional second phase SBIR awards for such project.
``(2) Technical or weapons systems.--Agencies are expressly
authorized to provide additional second phase SBIR awards for
testing and evaluation assistance for the insertion of SBIR
technologies into technical or weapons systems.''.
SEC. 413. FIRST PHASE REQUIRED.
Section 9 of the Small Business Act (15 U.S.C. 638), as amended, is
further amended by adding at the end the following:
``(ll) First Phase Required.--Under this section, a Federal agency
shall provide to a small business concern an award for the second phase
of an SBIR program with respect to a project only if such agency finds
that the small business concern has been provided an award for the
first phase of an SBIR program with respect to such project or has
completed the determinations described in subsection (e)(4)(A) with
respect to such project despite not having been provided an award for
the first phase.''.
II. Purpose of the Bill
The purpose of the bill is to reauthorize the Small
Business Innovation Research (SBIR) Program and the Small
Business Technology Transfer (STTR) Program at the Small
Business Administration (SBA) through 2011. The legislation
also implements a number of policy changes to better reflect
the competitive environment facing small high-tech businesses.
III. Background and Need for Legislation
SBIR
Congress has demonstrated an ongoing interest in the small
business sector and has given special consideration to small,
high tech firms in addressing issues related to economic growth
and competitiveness. This is for several reasons, including the
fact that data indicates such companies tend to be highly
innovative, play a significant role in technological
advancement, and contribute to a high standard of living in the
United States. Such was the rationale behind legislation
creating the SBIR program (P.L. 97-219). Believing that small
companies were underrepresented in government R&D activities,
P.L. 97-219 established agency SBIR programs to guarantee this
sector a portion of the government's research and development
budget to compensate for what was viewed as a federal
contracting preference for large corporations.
Current law requires that every Federal department with an
extramural R&D budget of $100 million or more establish and
operate a SBIR program. Generally, a set percentage of that
agency's extramural research and development budget--currently
set at 2.5%--is to be used to support mission-related work in
small companies. To be eligible to compete in the program, a
company must: (1) be independently owned and operated; (2) not
be dominant in the field of research proposed; (3) for profit;
(4) employ 500 or fewer people; (5) be the primary employer of
the principal investigator; and (6) be at least 51% owned by
one or more U.S. citizens or lawfully admitted permanent
resident aliens. Subsidiaries of SBIR-eligible companies are
also eligible to participate as long as the parent company
meets all SBIR requirements.
Agency SBIR efforts involve three phases of activity. In
the first phase, awards up to $100,000 (for six months) are
provided to evaluate a concept's scientific or technical merit
and feasibility. The project must be of interest to, and
coincide with, the mission of the supporting organization.
Projects that demonstrate potential after the initial endeavor
may compete for Phase II awards of up to $750,000 (lasting one
to two years) to perform the principal R&D. Phase III funding,
directed at the commercialization of the product or process, is
expected to be generated in the private sector. Federal
dollars, but not SBIR funds, may be used if the government
perceives that the final technology or technique will meet
public needs. The Small Business Research and Development
Enhancement Act of 1992 (P.L. 102-564) directed agencies to
weigh commercial potential as an additional factor in
evaluating SBIR proposals.
As of Fiscal Year 2009, 11 departments administer SBIR
programs, including the Departments of Agriculture, Commerce,
Defense (DOD), Education, Energy (DOE), Health and Human
Services (HHS), Homeland Security, and Transportation; the
Environmental Protection Agency; the National Aeronautics and
Space Administration (NASA); and the National Science
Foundation (NSF). Individual departments select R&D interests,
administer program operations, and control financial support.
Funding may be disbursed in the form of contracts, grants, or
cooperative agreements. Separate agency solicitations are
issued at established times.
The Small Business Administration has created broad policy
and guidelines under which individual departments operate SBIR
programs. The agency monitors and reports to Congress on the
conduct of the separate departmental activities.
STTR
A pilot effort to encourage commercialization of university
and Federal laboratory R&D by small companies was created by
the Small Business Research and Development Enhancement Act of
1992 (P.L. 102-564) and reauthorized several times through
Fiscal Year 2009. The STTR program provides funding for
research proposals that are developed and executed
cooperatively between a small firm and a scientist in a
research organization and fall under the mission requirements
of the Federal funding agency. Up to $100,000 in Phase I
financing is available for one year. Phase II awards of up to
$750,000 may be made for two years. Currently funded by a set-
aside of 0.3% of the extramural R&D budget of departments that
spend over $1 billion per year, the DOE, DOD, HHS, NASA, and
NSF participate in the STTR program.
LEGISLATION
The SBIR and STTR programs have been extended several times
and were scheduled to terminate on September 30, 2008. In the
110th Congress, several bills were introduced to reauthorize
and alter the initiatives. H.R. 5819, the SBIR/STTR
Reauthorization Act, passed the House on April 23, 2008, and
the Senate version (S. 3362) was reported from the Senate
Committee on Small Business and Entrepreneurship on August 22,
2008. However, no comprehensive SBIR and STTR reauthorization
bill was enacted.
S. 3029, a bill to provide for an additional temporary
extension of programs under the Small Business Act and the
Small Business Investment Act of 1958 (P.L. 110-235),
temporarily extended SBIR activity through March 20, 2009. H.R.
1541, to provide for an additional temporary extension of
programs under the Small Business Act and the Small Business
Investment Act of 1958 (P.L. 111-10), provided another
extension of the program through July 31, 2009.
The original statute creating the SBIR program was signed
into law in 1982. Much has changed in terms of the competitive
challenges facing American small high-tech entrepreneurs as
well as the trend of globalization of all aspects of the R&D
enterprise. Therefore, H.R. 2965 implements a number of
policies which better reflect the current environment.
IV. Hearing Summaries
The Committee on Science and Technology held four hearings
on the SBIR and STTR programs over the past three Congresses.
The Committee held the first hearing in the 109th Congress
on Tuesday, June 28, 2005. The hearing, entitled Small Business
Innovation Research: What is the Optimal Role of Venture
Capital?, focused on the issues associated with awarding SBIR
grants to small businesses owned, or partly owned, by venture
capital (VC) firms. The witnesses were: The Honorable Sam
Graves, Member, U.S. House of Representatives; Ms. Ann Eskesen,
President of Innovation Technology Institute; Dr. Ron Cohen,
CEO of Acorda Technologies; Mr. Jonathan Cohen, President and
CEO of 20/20 Gene Systems; Dr. Carol Nacy, CEO of Sequella
Inc.; and Dr. Frederic Abramson, President and CEO of
AlphaGenetics Inc. The witnesses discussed how VC ownership of
small companies should be treated in the consideration of SBIR
applications and ways to improve the SBIR program to more
efficiently promote the development of new technologies and
help bring them to market. The witnesses were split on whether
VC-backed companies should be eligible for SBIR funding--half
of the witnesses were in favor of these companies being
eligible, arguing that the VC money was used for different
purposes than the SBIR money, while the remaining witnesses
supported the existing SBA ruling that makes businesses that
are majority-owned by venture capitalists ineligible for SBIR
grants.
The Committee held a second hearing in the 110th Congress
on Thursday, April 26, 2007, entitled Small Business Innovation
Research Reauthorization on the 25th Program Anniversary. This
hearing focused on the degree to which the current programs
were meeting their objectives, the adequacy of the award
levels, strategies to maximize small business participation and
increase participation by women and minority-owned small
businesses, the programs' effectiveness in promoting product
commercialization, covering administrative costs, and the
appropriate role for VC-backed small businesses. The witnesses
were: Mr. Bruce J. Held, Director of the Force Development and
Technology at the RAND Arroyo Center, RAND Corporation; Mr. Jon
Baron, Executive Director of the Coalition for Evidence-Based
program Policy at the Council for Excellence in Government; Mr.
Robert N. Schimdt, Founder and Chairman of Cleveland Medical
Devices and Orbital Research Inc.; Dr. Gary McGarrity,
Executive Vice President of Scientific and Clinical Affairs,
VIRxSYS Corporation; and Mr. Anthony R. Ignagni, President and
CEO of Synapse Biomedical Inc. The witnesses discussed the
benefits of the SBIR program, and argued that more flexibility
in the solicitation and funding process would enhance the
program. A witness also recommended that the SBIR program
consider methods to build up entrepreneurial skills. Two of the
witnesses criticized the SBA ruling barring VC-backed
businesses from receiving SBIR grants.
The Committee held a third hearing in the 110th Congress on
Tuesday, June 26, 2007. The hearing, entitled SBIR and STTR--
How are the Programs Managed Today?, focused on program trends,
outreach to encourage new applicants and reach out to a diverse
pool of applicants, program data and tracking, and the role of
procurement in enabling commercialization. The witnesses were:
Mr. Michael J. Caccuitto, SBIR/STTR Program Coordinator at the
Office of Small Business Programs in DOD; Ms. Jo Anne
Goodnight, SBIR/STTR Program Coordinator at the Office of
Extramural Research of the National Institutes of Health (NIH)
in HHS; Mr. Larry S. James, SBIR and STTR Program Manager and
Acting Director at the Small Business Research Division in DOE;
Mr. Doug A. Comstock, Director of the Innovative Partnership
Program Office at NASA; and Dr. Kesh S. Narayanan, Director of
the Division of Industrial Innovation and Partnerships in the
Directorate for Engineering at NSF. The witnesses discussed the
state of the SBIR and STTR programs in their respective
departments. Two of the witnesses reported that a balance of
centralized oversight and decentralized management were key to
the programs' success. A third witness emphasized the
importance of program flexibility in fulfilling SBIR and STTR
goals. A fourth witness cited a recent restructuring of program
oversight that allowed for a more integrated approach. The
final witness also reported the programs' overall success, but
noted that limited funds restricted certain management
possibilities.
The Committee held a fourth hearing in the 111th Congress
on Thursday, April 23, 2009. The hearing, entitled The Role of
SBIR and STTR Programs in Stimulating Innovation At Small High-
Tech Businesses, focused on the programs' role in supporting
innovation at small high-tech firms and how, in turn, this
promotes the economic welfare of the Nation. The hearing also
explored the efficiency of the SBIR and STTR programs at
stimulating innovation at these businesses. The witnesses were:
Dr. Robert Berdahl, President of the Association of American
Universities; Mr. Jim Greenwood, President and CEO of the
Biotechnology Industry Organization; Dr. Sally Rockey, Acting
Deputy Director for Extramural Research at NIH; and Mr. Jere
Glover, Attorney and Executive Director for the Small Business
Technology Council. The witnesses discussed their views on
updating the rules by which companies qualify for participation
in the SBIR and STTR programs. Three of the witnesses agreed
that the programs were generally working well, but argued that
new legislation was needed to better allow small high-tech
firms with venture capital backing to participate in SBIR and
STTR. One of the witnesses emphasized the importance of
flexibility in the program, while another added that additional
changes were needed to redefine the process by which the number
of employees is determined. The final witness disagreed that
changes were needed to SBIR, but suggested that increased
funding for the program would be beneficial.
V. Committee Actions
111TH CONGRESS
On June 19, 2009, Representative Jason Altmire, for himself
and Representatives Wu, Graves, Velazquez, Schock, Nye,
Halvorson, and Bright, introduced H.R. 2965, the Enhancing
Small Business Research and Innovation Act of 2009. The bill
was referred to the Committee on Small Business and the
Committee on Science and Technology.
The Committee on Science and Technology met to consider
H.R. 2965 on June 24, 2009. The Committee considered an
amendment by Representative Smith of Nebraska to add the Office
of Management and Budget as a member of the Interagency SBIR/
STTR Policy Committee. It further added systematic program
evaluation to the list of issues the Interagency SBIR/STTR
Policy Committee must review and specified that the committee
must report on its review and recommendations relating to this
issue not later than one year after the date of enactment. The
amendment was agreed to by voice vote. H.R. 2965, as amended,
was agreed to by voice vote.
Mr. Gordon moved that the Committee favorably report H.R.
2965, as amended, to the House with the recommendation that the
bill do pass. The motion was agreed to by voice vote.
110TH CONGRESS
On April 15, 2008, Representative Wu, for himself and
Representatives Baird, Gordon, and Wilson of Ohio, introduced
H.R. 5789, the Science and Technology Innovation Act of 2008.
It was referred to the Committee on Small Business and the
Committee on Science and Technology.
On April 16, 2008, the Subcommittee on Technology and
Innovation of the Committee of Science and Technology met to
consider H.R. 5789. Representative Ehlers offered an amendment
and Representative Gingrey offered two amendments, none of
which were adopted. Representative Wilson offered an amendment
adding nanotechnology-related research to the list of topics to
receive ``special consideration'' in determining SBIR and STTR
awards. The amendment was agreed to by voice vote.
Representative Smith of Nebraska offered an amendment adding a
section requiring priority be given to SBIR and STTR
applications from rural areas. The amendment was agreed to by
voice vote. Mr. Gingrey moved that the Subcommittee favorably
report H.R. 5789, as amended, to the Full Committee on Science
and Technology. The motion was agreed to by voice vote.
On April 16, 2008, Representative Velazquez, for herself
and Representatives Graves and Sestak, introduced H.R. 5819,
the SBIR/STTR Reauthorization Act, which incorporated
provisions from H.R. 5789. H.R. 5819 was referred to the
Committee on Small Business and the Committee on Science and
Technology.
On April 18, 2008, H.R. 5819 was discharged from the
Committee on Science and Technology. On April 23, 2008, the
House passed H.R. 5819 by a recorded vote of 368-43.
On April 24, 2008, H.R. 5819 was received in the Senate and
referred to the Committee on Small Business and
Entrepreneurship. No further legislative action was taken on
H.R. 5819 in the 110th Congress.
VI. Summary of Major Provisions
H.R. 2965 extends the authorization for the SBIR and STTR
programs through Fiscal Year 2011. It provides that small
businesses with substantial investment from Venture Capital
Operating Companies are eligible to participate in the SBIR and
STTR programs. It adds additional research topics as topics
deserving special consideration. It requires agencies to
establish annual goals for commercialization of projects funded
by SBIR awards and to establish a commercialization program
that supports the progression of SBIR awardees to the third
phase. It directs the SBA Administrator to make outreach and
support grants, and further requires agencies to increase the
number of award recipients from rural areas.
H.R. 2965 requires agencies to conduct at least two rounds
of SBIR research solicitations per year, and render a final
decision on each proposal within 90 days after the solicitation
closes. It authorizes funding to assist with the
administrative, oversight, and contract processing costs
relating to the SBIR program. It also establishes an
interagency policy committee to review issues related to the
SBIR and STTR programs and make policy recommendations. The
bill further increases the award levels for the SBIR and STTR
programs for both Phase I and Phase II.
VII. Section-by-Section Analysis (by Title and Section)
Sec. 1. Short title; table of contents
``Enhancing Small Business Research and Innovation Act of
2009''
Title I. Program Extension and Venture Capital Operating Company
Involvement
Sec. 101. Extension of termination dates
Amends the Small Business Act to extend through FY2011 the
SBIR and STTR programs of the SBA.
Sec. 102. Ensuring that innovative small businesses with substantial
investment from venture capital operating companies are
eligible to participate in the SBIR and STTR programs
Provides that, effective only for the SBIR and STTR
programs: (1) a business concern that has more than 500
employees shall not qualify as a small business concern; (2) in
determining whether a small business concern is independently
owned and operated, the SBA Administrator shall not consider a
business concern to be affiliated with a venture capital
operating company if the venture capital operating company
(VCOC) does not own 50% or more of the business concern and
employees of the VCOC do not constitute a majority of the board
of directors of the business concern; (3) a business concern
shall be deemed to be independently owned and operated if it is
owned in majority part by one or more natural persons or VCOCs,
there is no single VCOC that owns 50% or more of the business
concern, and there is no single VCOC the employees of which
constitute a majority of the board of directors of the business
concern; and (4) if a VCOC controlled by a business with more
than 500 employees has an ownership interest in a small
business owned in majority by VCOCs, that small business is
eligible to receive an SBIR or STTR award only if not more than
two of such VCOCs have an ownership interest in the small
business and such VCOCs do not collectively own more than 20%
of the small business.
Defines the term ``venture capital operating company''.
Title II. Commercialization Activities and Research Topics Deserving
Special Consideration
Sec. 201. Focus on commercialization
Amends section 9 to modify the purpose and policy of the
SBIR and STTR programs as follows:
``It is further the policy of Congress that the purpose of
the programs established in this section should focus on
promoting research and the development of projects governed by
commercial business plans, which have significant potential to
produce products or services for the marketplace or for
acquisition by Federal agencies.''
Sec. 202. Inclusion of energy-related research topics and rare disease-
related research topics as deserving ``special consideration''
as SBIR research topics
Includes energy-related research (as identified by the
National Academy of Sciences (NAS), in the final report issued
by the `America's Energy Future: Technology Opportunities,
Risks, and Tradeoffs' project, and in subsequent reports issued
by NAS on sustainability, energy, and alternative fuels), rare
disease-related research (as identified by NIH, in the annual
report on the rare diseases research activities of NIH for
fiscal year 2005, and in subsequent reports issued by the NIH
on rare diseases research activities), and transportation and
infrastructure research (as identified by the NAS, 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 NAS and United States
Department of Transportation on transportation and
infrastructure) as ``special consideration'' SBIR research
topics.
Sec. 203. Nanotechnology-related research topics
Includes nanotechnology research (as identified by the
national nanotechnology strategic plan required under section
2(c)(4) of the 21st Century Nanotechnology Research and
Development Act and in subsequent reports issued by the
National Science and Technology Council Committee on
Technology, focusing on areas of nanotechnology identified in
such plan) as a ``special consideration'' SBIR and STTR
research topic.
Sec. 204. Clarifying the definition of ``Phase Three''
Clarifies that the ``third phase'' of the SBIR program
``shall consist of work that derives, extends, or logically
concludes efforts performed under prior SBIR funding agreements
(which may be referred to as `Phase III')''.
Also provides that the term ``commercialization'' means
``the process of developing marketable products or services and
producing and delivering products or services for sale (whether
by the originating party or by others) to government or
commercial markets''.
Sec. 205. Agency research goals
Requires agencies with SBIR programs that award annually $5
billion or more in procurement contracts to establish annual
goals for commercialization of projects funded by SBIR awards.
Outlines specific goals required, including: (1) the percentage
of SBIR projects that receive private sector funds during the
third phase; (2) the percentage of SBIR projects that are
integrated into a program of record; and (3) the amount of
Federal dollars received by SBIR projects through Federal
contracts, not including dollars received through the SBIR
program.
Requires that the goals be reported not later than 60 days
after the beginning of the fiscal year and the extent to which
the goals were met and a description of the methodology used to
collect such data be reported not later than 90 days after the
end of the fiscal year to the Committee on Small Business and
the Committee on Science and Technology of the House of
Representatives and the Committee on Small Business and
Entrepreneurship of the Senate.
Sec. 206. Commercialization program
Requires each agency to establish a commercialization
program that supports the progression of SBIR awardees to the
third phase.
Requires an analysis of the various activities considered
for inclusion in the commercialization program and a statement
of the reasons why each activity considered was included or not
included to be submitted to Congress.
Authorizes $27.5 million in funding to SBA, to be
transferred to agencies to support commercialization programs.
Specifies that agencies may not use more than an amount equal
to 1% of the funds set aside for the agency's SBIR program to
administer the commercialization program.
Title III. Rural Development and Outreach
Sec. 301. Outreach and support activities
Directs the Administrator to make grants on a competitive
basis to organizations to: (1) conduct outreach efforts to
increase participation in the programs; and (2) provide
application support and entrepreneurial and business skills
support to prospective participants.
Authorizes $10 million for each of fiscal years 2010 and
2011 to carry out these outreach and support activities.
Provides that the amount of assistance provided to an
organization in any fiscal year shall be equal to the total
amount of matching funds from non-Federal sources provided by
the organization and shall not exceed $250,000.
Requires organizations receiving grants to direct
activities towards small business concerns located in
geographic areas that are underrepresented in the programs and/
or small business concerns owned and controlled by women, by
service-disabled veterans, and by minorities.
Requires the Administrator to establish an advisory board
for outreach and support activities. Members of the advisory
board shall include the Administrator (or the Administrator's
designee), the head (or the designee of the head) of each
Federal agency with an SBIR program, representatives of small
business concerns that are current or former recipients of SBIR
awards, and representatives of service providers of SBIR
outreach and assistance. Assigns the following duties to the
advisory board: (1) to develop guidelines for outreach awards;
(2) to identify opportunities for coordinated outreach,
technical assistance, and commercialization activities among
Federal agencies, the recipients of the outreach awards, and
applicants and recipients of SBIR awards; (3) to review and
recommend revisions to outreach activities; and (4) to submit
to the Committee on Small Business and Entrepreneurship of the
Senate and the Committee on Small Business and the Committee on
Science and Technology of the House of Representatives an
annual report on outreach activities and the effectiveness and
impact of those activities.
Requires the Administrator to use selection criteria
developed by the advisory board in awarding grants, including
criteria designed to give preference to applicants who: (1)
propose to carry out activities that will reach either an
underperforming geographic area or an underrepresented
population group; (2) propose to carry out activities that
complement the existing public-private innovation support
system for the targeted region or population; (3) propose to
measure to effectiveness of the proposed activities; and (4)
include a Small Business Development Center program that is
accredited for its technology services.
Specifies that, in awarding grants, the Administrator is to
use a peer review process.
States that, to be eligible to receive a grant, the
applicant must have the written endorsement of the Governor of
the State where the targeted regions or populations are
located. Specifies that the endorsement must indicate that the
Governor will ensure that the activities to be carried out
under the grant will be integrated with the balance of the
State's portfolio of investments to help small business
concerns commercialize technology. Includes a limitation
stating that, each fiscal year, a Governor may have in effect
not more than one written endorsement for an outreach grant and
not more than one written endorsement for a support grant.
Provides that each award shall be for a period of 2 fiscal
years.
Sec. 302. Rural preference
Requires agencies to give priority to SBIR and STTR award
applications so as to increase the number of award recipients
from rural areas.
Sec. 303. Obtaining SBIR applicant's consent to release contact
information to economic development organizations
Requires each agency to enable an SBIR applicant to
indicate whether the agency has its consent to identify the
applicant to appropriate local and State-level economic
development organizations as an applicant and release the
applicant's contact information to such organizations.
Sec. 304. Increased partnerships between SBIR awardees and prime
contractors, venture capital investment companies, and larger
businesses
Directs each agency to establish initiatives to encourage
partnerships between SBIR awardees and prime contractors,
venture capital investment companies, business incubators, and
larger businesses in order to facilitate the progress of SBIR
awardees to the third phase.
Defines ``business incubator''.
Title IV. SBIR and STTR Enhancement
Sec. 401. Increased number of research topic solicitations annually and
shortened period for final decisions on applications
Requires the Administrator to establish by regulation a
process in which each agency conducts at least two rounds of
SBIR research solicitations per year, and renders a final
decision on each proposal within 90 days after the solicitation
closes (with an authorized extension to 180 days on a case-by-
case basis).
Sec. 402. Agencies should fund vital R & D projects with the potential
for commercialization
Requires the Administrator to submit annually to the
Committee on Small Business and the Committee on Science and
Technology of the House of Representatives and the Committee on
Small Business and Entrepreneurship of the Senate a list of
small businesses that, during the previous five-year period,
received 15 or more first phase SBIR awards and no second phase
SBIR awards.
Sec. 403. Federal agency engagement with SBIR awardees that have been
awarded multiple Phase One awards but have not been awarded
Phase Two awards
Requires each agency to engage with SBIR awardees that have
been awarded multiple first phase awards but no second phase
awards, and to develop performance measures with respect to
awardee progression in the SBIR program.
Sec. 404. Funding for administrative, oversight, and contract
processing costs
Authorizes $27.5 million for each of fiscal years 2010 and
2011 to the Administrator, to be transferred to agencies, to
assist with the administrative, oversight, and contract
processing costs relating to the SBIR program. States that an
agency may not receive in a fiscal year an amount greater than
3 percent of the SBIR budget of such agency for such fiscal
year under this subsection.
Sec. 405. Comptroller General audit of how federal agencies calculate
extramural research budgets
Requires the Government Accountability Office (GAO) to
carry out a detailed audit of how Federal agencies calculate
extramural research budgets for purposes of calculating the
size of the agencies' SBIR and STTR budgets.
Requires that GAO submit a report on the results of the
audit within 1 year of the date of enactment to the Committee
on Small Business and the Committee on Science and Technology
of the House of Representatives and the Committee on Small
Business and Entrepreneurship of the Senate.
Sec. 406. Agency databases to support program evaluation
Requires that the government database for SBIR and STTR
program evaluation include information on the ownership
structure of award recipients, both at the time of receipt of
the award and upon completion of the award period.
Requires: (1) SBIR and STTR small business participants to
provide updated information for purposes of updating the
government database for SBIR and STTR program evaluation; and
(2) participating agencies to develop and maintain such
databases.
Sec. 407. Agency databases to support technology utilization
Requires each agency to create and maintain a technology
utilization database, available to the public and containing
data supplied by award recipients, to help them attract
customers for the products and services generated under the
SBIR or STTR project, and to attract additional investors or
business partners. Participation in a database shall be
voluntary, except that participation is required of all award
recipients who received supplemental payments from SBIR and
STTR program funds above their initial Phase II award.
Sec. 408. Interagency policy committee
Requires the Director of OSTP to establish an Interagency
SBIR/STTR Policy Committee comprised of one representative from
each Federal agency with an SBIR program. Specifies that the
Director of OSTP and the Director of the National Institute of
Standards and Technology shall jointly chair the committee.
Requires the committee to review the following issues and
make policy recommendations on ways to improve the program
effectiveness and efficiency: (1) the public and government
databases; (2) Federal agency flexibility in establishing Phase
I and Phase II award sizes; and (3) commercialization
assistance best practices in Federal agencies with significant
potential to be employed by other agencies, as well as
proposals for new initiatives to address funding gaps business
concerns face after Phase II but before commercialization.
Requires the committee to transmit to the Committee on
Science and Technology and the Committee on Small Business of
the House of Representatives and the Committee on Small
Business and Entrepreneurship of the Senate reports on the
issues identified above.
Sec. 409. National Research Council SBIR study
Amends the Small Business Reauthorization Act of 2000 to
remove the requirement that the National Research Council
provide an updated report on the SBIR program.
Sec. 410. Express authority to ``fast-track'' Phase Two awards for
promising Phase One research
Authorizes agencies to develop fast-track programs to
eliminate funding delays by issuing Phase Two SBIR awards as
soon as practicable, including simultaneously with the issuance
of the Phase One award.
Requires the Administrator to encourage the development of
such ``fast-track'' programs.
Sec. 411. Increased SBIR and STTR award levels
Increases, for both the SBIR and STTR programs, the
individual small business award levels from: (1) $100,000 to
$250,000, for participation at a Phase One level; and (2)
$750,000 to $2 million, for participation at a Phase Two level.
Provides for an annual readjustment to these levels to reflect
economic conditions and programmatic considerations.
Sec. 412. Express authority for an agency to award sequential Phase Two
awards for SBIR-funded projects
States that a small business concern that receives a second
phase SBIR award for a project remains eligible to receive
additional second phase SBIR awards for such project.
States that agencies are expressly authorized to provide
additional second phase SBIR awards for testing and evaluation
assistance for the insertion of SBIR technologies into
technical or weapons systems.
Sec. 413. First phase required
States that an agency shall provide to a small business
concern an award for a second phase of an SBIR program with
respect to a project only if such agency finds that the small
business concern has been provided an award for the first phase
of an SBIR program with respect to such project or has
completed the determinations described in subsection (e)(4)(A)
with respect to such project despite not having been provided
an award for the first phase.
VIII. Committee Views
Innovation is crucial to our economic recovery. Innovation
by small high-tech businesses creates high-wage jobs and
stimulates economic growth. Congress must implement policies
that strengthen small high-tech companies that work on the
cutting edge of scientific and technological innovation. The
SBIR and STTR programs do just that. Providing more than $2
billion, the SBIR and STTR programs provide necessary R&D
funding to small high-tech firms to develop products for the
marketplace and assist Federal agencies in their missions
One of the central issues for the reauthorization of these
two programs is the issue of the participation of majority-
owned, venture capital-backed high-tech businesses in these
programs. During the 109th, 110th, and 111th Congresses, the
Committee held a series of hearings which explored the positive
and negative effects of allowing majority venture capital-
backed firms to participate in the SBIR and STTR programs. For
the most part, the debate was marked by a lack of data
supporting the views of proponents or opponents of expanding
participation.
Therefore, the Committee was pleased that, on May 2, 2009,
the National Academy of Sciences released a report, entitled
``Venture Capital Funding and the NIH SBIR Program''. In
essence, the report concludes:
From 1992 to 2002, there is no indication that
``venture-controlled'' firms crowded out non-venture-controlled
firms. ``Venture-controlled'' firms accounted for only 4.1 to
11.9 percent of NIH's phase II awards.
The recent exclusion of ``venture-controlled''
firms seems to disproportionately affect firms with
demonstrated potential for significant commercialization.
Restricting access to SBIR funding for companies
that benefit from VC investments would risk disproportionately
affecting some of the smallest innovative businesses. To this
extent, the current exclusion has the potential to diminish the
positive impact of the nation's investment in research and
development, especially in the biomedical area.
Consideration should be given to either restoring
the de facto status quo ante (i.e., allowing ``venture-
controlled firms'') eligibility requirements for participation
in the SBIR program or to making some other adjustment that
will permit the limited number of majority-venture-funded firms
with significant commercial potential to compete for SBIR
funding.
Congress relies on NAS to provide it with objective,
unbiased analysis. H.R. 2965 reflects the analysis of the NAS
report.
The Committee also notes that it has worked closely with
its colleagues on the Committee on Small Business in developing
this legislation. The Committee has worked in the spirit of
comity, and believes that the SBIR and STTR programs need to be
updated to better reflect the challenges facing the American
small high-tech businesses.
IX. Cost Estimate
A cost estimate and comparison prepared by the Director of
the Congressional Budget Office under section 402 of the
Congressional Budget Act of 1974 has been timely submitted to
the Committee on Science and Technology prior to the filing of
this report and is included in Section X of this report
pursuant to House Rule XIII, clause 3(c)(3).
H.R. 2965 does not contain new budget authority, credit
authority, or changes in revenues or cost expenditures. H.R.
2965 does authorize additional discretionary spending, as
described in the Congressional Budget Office report on the
bill, which is contained in Section X of this report.
X. Congressional Budget Office Cost Estimate
July 7, 2009.
Hon. Bart Gordon,
Chairman, Committee on Science and Technology,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 2965, the
Enhancing Small Business Research and Innovation Act of 2009.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Susan Willie.
Sincerely,
Douglas W. Elmendorf.
Enclosure.
H.R. 2965--Enhancing Small Business Research and Innovation Act of 2009
Summary: H.R. 2965 would expand and extend the authority
for programs that require certain federal agencies to set aside
portions of their research and development budgets for small
businesses. The bill also would authorize appropriations to
improve efforts to develop products funded through those
programs that can be sold commercially. Finally, the bill would
require participating agencies to develop databases for program
evaluation and business development purposes.
Based on information from the Small Business Administration
(SBA) and other agencies, CBO estimates that implementing H.R.
2965 would cost $272 million over the 2010-2014 period, subject
to appropriation of the necessary amounts. Enacting the bill
would not affect direct spending or revenues.
H.R. 2965 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would impose no costs on state, local, or tribal
governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 2965 is shown in the following table.
The costs of this legislation fall within budget functions 050
(national defense), 250 (general science, space, and
technology), 270 (energy), 300 (natural resources and
environment), 350 (agriculture), 370 (commerce and housing
credit), 400 (transportation), 500 (education, training,
employment, and social services), 550 (health), and 750
(administration of justice).
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-------------------------------------------------------
2010 2011 2012 2013 2014 2010-2014
----------------------------------------------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Reauthorize SBIR/STTR Programs:
Estimated Authorization Level....................... 33 33 17 17 17 117
Estimated Outlays................................... 25 32 22 18 17 114
Commercialization:
Authorization Level................................. 28 28 28 28 28 140
Estimated Outlays................................... 21 26 29 28 28 132
Outreach and Support Activities:
Authorization Level................................. 10 10 0 0 0 20
Estimated Outlays................................... 2 5 7 5 1 20
Additional Agency Activities:
Estimated Authorization Level....................... 6 0 0 0 0 6
Estimated Outlays................................... 3 3 0 0 0 6
Total Changes:
Estimated Authorization Level................... 77 71 45 45 45 283
Estimated Outlays............................... 51 66 58 51 46 272
----------------------------------------------------------------------------------------------------------------
Note: SBIR = Small Business Innovation Research; STTR = Small Business Technology Transfer.
Basis of estimate: Under current law, the Small Business
Innovation Research (SBIR) program requires federal agencies
with extramural budgets for research and development (R&D) that
exceed $100 million per year to set aside 2.5 percent of that
budget for contracts with small businesses. (Extramural budgets
are made up of expenditures for activities not performed by
agency employees.) Likewise, the Small Business Technology
Transfer (STTR) program requires federal agencies with
extramural budgets for R&D that exceed $1 billion per year to
set aside 0.3 percent of that budget for cooperative research
between small businesses and a federal laboratory or nonprofit
research institution. Eleven agencies currently participate in
one or both programs, including the Departments of Defense,
Health and Human Services, Energy, Agriculture, and Homeland
Security as well as the National Aeronautics and Space
Administration, the National Science Foundation, and the
Environmental Protection Agency.
The cost of those programs to the participating agencies
consists primarily of personnel and associated overhead
expenses to solicit applications, prepare reports, and track
outcomes. The organizational structures of the program offices
vary. Some agencies have full-time staff members devoted to the
SBIR and STTR programs, with other staff assisting as part of
their duties; other agencies, however, have employees working
part-time on the program.
For this estimate, CBO assumes that the bill will be
enacted near the end of fiscal year 2009 and that the necessary
funds will be appropriated near the start of each year. Based
on information from SBA and participating agencies, CBO
estimates that implementing H.R. 2965 would cost $272 million
over the 2010-2014 period, assuming appropriation of the
necessary amounts.
Reauthorization of the SBIR and STTR programs
The bill would extend both the SBIR and STTR programs
through 2011. Under current law, the SBIR program is scheduled
to terminate on July 31, 2009, and the STTR program is
scheduled to terminate at the end of fiscal year 2009. H.R.
2965 would authorize the appropriation of $28 million for each
of fiscal years 2010 and 2011 for costs associated with the
SBIR program's administration, oversight, and contract
processing activities. In addition, we estimate that
participating agencies would require additional appropriations
of about $5 million in each of years 2010 and 2011 for similar
costs of the STTR program. CBO expects that participating
agencies would continue to incur costs of about $17 million per
year to administer existing contracts with small businesses for
several years after the programs would expire in 2011.
Based on information from SBA and participating agencies,
CBO estimates that reauthorizing the two programs would cost
$114 million over the 2010-2014 period, assuming appropriation
of the necessary amounts. About $9 million of that amount would
be for administrative costs incurred by the agencies to operate
the STTR program, and $6 million would be for SBA.
Commercialization program
H.R. 2965 would authorize the appropriation of $28 million
annually for a program to support agency efforts to assist
small businesses that have received SBIR awards to develop
products or services that could be sold to the government or in
commercial markets. SBA would oversee this program--each agency
participating in the SBIR program would be required to request
funds from SBA to support its commercialization activities.
Based on information from SBA and participating agencies, CBO
estimates that implementing this provision would cost $132
million over the 2010-2014 period, assuming appropriation of
the authorized amounts.
Outreach and support activities
H.R. 2965 would establish a program to conduct research and
provide technical assistance to increase the number of small
businesses participating in the SBIR program. The outreach
activities would be directed to geographic areas that are
under-represented in the program and to small businesses owned
by women, veterans, and minorities. The bill would authorize
the appropriation of $10 million for each of fiscal years 2010
and 2011 to implement the program. Based on historical spending
patterns of SBA's other business assistance programs, CBO
estimates that implementing this provision would cost $20
million over the 2010-2014 period, assuming appropriation of
the authorized amounts.
Additional agency activities
H.R. 2965 would require each agency that participates in
the SBIR or STTR program to collect more information from SBIR
awardees to be included in a database used by the agency for
program evaluation. The bill also would require agencies to
develop a new database, available to the public, that would be
used to help businesses that receive awards or contracts under
either program to attract customers for the products or
services developed with those awards. Based on information from
the participating agencies, CBO estimates that implementing
those provisions to create and update databases for each
participating agency would cost about $6 million over the 2010-
2014 period.
Intergovernmental and private-sector impact: H.R. 2965
contains no intergovernmental or private-sector mandates as
defined in UMRA. The bill would authorize a program to
encourage states to assist in the development of high-
technology small businesses. Any costs to state governments of
providing matching funds to participate in the program would be
incurred voluntarily.
Previous CBO estimates: On July 6, 2009, CBO transmitted an
estimate for H.R. 2965, the Enhancing Small Business Research
and Innovation Act of 2009, as reported by the House Committee
on Small Business on June 26, 2009. The two versions of the
legislation are nearly identical, and the cost estimates are
the same.
On June 22, 2009, CBO transmitted an estimate for S. 1233,
the SBIR/STTR Reauthorization Act of 2009, as reported by the
Senate Committee on Small Business and Entrepreneurship on June
18, 2009. The House legislation differs in several ways from
the Senate version. Specifically, it would: reauthorize the
SBIR and STTR programs for a shorter period of time; not
increase the amount of agency R&D budgets that would be set
aside for those programs; and authorize a commercialization
program. S. 1233, however, contains an authorization of
appropriations for a workforce development program that is not
included in H.R. 2965. CBO estimates that implementing the
provisions of S. 1233 would cost $229 million over the 2010-
2014 period.
Estimate prepared by: Federal Costs: Susan Willie; Impact
on State, Local, and Tribal Governments: Elizabeth Cove
Delisle; Impact on the Private Sector: Jacob Kuipers.
Estimate approved by: Theresa Gullo, Deputy Assistant
Director for Budget Analysis.
XI. Compliance with Public Law 104-4
H.R. 2965 contains no unfunded mandates.
XII. Committee Oversight Findings and Recommendations
The Committee on Science and Technology's oversight
findings and recommendations are reflected in the body of this
report.
XIII. Statement on General Performance Goals and Objectives
Pursuant to clause 3(c) of House rule XIII, the goals of
H.R. 2965 are to modernize the SBIR and STTR programs and make
them more effective.
XIV. Constitutional Authority Statement
Article I, section 8 of the Constitution of the United
States grants Congress the authority to enact H.R. 2965.
XV. Federal Advisory Committee Statement
H.R. 2965 does not create any new advisory committees
subject to the Federal Advisory Committee Act.
XVI. Congressional Accountability Act
The Committee finds that H.R. 2965 does not relate to the
terms and conditions of employment or access to public services
or accommodations within the meaning of section 102(b)(3) of
the Congressional Accountability Act (Public Law 104-1).
XVII. Statement on Preemption of State, Local, or Tribal Law
This bill is not intended to preempt any State, local, or
tribal law.
XVIII. Earmark Identification
H.R. 2965 does not contain any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9(d), 9(e), or 9(f) of rule XXI.
XIX. 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) Research and development are major factors in the
growth and progress of industry and the national economy. The
expense of carrying on research and development programs is
beyond the means of many small-business concerns, and such
concerns are handicapped in obtaining the benefits of research
and development programs conducted at Government expense. These
small-business concerns are thereby placed at a competitive
disadvantage. This weakens the competitive free enterprise
system and prevents the orderly development of the national
economy. Is is the policy of the Congress that assistance be
given to small-business concerns to enable them to undertake
and to obtain the benefits of research and development in order
to maintain and strengthen the competitive free enterprise
system and the national economy. It is further the policy of
Congress that the programs established in this section should
focus on promoting research and development of projects
governed by commercial business plans, which have significant
potential to produce products or services for the marketplace
or for acquisition by Federal agencies.
* * * * * * *
(e) For the purpose of this section--
(1) * * *
* * * * * * *
(4) the term ``Small Business Innovation Research
Program'' or ``SBIR'' means a program under which a
portion of a Federal agency's research or research and
development effort is reserved for award to small
business concerns through a uniform process having--
(A) * * *
* * * * * * *
(C) where appropriate, a third phase, which
shall consist of work that derives from,
extends, or logically concludes efforts
performed under prior SBIR funding agreements
(which may be referred to as ``Phase III'')--
(i) * * *
* * * * * * *
(8) the term ``research institution'' means a
nonprofit institution, as defined in section 4(5) of
the Stevenson-Wydler Technology Innovation Act of 1980,
and includes federally funded research and development
centers, as identified by the National Scientific
Foundation in accordance with the governmentwide
Federal Acquisition Regulation issued in accordance
with section 35(c)(1) of the Office of Federal
Procurement Policy Act (or any successor regulation
thereto); [and]
(9) the term ``commercial applications'' shall not be
construed to exclude testing and evaluation of
products, services, or technologies for use in
technical or weapons systems, and further, awards for
testing and evaluation of products, services, or
technologies for use in technical or weapons systems
may be made in either the second or the third phase of
the Small Business Innovation Research Program and of
the Small Business Technology Transfer Program, as
defined in this subsection [.]; and
(10) the term ``commercialization'' means the process
of developing marketable products or services and
producing and delivering products or services for sale
(whether by the originating party or by others) to
government or commercial markets.
* * * * * * *
(g) Each Federal agency required by subsection (f) to
establish a small business innovation research program shall,
in accordance with this Act and regulations issued hereunder--
(1) * * *
(2) issue small business innovation research
solicitations in accordance with a schedule determined
cooperatively with the Small Business Administration,
but not less often than twice per year;
(3) unilaterally determine research topics within the
agency's SBIR solicitations, giving special
consideration to broad research topics and to topics
that further 1 or more critical technologies or
pressing research priorities, as identified by--
(A) the National Critical Technologies Panel
(or its successor) in the 1991 report required
under section 603 of the National Science and
Technology Policy, Organization, and Priorities
Act of 1976, and in subsequent reports issued
under that authority; [or]
* * * * * * *
(C) the National Academy of Sciences, in the
final report issued by the ``America's Energy
Future: Technology Opportunities, Risks, and
Tradeoffs'' project, and in subsequent reports
issued by the National Academy of Sciences on
sustainability, energy, and alternative fuels;
(D) the National Institutes of Health, in the
annual report on the rare diseases research
activities of the National Institutes of Health
for fiscal year 2005, and in subsequent reports
issued by the National Institutes of Health on
rare diseases research activities;
(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
(F) the national nanotechnology strategic
plan required under section 2(c)(4) of the 21st
Century Nanotechnology Research and Development
Act (15 U.S.C. 7501(c)(4)) and in subsequent
reports issued by the National Science and
Technology Council Committee on Technology,
focusing on areas of nanotechnology identified
in such plan;
(4) unilaterally receive and evaluate proposals
resulting from SBIR proposals, but a final decision on
each proposal shall be rendered not later than 90 days
after the date on which the solicitation closes unless
the Administrator determines, on a case by case basis,
that a decision may be extended from 90 days to 180
days;
* * * * * * *
[(h) In addition to the requirements of subsection (f), each
Federal agency which has a budget for research or research and
development in excess of $20,000,000 for any fiscal year
beginning with fiscal year 1983 or subsequent fiscal year shall
establish goals specifically for funding agreements for
research or research and development to small business
concerns, and no goal established under this subsection shall
be less than the percentage of the agency's research or
research and development budget expended under funding
agreements with small business concerns in the immediately
preceding fiscal year.]
(h) Agency Research Goals.--
(1) In general.--In addition to the requirements of
subsection (f), each Federal agency that is required by
this section to have an SBIR program and that awards
annually $5,000,000,000 or more in procurement
contracts shall, effective for fiscal year 2010 and
each fiscal year thereafter, establish annual goals for
commercialization of projects funded by SBIR awards.
(2) Specific goals.--The goals required by paragraph
(1) shall include specific goals for each of the
following:
(A) The percentage of SBIR projects that
receive funding for the third phase (as defined
in subsection (e)(4)(C)).
(B) The percentage of SBIR projects that are
successfully integrated into a program of
record.
(C) The amount of Federal dollars received by
SBIR projects through Federal contracts, not
including dollars received through the SBIR
program.
(3) Submission to committees.--For each fiscal year
for which goals are required by paragraph (1), the
agency shall submit to the Committee on Small Business
and the Committee on Science and Technology of the
House of Representatives and the Committee on Small
Business and Entrepreneurship of the Senate--
(A) not later than 60 days after the
beginning of the fiscal year, the goals; and
(B) not later than 90 days after the end of
the fiscal year, data on the extent to which
the goals were met and a description of the
methodology used to collect such data.
* * * * * * *
(j)(1) * * *
* * * * * * *
(4) Further Additional Modifications.--Not later than 180
days after the date of enactment of this paragraph and
notwithstanding paragraph (2)(D), the Administrator shall
modify the policy directives issued pursuant to this subsection
to provide for an increase to $250,000 in the amount of funds
which an agency may award in the first phase of an SBIR
program, and to $2,000,000 in the second phase of an SBIR
program, and a mandatory annual adjustment of such amounts to
reflect economic adjustments and programmatic considerations.
(k) Database.--
(1) * * *
(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 exclusively for SBIR and STTR
program evaluation that--
(A) contains for each second phase award made
by a Federal agency--
(i) * * *
(ii) information collected in
accordance with paragraph (3) on
additional investment from any source,
other than first phase or second phase
SBIR or STTR awards, to further the
research and development conducted
under the award; [and]
(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; and
(iv) information on the ownership
structure of award recipients, both at
the time of receipt of the award and
upon completion of the award period;
* * * * * * *
[(3) Updating information for database.--
[(A) In general.--A small business concern
applying for a second phase award under this
section shall be required to update information
in the database established under this
subsection for any prior second phase award
received by that small business concern. In
complying with this paragraph, a small business
concern may apportion sales or additional
investment information relating to more than
one second phase award among those awards, if
it notes the apportionment for each award.
[(B) Annual updates upon termination.--A
small business concern receiving a second phase
award under this section shall--
[(i) update information in the
database concerning that award at the
termination of the award period; and
[(ii) be requested to voluntarily
update such information annually
thereafter for a period of 5 years.]
(3) Updating information for database.--
(A) In general.--A Federal agency shall not
make a Phase I or Phase II payment to a small
business concern under this section unless the
small business concern has provided all
information required under this subsection and
available at the time with respect to the award
under which the payment is made, and with
respect to any other award under this section
previously received by the small business
concern or a predecessor in interest to the
small business concern.
(B) Apportionment.--In complying with this
paragraph, a small business concern may
apportion sales or additional investment
information relating to more than one second
phase award among those awards, if it notes the
apportionment for each award.
(C) Annual updates upon termination.--A small
business concern receiving an award under this
section shall--
(i) in the case of a second phase
award, update information in the
databases required under paragraphs (2)
and (6) concerning that award at the
termination of the award period;
(ii) in the case of award recipients
not described in clause (iii), be
requested to voluntarily update such
information annually thereafter for a
period of 5 years; and
(iii) in the case of a small business
concern applying for a subsequent first
phase or second phase award, be
required to update such information
annually thereafter for a period of 5
years.
* * * * * * *
(6) Agency program evaluation databases.--Each
Federal agency required to establish an SBIR or STTR
program under this section shall develop and maintain,
for the purpose of evaluating such programs, a database
containing information required to be contained in the
database under paragraph (2). Each such database shall
be designed to be accessible to other agencies that are
required to maintain a database under this paragraph.
Each such database shall be developed and operated in a
manner to ensure that each such database is relevant to
and contributes to the agency's oversight and
evaluation of the SBIR and STTR programs. Paragraphs
(4) and (5) apply to each database under this
paragraph.
(7) Agency databases to support technology
utilization.--Each Federal agency with an SBIR or STTR
program shall create and maintain a technology
utilization database, which shall be available to the
public and shall contain data supplied by the award
recipients specifically to help them attract customers
for the products and services generated under the SBIR
or STTR project, and to attract additional investors
and business partners. Each database created under this
paragraph shall include information on the other
databases created under this paragraph by other Federal
agencies. Participation in a database under this
paragraph shall be voluntary, except that such
participation is required of all award recipients who
received supplemental payments from SBIR and STTR
program funds above their initial Phase II award. Each
database created under this paragraph shall be
developed and operated in a manner to ensure that each
such database is relevant to and contributes to the
agency's oversight and evaluation of the SBIR and STTR
programs.
* * * * * * *
(m) Termination.--The authorization to carry out the Small
Business Innovation Research Program established under this
section shall terminate on September 30, [2008] 2011.
(n) Required Expenditures for STTR by Federal Agencies.--
(1) Required expenditure amounts.--
(A) In general.--With respect to each fiscal
year through fiscal year [2009] 2011, 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.
* * * * * * *
(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) * * *
* * * * * * *
(3) unilaterally determine research topics within the
agency's STTR solicitations, giving special
consideration to broad research topics and to topics
that further 1 or more critical technologies, as
identified--
(A) by the National Critical Technologies
Panel (or its successor) in reports required
under section 603 of the National Science and
Technology Policy, Organization, and Priorities
Act of 1976; [or]
(B) by the Secretary of Defense, in
accordance with section 2522 of title 10,
United States Code; or
(C) by the national nanotechnology strategic
plan required under section 2(c)(4) of the 21st
Century Nanotechnology Research and Development
Act (15 U.S.C. 7501(c)(4)) and in subsequent
reports issued by the National Science and
Technology Council Committee on Technology,
focusing on areas of nanotechnology identified
in such plan;
* * * * * * *
(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] $250,000, and 2-
year awards for the second phase of an
STTR program, generally not to exceed
[$750,000] $2,000,000, [greater or
lesser amounts] with a mandatory annual
adjustment of such amounts to reflect
economic adjustments and programmatic
considerations, and with 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;
* * * * * * *
(s) Outreach and Support Activities.--
(1) In general.--Subject to the other provisions of
this subsection, the Administrator shall make grants on
a competitive basis to organizations, to be used by the
organizations to do one or both of the following:
(A) To conduct outreach efforts to increase
participation in the programs under this
section.
(B) To provide application support and
entrepreneurial and business skills support to
prospective participants in the programs under
this section.
(2) Authorization of appropriations.--There is
authorized to be appropriated to the Administrator
$10,000,000 to carry out paragraph (1) for each of
fiscal years 2010 and 2011.
(3) Amount of assistance.--For each of subparagraphs
(A) and (B) of paragraph (1), the amount of assistance
provided to an organization under that subparagraph in
any fiscal year--
(A) shall be equal to the total amount of
matching funds from non-Federal sources
provided by the organization; and
(B) shall not exceed $250,000.
(4) Direction.--An organization receiving funds under
paragraph (1) shall, in using those funds, direct its
activities at one or both of the following:
(A) Small business concerns located in
geographic areas that are underrepresented in
the programs under this section.
(B) Small business concerns owned and
controlled by women, small business concerns
owned and controlled by service-disabled
veterans, and small business concerns owned and
controlled by minorities.
(5) Advisory board.--
(A) Establishment.--Not later than 90 days
after the date of the enactment of this
subsection, the Administrator shall establish
an advisory board for the activities carried
out under this subsection.
(B) Non-applicability of faca.--The Federal
Advisory Committee Act (5 U.S.C. App.) shall
not apply to the advisory board.
(C) Members.--The members of the advisory
board shall include the following:
(i) The Administrator (or the
Administrator's designee).
(ii) For each Federal agency required
by this section to conduct an SBIR
program, the head of the agency (or the
designee of the head of the agency).
(iii) Representatives of small
business concerns that are current or
former recipients of SBIR awards, or
representatives of organizations of
such concerns.
(iv) Representatives of service
providers of SBIR outreach and
assistance, or representatives of
organizations of such service
providers.
(D) Duties.--The advisory board shall have
the following duties:
(i) To develop guidelines for awards
under paragraph (1), including
guidelines relating to award sizes,
proposal requirements, measures for
monitoring awardee performance, and
measures for determining the overall
value of the activities carried out by
the awardees.
(ii) To identify opportunities for
coordinated outreach, technical
assistance, and commercialization
activities among Federal agencies, the
recipients of the awards under
paragraph (1), and applicants and
recipients of SBIR awards, including
opportunities such as--
(I) podcasting or webcasting
for conferences, training
workshops, and other events;
(II) shared online resources
to match prospective applicants
with the network of paragraph
(1) recipients; and
(III) venture capital
conferences tied to
technologies and sectors that
cross agencies.
(iii) To review and recommend
revisions to activities under paragraph
(1).
(iv) To submit to the Committee on
Small Business and Entrepreneurship of
the Senate and the Committee on Small
Business and the Committee on Science
and Technology of the House of
Representatives an annual report on the
activities carried out under paragraph
(1) and the effectiveness and impact of
those activities.
(6) Selection criteria.--In awarding grants under
this subsection, the Administrator shall use selection
criteria developed by the advisory board established
under paragraph (5). The criteria shall include--
(A) criteria designed to give preference to
applicants who propose to carry out activities
that will reach either an underperforming
geographic area or an underrepresented
population group (as measured by the number of
SBIR applicants);
(B) criteria designed to give preference to
applicants who propose to carry out activities
that complement, and are integrated into, the
existing public-private innovation support
system for the targeted region or population;
(C) criteria designed to give preference to
applicants who propose to measure the
effectiveness of the proposed activities; and
(D) criteria designed to give preference to
applicants who include a Small Business
Development Center program that is accredited
for its technology services.
(7) Peer review.--In awarding grants under this
subsection, the Administrator shall use a peer review
process. Reviewers shall include--
(A) SBIR program managers for agencies
required by this section to conduct SBIR
programs; and
(B) private individuals and organizations
that are knowledgeable about SBIR, the
innovation process, technology
commercialization, and State and regional
technology-based economic development programs.
(8) Per-state limitations.--
(A) In general.--To be eligible to receive a
grant under this subsection, the applicant must
have the written endorsement of the Governor of
the State where the targeted regions or
populations are located (if the regions or
populations are located in more than one State,
the applicant must have the written endorsement
of the Governor of each such State). Such an
endorsement must indicate that the Governor
will ensure that the activities to be carried
out under the grant will be integrated with the
balance of the State's portfolio of investments
to help small business concerns commercialize
technology.
(B) Limitation.--Each fiscal year, a Governor
may have in effect not more than one written
endorsement for a grant under paragraph (1)(A),
and not more than one written endorsement for a
grant under paragraph (1)(B).
(9) Specific requirements for awards.--In making
awards under paragraph (1) the Administrator shall
ensure that each award shall be for a period of 2
fiscal years. The Administrator shall establish rules
and performance goals for the disbursement of funds for
the second fiscal year, and funds shall not be
disbursed to a recipient for such a fiscal year until
after the advisory board established under this
subsection has determined that the recipient is in
compliance with the rules and performance goals.
* * * * * * *
(aa) Venture Capital Operating Companies.--Effective only for
the SBIR and STTR programs the following shall apply:
(1) A business concern that has more than 500
employees shall not qualify as a small business
concern.
(2) 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--
(A) the venture capital operating company
does not own 50 percent or more of the business
concern; and
(B) employees of the venture capital
operating company do not constitute a majority
of the board of directors of the business
concern.
(3) A business concern shall be deemed to be
``independently owned and operated'' if--
(A) it is owned in majority part by one or
more natural persons or venture capital
operating companies;
(B) there is no single venture capital
operating company that owns 50 percent or more
of the business concern; and
(C) there is no single venture capital
operating company the employees of which
constitute a majority of the board of directors
of the business concern.
(4) If a venture capital operating company controlled
by a business with more than 500 employees (in this
paragraph 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--
(A) not more than two VCOCs under large
business control have an ownership interest in
the small business concern; and
(B) the VCOCs under large business control do
not collectively own more than 20 percent of
the small business concern.
(5) The term ``venture capital operating company''
means a business concern--
(A) 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--
(I) is registered under the
Investment Company Act of 1940
(15 U.S.C. 80a-51 et seq.); or
(II) is an investment
company, as defined in section
3(c)(1) of such Act (15 U.S.C.
80a-3(c)(1)), which is not
registered under such Act
because it is beneficially
owned by less than 100 persons;
and
(B) 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.
(bb) Commercialization Programs.--
(1) In general.--Each agency required by this section
to conduct an SBIR program shall establish a
commercialization program that supports the progress of
SBIR awardees to the third phase. The commercialization
program may include activities such as partnership
databases, partnership conferences, multiple second
phases, mentoring between prime contractors and SBIR
awardees, multiple second phases with matching private
investment requirements, jumbo awards, SBIR helpdesks,
and transition assistance programs. The agency shall
include in its annual report an analysis of the various
activities considered for inclusion in the
commercialization program and a statement of the
reasons why each activity considered was included or
not included, as the case may be.
(2) Funding for commercialization programs.--
(A) In general.--From amounts made available
to carry out this paragraph, the Administrator
may, on petition by agencies required by this
section to conduct an SBIR program, transfer
funds to such agencies to support the
commercialization programs of such agencies.
(B) Petitions.--The Administrator shall
establish rules for making transfers under
subparagraph (A). The initial set of rules
shall be promulgated not later than 90 days
after the date of the enactment of this
paragraph.
(C) Authorization of appropriations.--There
is authorized to be appropriated to the
Administrator to carry out this paragraph
$27,500,000 for fiscal year 2010 and each
fiscal year thereafter.
(3) Funding limitation.--For payment of expenses
incurred to administer the commercialization programs
described in paragraphs (1) and (2), the head of an
agency may use not more than an amount equal to 1
percent of the funds set aside for the agency's Small
Business Innovation Research program. Such funds--
(A) shall not be subject to the limitations
on the use of funds in subsection (f)(2); and
(B) shall not be used for the purpose of
funding costs associated with salaries and
expenses of employees of the Federal
Government.
(cc) Rural Preference.--In making awards under this section,
Federal agencies shall give priority to applications so as to
increase the number of SBIR and STTR award recipients from
rural areas.
(dd) Consent To Release Contact Information to
Organizations.--
(1) Enabling concern to give consent.--Each Federal
agency required by this section to conduct an SBIR
program shall enable a small business concern that is
an SBIR applicant to indicate to the agency whether the
agency has its consent to--
(A) identify the concern to appropriate local
and State-level economic development
organizations as an SBIR applicant; and
(B) release the concern's contact information
to such organizations.
(2) Rules.--The Administrator shall establish rules
to implement this subsection. The rules shall include a
requirement that the agency include in its SBIR
application forms a provision through which the
applicant can indicate consent for purposes of
paragraph (1).
(ee) Increased Partnerships.--
(1) In general.--Each agency required by this section
to conduct an SBIR program shall establish initiatives
by which the agency encourages partnerships between
SBIR awardees and prime contractors, venture capital
investment companies, business incubators, and larger
businesses, for the purpose of facilitating the
progress of the SBIR awardees to the third phase.
(2) Definition.--In this subsection, 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.
(ff) Multiple First Phase SBIR Awards Report.--The
Administrator shall, on an annual basis, submit to the
Committee on Small Business and the Committee on Science and
Technology of the House of Representatives and the Committee on
Small Business and Entrepreneurship of the Senate a list
identifying each small business concern that, for the period
covered by the preceding 5 fiscal years, received 15 or more
first phase SBIR awards and no second phase SBIR awards.
(gg) Requirements Relating to Federal Agency Engagement With
Certain First Phase SBIR Awardees.--Each Federal agency
required by this section to conduct an SBIR program shall
engage with SBIR awardees that have been awarded multiple first
phase SBIR awards but have not been awarded any second phase
SBIR awards and shall develop performance measures with respect
to awardee progression in the SBIR program.
(hh) Assistance for Administrative, Oversight, and Contract
Processing Costs.--
(1) In general.--From amounts made available to carry
out this subsection, the Administrator may, on petition
by Federal agencies required by this section to conduct
an SBIR program, transfer funds to such agencies to
assist with the administrative, oversight, and contract
processing costs relating to such program.
(2) Petitions.--The Administrator shall establish
rules for making transfers under paragraph (1). The
initial set of rules shall be promulgated not later
than 180 days after the date of the enactment of this
subsection.
(3) Limit on transfer.--A Federal agency may not
receive under this subsection in a fiscal year an
amount greater than 3 percent of the SBIR budget of
such agency for such fiscal year.
(4) Authorization of appropriations.--There is
authorized to be appropriated to the Administrator to
carry out this subsection $27,500,000 for each of
fiscal years 2010 and 2011.
(ii) Authority To ``Fast-track'' Phase Two Awards for
Promising Phase One Research.--To address the delay between an
award for the first phase of an SBIR program and the
application for and extension of an award for the second phase
of such program, each Federal agency with an SBIR program may
develop ``fast-track'' programs to eliminate such delay by
issuing second phase SBIR awards as soon as practicable,
including in appropriate cases simultaneously with the issuance
of the first phase SBIR award. The Administrator shall
encourage the development of such ``fast-track'' programs.
(jj) Limitation on Phase I and II Awards.--No Federal agency
shall issue an award under the SBIR program or the STTR program
if the size of the award exceeds the amounts established under
subsections (j)(4) and (p)(2)(B)(ix).
(kk) Requirements Relating to Additional Second Phase SBIR
Awards.--
(1) In general.--A small business concern that
receives a second phase SBIR award for a project
remains eligible to receive additional second phase
SBIR awards for such project.
(2) Technical or weapons systems.--Agencies are
expressly authorized to provide additional second phase
SBIR awards for testing and evaluation assistance for
the insertion of SBIR technologies into technical or
weapons systems.
(ll) First Phase Required.--Under this section, a Federal
agency shall provide to a small business concern an award for
the second phase of an SBIR program with respect to a project
only if such agency finds that the small business concern has
been provided an award for the first phase of an SBIR program
with respect to such project or has completed the
determinations described in subsection (e)(4)(A) with respect
to such project despite not having been provided an award for
the first phase.
* * * * * * *
----------
SECTION 108 OF THE SMALL BUSINESS REAUTHORIZATION ACT OF 2000
SEC. 108. NATIONAL RESEARCH COUNCIL REPORTS.
(a) * * *
* * * * * * *
(d) Report.--The National Research Council shall transmit to
the heads of agencies entering into an agreement under this
section and to the Committee on Science and the Committee on
Small Business of the House of Representatives, and to the
Committee on Small Business [of the Senate--
[(1) not later than 3] of the Senate, not later than
3 years after the date of the enactment of this Act, a
report including the results of the study conducted
under subsection (a)(1) and recommendations made under
subsection (a)(2)[; and
[(2) not later than 6 years after that date of the
enactment, an update of such report].
XX. Committee Recommendations
On June 24, 2009, the Committee on Science and Technology
favorably reported the Enhancing Small Business Research and
Innovation Act of 2009, by voice vote and recommended its
enactment.
XXI. PROCEEDINGS OF THE FULL COMMITTEE MARKUP ON H.R. 2965, THE
ENHANCING SMALL BUSINESS RESEARCH AND INNOVATION ACT OF 2009
----------
WEDNESDAY, JUNE 24, 2009
House of Representatives,
Committee on Science,
Washington, DC.
The Committee met, pursuant to call, at 10:00 a.m., in Room
2318 of the Rayburn House Office Building, Hon. Bart Gordon
[Chair of the Committee] presiding.
Chair Gordon. The Committee will come to order.
Pursuant to notice, the Committee on Science and Technology
meets to consider the following measures: H.R. 2965, the
Enhancing Small Business Research and Innovation Act of 2009;
H.R. 2729, To authorize the designation of National Environment
Research Parks by the Secretary of Energy and for other
purposes; and H.R. 1622, To provide for the programs of
research, development and demonstration on natural gas
vehicles.
Today the Committee is going to mark up three good
bipartisan pieces of legislation. The first bill, H.R. 2965,
the Enhancing Small Business Research and Innovation Act, is
one of the most significant bills the Committee will likely
address in this Congress. The Small Business Innovation
Research Program (SBIR) is a more than $2.3 billion federal
investment in small high-tech businesses that assist them in
developing commercial products and assist agencies in their
mission related to research agendas. It is the single largest
federal program supporting the private sector research
activities.
Since its beginning more than 25 years ago, we have learned
about the significant contributions small high-tech startup
companies can have to our economy and employment growth. AmGen,
Apple, Microsoft, Genetech, Research-in-Motion all started as
small high-tech entrepreneurial firms. In the current economic
environment, we need to do everything possible to support small
high-tech entrepreneurs in the United States, which is the goal
of the SBIR program.
There is no stronger supporter of the SBIR program than
Representative David Wu. H.R. 2965 is largely the result of
hard work by Representative Wu. In the 110th and 111th
Congress, he has held three Subcommittee hearings on the
program and he has worked closely with the Small Business
Committee in crafting this legislation. H.R. 2965 is
substantially the same bill which passed the House last year
with only 43 no votes. H.R. 2965 was introduced with strong
bipartisan support.
Unfortunately, the SBIR program is operating under rules
more than 25 years old. H.R. 2965 makes major improvements to
the SBIR program which reflects the current set of challenges
confronting our small high-tech entrepreneurs. I strongly
support this legislation and will work with my counterpart on
the Small Business Committee to bring it to the Floor as
quickly as possible. This program is set to expire on July 31,
so time is of the essence.
Today we will also consider H.R. 2729, a bill introduced by
Representative Lujan that will formally authorize the seven
National Environmental Research Parks supported by the
Department of Energy (DOE). These parks are a truly unique
national resource. They provide large tracks of undisturbed
land that enable long-term research in environmental sciences,
climate change and for the development and testing of methods
to clean up past pollution. The parks are located on DOE sites
in states across the country. They have had bipartisan
cooperation in making this a good bill, and I hope that you
will all join me in supporting it.
Finally, the Committee will consider H.R. 1622, a bill
introduced by Mr. Sullivan of Oklahoma and co-sponsored by my
friend from Texas, Mr. Hall, as well as Mr. Lujan and Mr.
Lucas. This bill reauthorizes the Department of Energy's
research, development and demonstration program in natural gas-
powered vehicles and related infrastructure. The vehicle fleet
of the future will include a diverse range of fuels and vehicle
technologies, and since it is both cleaner than petroleum and
domestically available, natural gas will likely play an
important role in a more sustained transportation sector.
I hope we can continue to improve these bills in a
bipartisan manner today, and I look forward to moving to the
Floor for their final passage.
I now recognize Mr. Hall to present his opening remarks.
[The prepared statement of Chair Gordon follows:]
Prepared Statement of Chair Bart Gordon
Today the Committee is going to markup three good, bipartisan
pieces of legislation. The first bill, H.R. 2965, the Enhancing Small
Business Research and Innovation Act, is one of the most significant
bills the Committee will likely address in this Congress.
The Small Business Innovation Research Program (SBIR) is a more
than 2.3 billion dollar federal investment in small high-tech
businesses that assists them in developing commercial products and
assists agencies in their mission-related research agendas.
It is the single largest federal program supporting private-sector
research activities.
Since its beginning more than 25 years ago, we have learned about
the significant contributions small high-tech start-up companies can
have to our economic and employment growth--AmGen, Apple, Microsoft,
Genetech, and Research-in-Motion all started as small high-tech
entrepreneurial firms. In the current economic environment we need to
do everything possible to support small high-tech entrepreneurs in the
United States, which is the goal of the SBIR program.
There is no stronger supporter of the SBIR program than
Representative David Wu. H.R. 2965 is largely the result of hard work
by Representative Wu. In the 110th and 111th Congresses he has held
three Subcommittee hearings on the program and has worked closely with
the Small Business Committee in crafting this legislation. H.R. 2965 is
substantially the same bill which passed the House last year with only
43 no votes. H.R. 2965 was introduced with strong bipartisan support.
Unfortunately, the SBIR program is operating under rules more than
25 years old. H.R. 2965 makes major improvements to the SBIR program
which reflect the current set of challenges confronting our small high-
tech entrepreneurs. I strongly support this legislation and will work
with my counterpart on the Small Business Committee to bring it to the
Floor as quickly as possible. This program is set to expire on July 31,
so time is of the essence.
Today we will also consider H.R. 2729, a bill introduced by Mr.
Lujan that will formally authorize the seven National Environmental
Research Parks supported by the Department of Energy. These parks are a
truly unique national resource.
They provide large tracts of undisturbed land that enable long-term
research in environmental sciences, climate change, and for the
development and testing of methods to clean up past pollution.
The Parks are located on DOE sites in states across the country,
including my home State of Tennessee. We've had bipartisan cooperation
in making this a good bill, and I hope you will all join me in
supporting it.
Finally, the Subcommittee will consider H.R. 1622, a bill
introduced by Mr. Sullivan of Oklahoma and co-sponsored by my friend
from Texas, Mr. Hall, as well as Mr. Lujan and Mr. Lucas. This bill
reauthorizes the Department of Energy's research, development, and
demonstration program in natural gas powered vehicles and related
infrastructure.
The vehicle fleet of the future will include a diverse range of
fuels and vehicle technologies.
And since it is both cleaner than petroleum and domestically
available, Natural gas will likely play an important role in a more
sustainable transportation sector.
I hope we can continue to improve these bills in a bipartisan
manner today, and I look forward to moving to the Floor for final
passage.
I now recognize Mr. Hall to present his opening remarks.
Mr. Hall. Mr. Chair, I thank you, and as you say, today we
are marking up three bills: H.R. 2965, and the other two bills
authorizing the designation of National Research Parks by the
Secretary of Energy and for H.R. 1622 that provides a program
of research, development and demonstration on natural gas
vehicles.
As you ably pointed out, H.R. 2965 extends and makes
important changes to the Small Business Innovation Research
Program and the Small Business Technology Transfer Program,
which as their names indicate, fund innovation and technology
development of America's small businesses. One of the basic
purposes of my parroting what you are saying is that I speak
for myself when I say I support this bill and note that both
the Committee and the Full House passed a bill very similar to
this version last year, as you ably pointed out; and I am
pleased that we are again able to advance this bill in a
bipartisan fashion, working closely with the Majority as well
as our counterparts on the Small Business Committee. This has
allowed us to build a strong legislative record on this
program, which will serve us well, and we aim to complete Floor
action and conference negotiations before the program expires
on July 31.
H.R. 2729 will authorize and make permanent the existing
seven National Environmental Research Parks across the country.
The National Environmental Research Parks are outdoor
laboratories that provide opportunities for environmental
studies on protected lands that act as buffers around the
Department of Energy facilities. I commend Mr. Lujan for his
dedication on the Parks and for authorizing this legislation. I
will be offering an amendment to the bill that came about as a
result of consultation with the Parks and with the Majority
staff to clarify that the Parks and the sites they are located
on shall continue to be run as they currently are.
H.R. 1622 reauthorizes the natural gas vehicle R&D program
that was created in the 1992 Energy Policy Act. This bill was
introduced by Representative John Sullivan of Oklahoma and I
co-sponsor it as does Representative Lucas on this committee.
On a well-to-wheels basis, natural gas vehicles produce 22
percent less greenhouse gases than comparable diesel vehicles
and 29 percent less gasoline vehicles. In 2007, natural gas
vehicles displaced 250 million gallons of petroleum in the
United States. In the next 17 years, the industry's goal is to
grow that to 10 billion gallons. Over 60 percent of the
petroleum used in America is imported. Much of it is from
countries that are unstable and do not have the best interests
of the United States in mind. Meanwhile, almost 98 percent of
the natural gas used in America is produced in North America,
85 percent in the U.S. and the rest in Canada. Just last
Thursday the report by the Potential Gas Committee, the
authority on gas supplies, shows that the United States holds
far larger reserves than previously thought, 35 percent more
than the previous report showed in 2006. Natural gas makes
sense as a transition fuel, and this bill will help us get more
natural gas vehicles on the road. I will be offering an
amendment to H.R. 1622 that will simply clear up some wording
in order to avoid potential jurisdictional issues.
And since I have just a little bit of time left, I want to
yield the balance of my time to Congressman Adrian Smith for
additional comments on H.R. 2965.
[The prepared statement of Mr. Hall follows:]
Prepared Statement of Representative Ralph M. Hall
Thank you Mr. Chairman. Today we're marking up three bills, H.R.
2965, the Enhancing Small Business Research and Innovation Act of 2009;
H.R. 2729, To authorize the designation of National Environmental
Research Parks by the Secretary of Energy, and for other purposes; and
H.R. 1622, To provide for a program of research, development, and
demonstration on natural gas vehicles.
H.R. 2965 extends and makes important changes to the Small Business
Innovation Research program (SBIR) and the Small Business Technology
Transfer program (STTR), which, as their names indicate, fund
innovation and technology development at America's small businesses. I
support this bill, and note that both the Committee and the Full House
passed a very similar version last year. I'm pleased that we're again
able to advance this bill in a bipartisan fashion, working closely with
the Majority as well as our counterparts on the Small Business
Committee. This has allowed us to build a strong legislative record on
this program, which will serve us well as we aim to complete Floor
action and conference negotiations before the program expires on July
31st.
H.R. 2729 will authorize and make permanent the existing seven
National Environmental Research Parks across the country. The National
Environmental Research Parks are outdoor laboratories that provide
opportunities for environmental studies on protected lands that act as
buffers around Department of Energy (DOE) facilities. I commend Mr.
Lujan on his dedication to the Parks and for authoring this
legislation. I will be offering an amendment to the bill that came
about as a result of consultation with the Parks and with the Majority
staff to clarify that the Parks and the sites they are located on shall
continue to be run as they currently are.
H.R. 1622 reauthorizes the natural gas vehicle RD&D program that
was created in the 1992 Energy Policy Act. This bill was introduced by
Rep. John Sullivan of Oklahoma and is co-sponsored by myself and Rep.
Lucas on this committee. On a well-to-wheels basis, natural gas
vehicles produce 22 percent less greenhouse gases than comparable
diesel vehicles and 29 percent less than gasoline vehicles. In 2007,
natural gas vehicles displaced 250 million gallons of petroleum in the
U.S. In the next 17 years, the industry's goal is to grow that to 10
billion gallons. Over 60 percent of the petroleum used in America is
imported--much of it from countries that are unstable or do not have
the best interests of the U.S. in mind. Meanwhile, almost 98 percent of
the natural gas used in America is produced in North America--85
percent in the U.S. and the rest in Canada.
Just last Thursday, the report by the Potential Gas Committee, the
authority on gas supplies, shows the United States holds far larger
reserves than previously thought--35 percent more that the previous
report showed in 2006. Natural gas makes sense as a transition fuel,
and this bill will help us get more natural gas vehicles on the road. I
will be offering an amendment to H.R. 1622 that will simply clear up
some wording in order to avoid potential jurisdictional issues.
With that I yield back the balance of my time.
Mr. Smith. Thank you. Thank you, Mr. Chair, Mr. Hall. I am
pleased to support passage of this legislation, the Enhancing
Small Research and Innovation Act of 2009. With 11
participating agencies and total funding in excess of $2.2
billion, the SBIR and STTR programs reauthorizing this
legislation are a key component of the federal R&D and
portfolio serving to facilitate increased private sector
commercialization of promising ideas, helping the government
advance its R&D goals and meet its technology needs.
This legislation makes important improvements to this
program, most notably by providing statutory clarity to what
have been changing interpretations of the eligibility of
majority venture capital-backed small businesses. As we know,
both this committee and the Small Business Committee have
considered this issue in detail in recent years and I think the
growing consensus in support of the legislation's proposed
changes is a strong indication that they are on target,
maximizing the eligibility of legitimate small businesses while
minimizing inappropriate eligibility of large businesses.
I also want to note my strong support for title III of this
bill which includes amendment language that I included in the
legislation last year. The language requires the Small Business
Administration's outreach efforts aimed at increasing
participation in SBIR and STTR, give priority to rural areas,
which tend to have low participation in the programs but are
nonetheless home to entrepreneurial and innovative small
business owners who would benefit from increased outreach.
I thank Chair Gordon, Ranking Member Hall and Chair Wu for
their leadership on this legislation, and I look forward to
working with them to ensure we expedite completion of this bill
before these programs expire at the end of July. Thank you. I
yield back.
[The prepared statement of Mr. Smith follows:]
Prepared Statement of Representative Adrian Smith
Thank you, Mr. Chairman. I'm pleased to support passage of this
legislation, the Enhancing Small Business Research and Innovation Act
of 2009.
With 11 participating agencies and total funding in excess of $2.2
billion, the SBIR and STTR programs reauthorized in this legislation
are a key component of the Federal R&D portfolio, serving to facilitate
increased private sector commercialization of promising ideas helping
the government advance its R&D goals and meet its technology needs.
This legislation makes important improvements to this program, most
notably by providing statutory clarity to what have been changing
interpretations of the eligibility of majority venture capital-backed
small businesses. As we know, both this committee and the Small
Business Committee have considered this issue in detail in recent
years, and I think the growing consensus in support of the
legislation's proposed changes is a strong indication that they are on
target-maximizing the eligibility of legitimate small businesses while
minimizing the inappropriate eligibility of large businesses.
I also want to note my strong support for Title III of this bill,
which includes amendment language that I included in this legislation
last year. The language requires the Small Business Administration's
outreach efforts--aimed at increasing participation in SBIR and STTR--
give priority to rural areas, which tend to have low participation in
the programs but are nonetheless home to entrepreneurial and innovative
small business owners who would benefit from increased outreach.
I thank Chairman Gordon, Ranking Member Hall, and Chairman Wu for
their leadership on this legislation and I look forward to working with
them to ensure we expedite completion of this bill before these
programs expire at the end of July.
I yield back.
Chair Gordon. Members may place statements in the record at
this point.
Prepared Statement of Representative Harry E. Mitchell
Thank you, Mr. Chairman.
Today we will mark up H.R. 2965, the Enhancing Small Business
Research and Innovation Act of 2009; H.R. 2729, legislation to
authorize the designation of National Environmental Research Parks by
the Secretary of Energy; and H.R. 1622, legislation to provide for a
program of research, development, and demonstration on natural gas
vehicles.
H.R. 2965 would strengthen and refine the Small Business Innovation
Research (SBIR) Program and promote energy-related research, rare
disease-related research, and transportation and infrastructure
projects.
As small businesses continue to develop and grow in Arizona, the
SBIR Program has become a vital resource.
In my district, small businesses have been partnering with Arizona
State University (ASU) to apply to SBIR grants. Together, they are able
to conduct comprehensive and groundbreaking research, while also
ensuring that local businesses stay innovative and competitive.
I look forward to today's markup of this legislation which I
believe would enhance technological competition and help spur economic
growth.
I yield back.
Chair Gordon. We will now consider H.R. 2965, the Enhanced
Small Business Research and Innovation Act of 2009. I recognize
the gentleman from Oregon to describe his bill.
Mr. Wu. Thank you very much, Mr. Chair. I want to thank you
for your generous words and later on perhaps properly allocate
that credit elsewhere.
In today's economy, small businesses, where a lot of
innovation happens, and the Science and Technology Committee
under your leadership, especially the Technology and Innovation
Subcommittee, which Mr. Smith and I serve on, intends to
promote the science and technology research that will drive an
innovation-based economy and create new high-wage, high-value
jobs which are not going to go away. At more than $2.3 billion
per year, the Small Business Innovative Research and Small
Business Technology Transfer programs comprise the largest
single source of federal support for technological innovation
in the private sector. Given the current economic climate, we
need robust SBIR and STTR programs more than ever to create the
next generation of companies that will provide high-paying jobs
and grow our economy.
These programs originated more than 20 years ago, and given
the changes that we have seen during the past two decades, we
need to update these programs to reflect the current economic
realities of our increasingly competitive innovation economy.
The Technology and Innovation Subcommittee has held numerous
hearings on SBIR and STTR in the past several years including
one as recently as this April. Our witnesses shared many
recommendations about how SBIR and STTR can be strengthened.
Recently, H.R. 2965, the Enhancing Small Business Research
and Innovation Act, was introduced. This bill reauthorizes SBIR
and STTR through 2011. The bill increases the phase I awards
from $100,000 to $250,000 and phase II awards from $750,000 to
$2 million to better reflect the actual costs of doing business
in high-tech research and development today. It also increases
the flexibility of the SBIR program by allowing cross-agency
awards and allowing applicants to apply directly for phase II
funding and permits recompeted repetitive phase II awards.
H.R. 2965 allows venture capital, majority venture capital-
backed small business to once again apply for awards and
specifically defines their eligibility requirements. There has
been much debate over the proper role of venture capital
participation. The National Academies' report released recently
states clearly that venture capital-backed companies are
important to technology development and do not crowd out other
small businesses.
In addition, the bill expands requirements for agency
databases of award recipients and improves accessibility
between various agency databases. This will allow for improved
future improvement of SBIR as we move to reauthorize in 2011 or
2012 and improved oversight by Congress.
H.R. 2965 also establishes an interagency committee co-
chaired by the Director of the White House Office of Science
and Technology Policy and the Director of the National
Institutes of Standards and Technology to report to Congress on
the best practices for commercialization of SBIR- and STTR-
funded research.
In closing, this committee has been a leader in passing
legislation that advances our innovation agenda. Today we
continue that leadership by reauthorizing SBIR and STTR. I want
to thank the Chair for his leadership of this committee, for
Speaker Pelosi in pushing the innovation agenda, and want to
specifically recognize staff who have worked very, very hard on
this legislation over multiple Congresses. I am fond of saying
that you don't have to be a rocket scientist to serve on the
House Science Committee but you do have to be a rocket
scientist to be on staff, and they have done a tremendous job.
I want to specifically recognize Mike Quear, who has hung with
this project through thick and thin, and also Dennis Worden of
my office staff for his fine work on this legislation, and I
want to urge all my colleagues to support this bill and yield
back the balance of my time.
[The prepared statement of Mr. Wu follows:]
Prepared Statement of Chair David Wu
Thank you, Mr. Chairman. In today's economy, small business is
where innovation happens. The Science and Technology Committee,
especially the Technology and Innovation Subcommittee, intends to
promote the science and technology research that drives an innovation-
based economy.
At more than $2.3 billion per year, the Small Business Innovation
Research and Small Business Technology Transfer programs comprise the
largest source of federal support for technological innovation in the
private sector. Given the current economic climate, we need robust SBIR
and STTR programs to create the next generation of companies that will
provide high-paying jobs and grow our economy.
However, these programs originated more than 20 years ago. Given
the economic changes we have seen during the past two decades, we need
to update these programs to reflect the current economic realities of
our increasingly competitive innovation economy.
The Technology and Innovation Subcommittee has held several
hearings on SBIR and STTR in the past several years, including one as
recent as April 2009. Our witnesses shared many recommendations about
how SBIR and STTR can be strengthened.
Recently, H.R. 2965, the Enhancing Small Business Research and
Innovation Act, was introduced. This bill reauthorizes the SBIR and
STTR programs through 2011.
The bill increases the Phase I awards from $100,000 to $250,000 and
Phase II awards from $750,000 to $2 million to better reflect the
actual costs of doing high-tech research. It also increases the
flexibility of the SBIR program by allowing cross-agency awards and
allowing applicants to apply directly for Phase II funding.
H.R. 2965 allows venture capital-backed small businesses to once
again apply for awards and specifically defines their eligibility
requirements. There has been much debate over the role of venture
capital participation, but the National Academies recently released a
report stating that venture capital-backed companies had a minimal role
in the programs and did not crowd out other small businesses.
In addition, the bill expands requirements for agency databases of
award recipients, requiring inter-operability and accessibility between
various agency databases. This will allow for improved oversight by
Congress on how agencies actually operate SBIR. H.R. 2965 also
establishes an Interagency Committee, co-chaired by the Director of the
White House Office of Science and Technology Policy and the Director of
the National Institutes of Standards and Technology, to report to
Congress on the best practices for commercialization of SBIR- and STTR-
funded research.
In closing, this committee has been a leader in passing legislation
that advances our innovation agenda. Today we continue our leadership
by reauthorizing SBIR and STTR. I urge my colleagues to support this
bill.
Chair Gordon. Thank you, Mr. Wu, for a job well done, and
Mr. Quear, we look forward to riding on your shuttle that I am
sure you will be making soon.
I now recognize Mr. Hall.
Mr. Hall. Mr. Chair, I have listened quietly and had advice
from the rocket scientists we have on this side of the docket.
We like this bill and urge those on this side of the docket to
be supportive, and at this time I might yield to Dr. Ehlers any
time that I may have.
Mr. Ehlers. I thank the gentleman for yielding. I just want
to make a comment on one particular area. I am pleased that the
bill before us today leaves the set-aside for the SBIR and STTR
programs unchanged. As you know, this has been a matter of
contention for several years. And last year, the House
considered legislation which would have increased the set-aside
for these programs. However, I offered an amendment on the
House Floor which was approved and left the set-asides
unchanged. The reason for this is that if you increase the set-
asides, you are taking money away from the other agencies and
they lose some money that has been allocated to them. A much
better approach is to increase the allocation of the other
agencies and then that automatically gives a higher percentage
to the SBIR and STTR programs. And I think that is a far better
approach.
I do note, however, that the Senate has written a bill that
was similar to the House bill last year. In other words, they
wish to include an increase in the set-aside, which is exactly
the opposite of what we want, and I certainly hope that the
House conferees will stand strong on this issue when we have
the conference with the Senate and continue to take the better
route, which is to leave the set-asides unchanged but increase
the funding to the base agencies. That is also in accord with
the COMPETES Act, which was passed several years ago with a lot
of hard work from various Members of this committee, and the
intent there also is to increase the allocation to the base
agencies and that way everyone benefits. The agencies get more
research funds, but at the same time SBIR and STTR get more
because that percentage stays the same, and since the base
increases, their allocations also increase.
I ask unanimous consent to submit the rest of my statement
for the record. I yield back.
[The prepared statement of Mr. Ehlers follows:]
Prepared Statement of Representative Vernon J. Ehlers
I am pleased that the bill before us today leaves the set-aside for
the SBIR and STTR programs unchanged. Last year, the House considered
legislation which would have increased the set-aside for these
programs. However, an amendment I offered to leave the set-asides
unchanged was voice-voted on the House Floor.
I believe that the amendment proved to be non-controversial because
of the overwhelming support for increasing the funding for these
important programs by increasing the overall research funding at
agencies. I understand, however, that the Senate version of this
legislation does include an increase in the set-aside.
By increasing the set-aside, we would only eat away at the base
funding for research available to our scientific agencies. I would much
rather see us fight for overall extramural research funding increases
which will equivalently benefit the innovation and tech transfer
activities of these programs, and hope that the House conferees will
stand strong on this issue in conference with the Senate.
Two years ago this committee worked very hard to get the COMPETES
Authorization bill signed into law, which created a doubling path for
several agencies under our jurisdiction. Finding the money to fund
these authorizations has not been so easy, but in light of the recent
stimulus funding and appropriations bills for fiscal year 2010, many
agencies that make SBIR and STTR grants are receiving funding
increases.
In fact, if you look at the health of these programs since their
creation in 1994, SBIR and STTR have increased by 82 percent and 746
percent, respectively, in inflationary-adjusted real increases in
funding. On average, SBIR has received an annual increase of over five
percent and STTR has received annual increases over 20 percent. This is
due to a combination of increasing the set-aside in the past, as well
as the overall extramural agency budgets increasing.
It is my hope that the House conferees will consider supporting
SBIR and STTR growth through overall funding increases for our
innovation agencies instead of considering increasing the set-asides.
Chair Gordon. Thank you, Dr. Ehlers and Mr. Hall. Does
anyone else wish to comment on this bill?
Mr. Peters.
Mr. Peters. Thank you, Mr. Chair.
The Small Business Innovation and Research Program and
Small Business Technology Transfer Program provide critical
financial support to the research and development initiatives
of small companies. Small firms, of course, are important
drivers of advanced technology. Innovations in a variety of
fields are increasingly generated by small companies who will
ultimately develop a partnership or have their idea purchased
by a larger firm. SBIR and STTR are the lifeblood of these
small companies and it is important that we continue to support
these programs.
Michigan companies compete favorably for SBIR awards,
particularly in the Department of Defense program. Over 400
Michigan companies have received SBIR awards over the years and
many new companies have been launched as a result, for example,
JADI, a company in my district that develops soldier tracking
technology and navigation systems that can be used where GPS is
not available. JADI was able to form a partnership and launch a
new company after a successful Army phase II SBIR award. The
company now has a partnership with Raytheon to provide this
innovative technology to our military.
H.R. 2965 extends the SBIR/STTR program until 2011 and
makes important improvements to the program. My constituents
often tell me that venture capital-backed companies should be
allowed to participate in SBIR and that doing so will help the
best ideas with the greatest chances of commercialization. I am
glad to see H.R. 2965 takes this into consideration.
The legislation also promotes greater commercialization
efforts and agency initiatives that encourage partnerships
between SBIR recipients and business incubators. Many small
companies in my district benefit from such partnerships with
business incubators, like Automation Alley, and it is important
to continue to promote these partnerships at the federal level.
I want to thank Chair Gordon and Ranking Member Hall and
Chair Wu and Ranking Member Smith of the Technology and
Innovation Subcommittee for their attention to this program and
for bringing this important legislation up for consideration
today and I urge my colleagues to report it favorably to the
House Floor. Thank you, Mr. Chair.
[The prepared statement of Mr. Peters follows:]
Prepared Statement of Representative Gary C. Peters
Thank you Mr. Chairman.
The Small Business Innovation and Research Program and Small
Business Technology Transfer Program provide critical financial support
to the research and development initiatives of small companies.
Small firms are important drivers of advanced technology.
Innovations in a variety of fields are increasingly generated by small
companies who will ultimately develop a partnership or have their idea
purchased by a larger firm. SBIR and STTR are the life blood of these
small companies, and it is important we continue to support these
programs.
Michigan companies compete favorably for SBIR awards, particularly
in the DOD Program. Over 400 Michigan companies have received SBIR
awards over the years and many new companies have been launched as a
result. For example, JADI is a company in my district that developed
soldier and first responder tracking technology and navigation systems
that can be used where GPS is not available. JADI was able to form a
partnership and launch a new company after a successful Army SBIR
awards. The company now has a partnership with Raytheon to provide this
innovative technology to our military.
H.R. 2965 extends the SBIR/STTR program until 2011 and makes
important improvements to the program. My constituents often tell me
that venture capital-backed companies should be allowed to participate
in SBIR, and that doing so will help promote the best ideas with the
greatest chances of commercialization. I am glad to see H.R. 2965 takes
this into consideration.
The legislation also promotes greater commercialization efforts and
agency initiatives that encourage partnerships between SBIR recipients
and business incubators. Many small companies in my district benefit
from such partnerships with business incubators, like Automation Alley,
and it is important to continue to promote these partnerships at the
federal level.
I want to thank Chairman Gordon and Ranking Member Hall, and
Chairman Wu and Ranking Member Smith of the Technology and Innovation
Subcommittee for their attention to this program and for bringing this
important legislation up for consideration today. I urge my colleagues
to report it favorably to the House Floor.
Thank you.
Chair Gordon. Does anyone else wish to be recognized? If
not, then I ask unanimous consent that the bill is considered
as read and open to amendment at any point and that the Members
proceed with the amendments in order of the roster. Without
objection, so ordered.
The first amendment on the roster is an amendment offered
by the gentleman from Nebraska, Mr. Smith. Are you ready to
proceed with your amendment?
Mr. Smith. Yes.
Chair Gordon. The Clerk will report the amendment.
The Clerk. Amendment to H.R. 2965, amendment number 163,
offered by Mr. Smith of Nebraska.
Chair Gordon. I ask unanimous consent to dispense with the
reading. Without objection, so ordered.
I recognize the gentleman for five minutes to explain his
amendment.
Mr. Smith. Thank you, Mr. Chair. This is a simple and
straightforward amendment aimed at improving the stewardship of
taxpayer dollars under SBIR and STTR. Specifically, it requires
the interagency policy committee established by the bill to
consider and report to Congress on whether and how SBIR/STTR
should institute a process through which the program can be
systematically evaluated and their outcomes can be tracked. It
also explicitly states the White House Office of Management and
Budget, OMB, shall participate in the interagency committee
conducting the review.
The absence of such a systematic evaluation process for
SBIR and STTR was identified by the National Research Council
in its 2008 assessment of the program. Specifically, the
council review concluded that ``insufficient data collection,
analytic capability and reporting requirements together with
the decentralized nature of the program means there is limited
ability to make connections between program outcomes and
program management and practices.''
This amendment is intended to address the concern and
ultimately I would hope this process could lead to development
of individual agency performance measures and more complete
information upon which to base future policy changes. Thank
you. I yield back.
[The prepared statement of Mr. Smith follows:]
Prepared Statement of Representative Adrian Smith
Thank you Mr. Chairman. This is a simple and straightforward
amendment aimed at improving stewardship of taxpayer dollars under the
SBIR and STTR programs. Specifically, it requires the Interagency
Policy Committee established by the bill to consider and report to
Congress on whether and how SBIR/STTR should institute a process
through which the program can be systematically evaluated and awards
and their outcomes can be tracked. It also explicitly states the White
House Office of Management and Budget shall participate in the
interagency committee conducting this review.
The absence of such a systematic evaluation process for SBIR and
STTR was identified by the National Research Council (NRC) in its 2008
assessment of the program. Specifically the NRC review concluded that
``insufficient data collection, analytic capability, and reporting
requirements, together with the decentralized nature of the program,
means that there is limited ability to make connections between program
outcomes and program management and practices.''
This amendment is intended to address this concern, and ultimately
I would hope this process could lead to development of individual
agency performance measures and more complete information upon which to
base future policy changes.
Chair Gordon. Thank you, Mr. Smith, for that constructive
amendment.
Is there further discussion on the amendment? If no, the
vote occurs on the amendment. All in favor, say aye. Opposed,
no. The ayes have it and the amendment is agreed to.
Are there any other amendments? If no, then the vote is on
the bill, H.R. 2965, as amended. All those in favor will say
aye. All those opposed, say no. In the opinion of the Chair,
the ayes have it. I recognize myself to offer a motion.
I move the Committee favorably report H.R. 2965, as
amended, to the House with the recommendation that the bill be
passed. Furthermore, I move that staff be instructed to prepare
the Committee legislative report and make necessary technical
and conforming changes and that the Chair take all necessary
steps to bring the bill before the House for consideration.
The question is on the motion to report the bill favorably.
Those in favor of the motion, say aye. Opposed, no. The ayes
have it, and the bill is favorably reported.
Without objection, the motion to reconsider is laid upon
the table. Members will have two subsequent calendar days in
which to submit supplemental Minority or additional views on
this measure.
Let me again in closing say that just because we didn't
have a lot of rancor today does not mean that we did not have
three very good bills. For some that came in a little after the
opening statements, I want to remind you that our first bill
was a $2.3 billion authorization for research in small business
innovation. It is the largest such program in the Federal
Government. When we are talking about creating new jobs for
this country, it is going to go a long way, and so I thank you
for helping. I want to thank the Members for their attendance.
This concludes our Committee markup.
[Whereupon, at 11:40 a.m., the Committee was adjourned.]
Appendix:
----------
H.R. 2965, Section-by-Section Analysis, Amendment Roster
Section-by-Section Analysis of
H.R. 2965, The Enhancing Small Business
Research and Innovation Act of 2009
Sec. 1. Short Title; Table of Contents
``Enhancing Small Business Research and Innovation Act of 2009"
Title I. Program Extension and Venture Capital Operating Company
Involvement
Sec. 101. Extension of Termination Dates
Amends the Small Business Act to extend through FY 2011 the Small
Business Innovation Research (SBIR) and Small Business Technology
Transfer (STTR) programs of the Small Business Administration (SBA).
Sec. 102. Ensuring that Innovative Small Businesses with Substantial
Investment from Venture Capital Operating Companies
are Eligible to Participate in the SBIR and STTR
Programs
Provides that, effective only for the SBIR and STTR programs: (1) a
business concern that has more than 500 employees shall not qualify as
a small business concern; (2) in determining whether a small business
concern is independently owned and operated, the SBA Administrator
shall not consider a business concern to be affiliated with a venture
capital operating company if the venture capital operating company
(VCOC) does not own 50 percent or more of the business concern and
employees of the VCOC do not constitute a majority of the board of
directors of the business concern; (3) a business concern shall be
deemed to be independently owned and operated if it is owned in
majority part by one or more natural persons or VCOCs, there is no
single VCOC that owns 50 percent or more of the business concern, and
there is no single VCOC the employees of which constitute a majority of
the board of directors of the business concern; and (4) if a VCOC
controlled by a business with more than 500 employees has an ownership
interest in a small business owned in majority by VCOCs, that small
business is eligible to receive an SBIR or STTR award only if not more
than two of such VCOCs have an ownership interest in the small business
and such VCOCs do not collectively own more than 20 percent of the
small business.
Defines the term ``venture capital operating company''.
Title II. Commercialization Activities and Research Topics Deserving
Special Consideration
Sec. 201. Focus on Commercialization
Amends section 9 to modify the purpose and policy of the SBIR and
STTR programs as follows:
``It is further the policy of Congress that the purpose of the
programs established in this section should focus on promoting research
and the development of projects governed by commercial business plans,
which have significant potential to produce products or services for
the marketplace or for acquisition by federal agencies.''
Sec. 202. Inclusion of Energy-Related Research Topics and Rare Disease-
Related Research Topics as Deserving `Special
Consideration' as SBIR Research Topics
Includes energy-related research (as identified by the National
Academy of Sciences, in the final report issued by the `America's
Energy Future: Technology Opportunities, Risks, and Tradeoffs' project,
and in subsequent reports issued by the National Academy of Sciences on
sustainability, energy, and alternative fuels), rare disease-related
research (as identified by the National Institutes of Health, in the
annual report on the rare diseases research activities of the National
Institute of Health for fiscal year 2005, and in subsequent reports
issued by the National Institutes of Health on rare diseases research
activities), and transportation and infrastructure research (as
identified by 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) as ``special consideration'' SBIR
research topics.
Sec. 203. Nanotechnology-Related Research Topics
Includes nanotechnology research (as identified by the national
nanotechnology strategic plan required under section 2(c)(4) of the
21st Century Nanotechnology Research and Development Act and in
subsequent reports issued by the National Science and Technology
Council Committee on Technology, focusing on areas of nanotechnology
identified in such plan) as a ``special consideration'' SBIR and STTR
research topic.
Sec. 204. Clarifying the Definition of ``Phase Three''
Clarifies that the ``third phase'' of the SBIR program ``shall
consist of work that derives, extends, or logically concludes efforts
performed under prior SBIR funding agreements (which may be referred to
as `Phase III').''
Also provides that the term ``commercialization'' means ``the
process of developing marketable products or services and producing and
delivering products or services for sale (whether by the originating
party or by others) to government or commercial markets.''
Sec. 205. Agency Research Goals
Requires agencies with SBIR programs that award annually $5 billion
or more in procurement contracts to establish annual goals for
commercialization of projects funded by SBIR awards. Outlines specific
goals required, including: (1) the percentage of SBIR projects that
receive private sector funds during the third phase; (2) the percentage
of SBIR projects that are integrated into a program of record; and (3)
the amount of federal dollars received by SBIR projects through federal
contracts, not including dollars received through the SBIR program.
Requires that the goals be reported not later than 60 days after
the beginning of the fiscal year and the extent to which the goals were
met and a description of the methodology used to collect such data be
reported not later than 90 days after the end of the fiscal year to the
Committee on Small Business and the Committee on Science and Technology
of the House of Representatives and the Committee on Small Business and
Entrepreneurship of the Senate.
Sec. 206. Commercialization Program
Requires each agency to establish a commercialization program that
supports the progression of SBIR awardees to the third phase.
Requires an analysis of the various activities considered for
inclusion in the commercialization program and a statement of the
reasons why each activity considered was included or not included to be
submitted to Congress.
Authorizes $27.5 million in funding to SBA, to be transferred to
agencies to support commercialization programs. Specifies that agencies
may not use more than an amount equal to one percent of the funds set
aside for the agency's SBIR program to administer the commercialization
program.
Title III. Rural Development and Outreach
Sec. 301. Outreach and Support Activities
Directs the Administrator to make grants on a competitive basis to
organizations to: (1) conduct outreach efforts to increase
participation in the programs; and (2) provide application support and
entrepreneurial and business skills support to prospective
participants.
Authorizes $10 million for each of fiscal years 2010 and 2011 to
carry out these outreach and support activities.
Provides that the amount of assistance provided to an organization
in any fiscal year shall be equal to the total amount of matching funds
from non-federal sources provided by the organization and shall not
exceed $250,000.
Requires organizations receiving grants to direct activities
towards small business concerns located in geographic areas that are
under-represented in the programs and/or small business concerns owned
and controlled by women, by service-disabled veterans, and by
minorities.
Requires the Administrator to establish an advisory board for
outreach and support activities. Members of the advisory board shall
include the Administrator (or the Administrator's designee), the head
(or the designee of the head) of each federal agency with an SBIR
program, representatives of small business concerns that are current or
former recipients of SBIR awards, and representatives of service
providers of SBIR outreach and assistance. Assigns the following duties
to the advisory board: (1) to develop guidelines for outreach awards;
(2) to identify opportunities for coordinated outreach, technical
assistance, and commercialization activities among federal agencies,
the recipients of the outreach awards, and applicants and recipients of
SBIR awards; (3) to review and recommend revisions to outreach
activities; and (4) to submit to the Committee on Small Business and
Entrepreneurship of the Senate and the Committee on Small Business and
the Committee on Science and Technology of the House of Representatives
an annual report on outreach activities and the effectiveness and
impact of those activities.
Requires the Administrator to use selection criteria developed by
the advisory board in awarding grants, including criteria designed to
give preference to applicants who: (1) propose to carry out activities
that will reach either an under-performing geographic area or an under-
represented population group; (2) propose to carry out activities that
complement the existing public-private innovation support system for
the targeted region or population; (3) propose to measure to
effectiveness of the proposed activities; and (4) include a Small
Business Development Center program that is accredited for its
technology services.
Specifies that, in awarding grants, the Administrator is to use a
peer review process.
States that, to be eligible to receive a grant, the applicant must
have the written endorsement of the Governor of the State where the
targeted regions or populations are located. Specifies that the
endorsement must indicate that the Governor will ensure that the
activities to be carried out under the grant will be integrated with
the balance of the State's portfolio of investments to help small
business concerns commercialize technology. Includes a limitation
stating that, each fiscal year, a Governor may have in effect not more
than one written endorsement for an outreach grant and not more than
one written endorsement for a support grant.
Provides that each award shall be for a period of two fiscal years.
Sec. 302. Rural Preference
Requires agencies to give priority to SBIR and STTR award
applications so as to increase the number of award recipients from
rural areas.
Sec. 303. Obtaining SBIR Applicant's Consent to Release Contact
Information to Economic Development Organizations
Requires each agency to enable an SBIR applicant to indicate
whether the agency has its consent to identify the applicant to
appropriate local and State-level economic development organizations as
an applicant and release the applicant's contact information to such
organizations.
Sec. 304. Increased Partnerships Between SBIR Awardees and Prime
Contractors, Venture Capital Investment Companies,
and Larger Businesses
Directs each agency to establish initiatives to encourage
partnerships between SBIR awardees and prime contractors, venture
capital investment companies, business incubators, and larger
businesses in order to facilitate the progress of SBIR awardees to the
third phase.
Defines ``business incubator.''
Title IV. SBIR and STTR Enhancement
Sec. 401. Increased Number of Research Topic Solicitations Annually and
Shortened Period for Final Decisions on
Applications
Requires the Administrator to establish by regulation a process in
which each agency conducts at least two rounds of SBIR research
solicitations per year, and renders a final decision on each proposal
within 90 days after the solicitation closes (with an authorized
extension to 180 days on a case-by-case basis).
Sec. 402. Agencies Should Fund Vital R&D Projects with the Potential
for Commercialization
Requires the Administrator to submit annually to the Committee on
Small Business and the Committee on Science and Technology of the House
of Representatives and the Committee on Small Business and
Entrepreneurship of the Senate a list of small businesses that, during
the previous five-year period, received 15 or more first phase SBIR
awards and no second phase SBIR awards.
Sec. 403. Federal Agency Engagement with SBIR Awardees that Have Been
Awarded Multiple Phase One Awards But Have Not Been
Awarded Phase Two Awards
Requires each agency to engage with SBIR awardees that have been
awarded multiple first phase awards but no second phase awards, and to
develop performance measures with respect to awardee progression in the
SBIR program.
Sec. 404. Funding for Administrative, Oversight, and Contract
Processing Costs.
Authorizes $27.5 million for each of fiscal years 2010 and 2011 to
the Administrator, to be transferred to agencies, to assist with the
administrative, oversight, and contract processing costs relating to
the SBIR program. States that an agency may not receive in a fiscal
year an amount greater than three percent of the SBIR budget of such
agency for such fiscal year under this subsection.
Sec. 405. Comptroller General Audit of How Federal Agencies Calculate
Extramural Research Budgets
Requires GAO to carry out a detailed audit of how federal agencies
calculate extramural research budgets for purposes of calculating the
size of the agencies' SBIR and STTR budgets.
Requires that GAO submit a report on the results of the audit
within one year of the date of enactment to the Committee on Small
Business and the Committee on Science and Technology of the House of
Representatives and the Committee on Small Business and
Entrepreneurship of the Senate.
Sec. 406. Agency Databases to Support Program Evaluation
Requires that the government database for SBIR and STTR program
evaluation include information on the ownership structure of award
recipients, both at the time of receipt of the award and upon
completion of the award period.
Requires: (1) SBIR and STTR small business participants to provide
updated information for purposes of updating the government database
for SBIR and STTR program evaluation; and (2) participating agencies to
develop and maintain such databases.
Sec. 407. Agency Databases to Support Technology Utilization
Requires each agency to create and maintain a technology
utilization database, available to the public and containing data
supplied by award recipients, to help them attract customers for the
products and services generated under the SBIR or STTR project, and to
attract additional investors or business partners. Participation in a
database shall be voluntary, except that participation is required of
all award recipients who received supplemental payments from SBIR and
STTR program funds above their initial Phase II award.
Sec. 408. Interagency Policy Committee
Requires the Director of the Office of Science and Technology
Policy (OSTP) to establish an Interagency SBIR/STTR Policy Committee
comprised of one representative from each federal agency with an SBIR
program. Specifies that the Director of OSTP and the Director of the
National Institute of Standards and Technology shall jointly chair the
committee.
Requires the committee to review the following issues and make
policy recommendations on ways to improve the program effectiveness and
efficiency: (1) the public and government databases; (2) federal agency
flexibility in establishing Phase I and Phase II award sizes; and (3)
commercialization assistance best practices in federal agencies with
significant potential to be employed by other agencies, as well as
proposals for new initiatives to address funding gaps business concerns
face after Phase II but before commercialization.
Requires the committee to transmit to the Committee on Science and
Technology and the Committee on Small Business of the House of
Representatives and the Committee on Small Business and
Entrepreneurship of the Senate reports on the issues identified above.
Sec. 409. National Research Council SBIR Study
Amends the Small Business Reauthorization Act of 2000 to remove the
requirement that the National Research Council provide an updated
report on the SBIR program.
Sec. 410. Express Authority to ``Fast-Track'' Phase Two Awards for
Promising Phase One Research
Authorizes agencies to develop fast-track programs to eliminate
funding delays by issuing Phase Two SBIR awards as soon as practicable,
including simultaneously with the issuance of the Phase One award.
Requires the Administrator to encourage the development of such
``fast-track'' programs.
Sec. 411. Increased SBIR and STTR Award Levels
Increases, for both the SBIR and STTR programs, the individual
small business award levels from: (1) $100,000 to $250,000, for
participation at a Phase One level; and (2) $750,000 to $2 million, for
participation at a Phase Two level. Provides for an annual readjustment
to these levels to reflect economic conditions and programmatic
considerations.
Sec. 412. Express Authority for an Agency to Award Sequential Phase Two
Awards for SBIR-Funded Projects
States that a small business concern that receives a second phase
SBIR award for a project remains eligible to receive additional second
phase SBIR awards for such project.
States that agencies are expressly authorized to provide additional
second phase SBIR awards for testing and evaluation assistance for the
insertion of SBIR technologies into technical or weapons systems.
Sec. 413. First Phase Required
States that an agency shall provide to a small business concern an
award for a second phase of an SBIR program with respect to a project
only if such agency finds that the small business concern has been
provided an award for the first phase of an SBIR program with respect
to such project or has completed the determinations described in
subsection (e)(4)(A) with respect to such project despite not having
been provided an award for the first phase.