[House Report 112-90]
[From the U.S. Government Publishing Office]


112th Congress                                             Rept. 112-90
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 2

======================================================================



 
      CREATING JOBS THROUGH SMALL BUSINESS INNOVATION ACT OF 2011

                                _______
                                

  July 1, 2011.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

     Mr. Graves of Missouri, from the Committee on Small Business, 
                        submitted the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 1425]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Small Business, to whom was referred the 
bill (H.R. 1425) to reauthorize and improve the SBIR and STTR 
programs, 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. Amendment........................................................2
 II. Purpose of the Bill and Summary.................................26
III. Background and Need for Legislation.............................28
 IV. Hearings........................................................32
  V. Committee Consideration.........................................33
 VI. Committee Votes.................................................35
VII. Section-by-Section Analysis of H.R. 1425........................61
VIII.Congressional Budget Cost Estimate..............................76

 IX. New Budget Authority, Entitlement Authority, and Tax Expenditure79
  X. Oversight Findings..............................................80
 XI. Statement of Constitutional Authority...........................80
XII. Compliance with Public Law 104-4................................80
XIII.Congressional Accountability Act................................80

XIV. Federal Advisory Committee Statement............................80
 XV. Statement of No Earmarks........................................80
XVI. Performance Goals and Objectives................................80
XVII. Applicability to the Legislative Branch........................80
XVIII.Exchange of Letters Regarding Jurisdiction.....................81

 XIX. Changes in Existing Law Made by the Bill, as Reported..........84
  XX. Dissenting Views..............................................116

                              I. Amendment

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Creating Jobs Through Small Business 
Innovation Act of 2011''.

SEC. 2. TABLE OF CONTENTS.

  The table of contents for this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.
Sec. 3. Definitions.

         TITLE I--REAUTHORIZATION OF THE SBIR AND STTR PROGRAMS

Sec. 101. Extension of termination dates.
Sec. 102. SBIR and STTR award levels.
Sec. 103. Agency and program flexibility.
Sec. 104. Elimination of Phase II invitations.
Sec. 105. Phase flexibility.
Sec. 106. Participation by firms with substantial investment from 
multiple venture capital operating companies, hedge funds, or private 
equity firms in a portion of the SBIR program.
Sec. 107. Ensuring that innovative small businesses with substantial 
investment from venture capital operating companies, hedge funds, or 
private equity firms are able to participate in the SBIR and STTR 
programs.
Sec. 108. SBIR and STTR special acquisition preference.
Sec. 109. Collaborating with Federal laboratories and research and 
development centers.
Sec. 110. Notice requirement.
Sec. 111. Additional SBIR and STTR Awards.

          TITLE II--OUTREACH AND COMMERCIALIZATION INITIATIVES

Sec. 201. Technical assistance for awardees.
Sec. 202. Commercialization Readiness Program at Department of Defense.
Sec. 203. Commercialization Readiness Pilot Program for civilian 
agencies.
Sec. 204. Interagency Policy Committee.
Sec. 205. Clarifying the definition of ``Phase III''.
Sec. 206. Shortened period for final decisions on proposals and 
applications.
Sec. 207. Phase 0 Proof of Concept Partnership pilot program.

                  TITLE III--OVERSIGHT AND EVALUATION

Sec. 301. Streamlining annual evaluation requirements.
Sec. 302. Data collection from agencies for SBIR.
Sec. 303. Data collection from agencies for STTR.
Sec. 304. Public database.
Sec. 305. Government database.
Sec. 306. Accuracy in funding base calculations.
Sec. 307. Continued evaluation by the National Academy of Sciences.
Sec. 308. Technology insertion reporting requirements.
Sec. 309. Obtaining consent from SBIR and STTR applicants to release 
contact information to economic development organizations.
Sec. 310. Pilot to allow funding for administrative, oversight, and 
contract processing costs.
Sec. 311. GAO study with respect to venture capital operating company, 
hedge fund, and private equity firm involvement.
Sec. 312. Reducing vulnerability of SBIR and STTR programs to fraud, 
waste, and abuse.
Sec. 313. Simplified paperwork requirements.
Sec. 314. Reducing fraud, waste, and abuse.

                      TITLE IV--POLICY DIRECTIVES

Sec. 401. Conforming amendments to the SBIR and the STTR Policy 
Directives.

                       TITLE V--OTHER PROVISIONS

Sec. 501. Report on SBIR and STTR program goals.
Sec. 502. Competitive selection procedures for SBIR and STTR programs.
Sec. 503. Loan restrictions.
Sec. 504. Limitation on pilot programs.
Sec. 505. Ensuring equity in SBIR and STTR awards to individual 
companies.
Sec. 506. Inspector General reports.
Sec. 507. Timing.
Sec. 508. Publication of certain information.
Sec. 509. Preference for clean coal technology research.
Sec. 510. Report on enhancement of manufacturing activities.
Sec. 511. Express authority to ``fast-track'' Phase II awards for 
promising Phase I research.
Sec. 512. Increased partnerships between SBIR awardees and prime 
contractors, venture capital investment companies, and larger 
businesses.
Sec. 513. Preference for acid mine drainage research.
Sec. 514. Preference for hydraulic fracturing research.

SEC. 3. DEFINITIONS.

  In this Act--
          (1) the terms ``Administration'' and ``Administrator'' mean 
        the Small Business Administration and the Administrator 
        thereof, respectively;
          (2) the terms ``extramural budget'', ``Federal agency'', 
        ``Small Business Innovation Research Program'', ``SBIR'', 
        ``Small Business Technology Transfer Program'', and ``STTR'' 
        have the meanings given such terms in section 9 of the Small 
        Business Act (15 U.S.C. 638); and
          (3) the term ``small business concern'' has the meaning given 
        that term under section 3 of the Small Business Act (15 U.S.C. 
        632).

         TITLE I--REAUTHORIZATION OF THE SBIR AND STTR PROGRAMS

SEC. 101. EXTENSION OF TERMINATION DATES.

  (a) SBIR.--Section 9(m) of the Small Business Act (15 U.S.C. 638(m)) 
is amended--
          (1) by striking ``Termination.--'' and all that follows 
        through ``the authorization'' and inserting ``Termination.--The 
        authorization'';
          (2) by striking ``2008'' and inserting ``2014''; and
          (3) by striking paragraph (2).
  (b) STTR.--Section 9(n)(1)(A) of the Small Business Act (15 U.S.C. 
638(n)(1)(A)) is amended--
          (1) by striking ``In general.--'' and all that follows 
        through ``with respect'' and inserting ``In general.--With 
        respect'';
          (2) by striking ``2009'' and inserting ``2014''; and
          (3) by striking clause (ii).

SEC. 102. SBIR AND STTR AWARD LEVELS.

  (a) SBIR Adjustments.--Section 9(j)(2)(D) of the Small Business Act 
(15 U.S.C. 638(j)(2)(D)) is amended--
          (1) by striking ``$100,000'' and inserting ``$150,000''; and
          (2) by striking ``$750,000'' and inserting ``$1,000,000''.
  (b) STTR 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 inserting ``$150,000''; and
          (2) by striking ``$750,000'' and inserting ``$1,000,000''.
  (c) Annual Adjustments.--Section 9 of the Small Business Act (15 
U.S.C. 638) is amended--
          (1) in subsection (j)(2)(D), by striking ``once every 5 years 
        to reflect economic adjustments and programmatic 
        considerations'' and inserting ``every year for inflation''; 
        and
          (2) in subsection (p)(2)(B)(ix), as amended by subsection (b) 
        of this section, by inserting ``(each of which the 
        Administrator shall adjust for inflation annually)'' after 
        ``$1,000,000,''.
  (d) Limitation on Size of Awards.--Section 9 of the Small Business 
Act (15 U.S.C. 638), as amended by this Act, is further amended by 
adding at the end the following:
  ``(aa) Limitation on Size of Awards.--
          ``(1) Limitation.--No Federal agency may issue an award under 
        the SBIR program or the STTR program if the size of the award 
        exceeds the award guidelines established under this section by 
        more than 50 percent.
          ``(2) Maintenance of information.--Participating agencies 
        shall maintain information on awards exceeding the guidelines 
        established under this section, including--
                  ``(A) the amount of each award;
                  ``(B) a justification for exceeding the award amount;
                  ``(C) the identity and location of each award 
                recipient; and
                  ``(D) whether an award recipient has received any 
                venture capital, hedge fund, or private equity firm 
                investment and, if so, whether the recipient is 
                majority-owned by multiple venture capital operating 
                companies, hedge funds, or private equity firms.
          ``(3) Reports.--The Administrator shall include the 
        information described in paragraph (2) in the annual report of 
        the Administrator to Congress.
          ``(4) Rule of construction.--Nothing in this subsection shall 
        be construed to prevent a Federal agency from supplementing an 
        award under the SBIR program or the STTR program using funds of 
        the Federal agency that are not part of the SBIR program or the 
        STTR program of the Federal agency.''.

SEC. 103. AGENCY AND PROGRAM FLEXIBILITY.

  Section 9 of the Small Business Act (15 U.S.C. 638), as amended by 
this Act, is further amended by adding at the end the following:
  ``(bb) Subsequent Phase II Awards.--
          ``(1) Agency flexibility.--A small business concern that 
        received a Phase I award from a Federal agency under this 
        section shall be eligible to receive a subsequent Phase II 
        award from another Federal agency, if the head of each relevant 
        Federal agency or the relevant component of the Federal agency 
        makes a written determination that the topics of the relevant 
        awards are the same and both agencies report the awards to the 
        Administrator for inclusion in the public database under 
        subsection (k).
          ``(2) SBIR and sttr program flexibility.--A small business 
        concern that received a Phase I award under this section under 
        the SBIR program or the STTR program may receive a subsequent 
        Phase II award in either the SBIR program or the STTR program 
        and the participating agency or agencies shall report the 
        awards to the Administrator for inclusion in the public 
        database under subsection (k).''.

SEC. 104. ELIMINATION OF PHASE II INVITATIONS.

  Section 9(e) of the Small Business Act (15 U.S.C. 638(e)) is 
amended--
          (1) in paragraph (4)(B), by striking ``to further'' and 
        inserting ``which shall not include any invitation, pre-
        screening, pre-selection, or down-selection process for 
        eligibility for Phase II, that will further''; and
          (2) in paragraph (6)(B), by striking ``to further develop 
        proposed ideas to'' and inserting ``which shall not include any 
        invitation, pre-screening, pre-selection, or down-selection 
        process for eligibility for Phase II, that will further develop 
        proposals that''.

SEC. 105. PHASE FLEXIBILITY.

  Section 9 of the Small Business Act (15 U.S.C. 638), as amended by 
this Act, is further amended by adding at the end the following:
  ``(cc) Phase I Required.--Under this section, a Federal agency shall 
provide to a small business concern an award under Phase II of an SBIR 
program with respect to a project only if such agency finds that the 
small business concern has been provided an award under Phase I 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 a Phase I award.''.

SEC. 106. PARTICIPATION BY FIRMS WITH SUBSTANTIAL INVESTMENT FROM 
                    MULTIPLE VENTURE CAPITAL OPERATING COMPANIES, HEDGE 
                    FUNDS, OR PRIVATE EQUITY FIRMS IN A PORTION OF THE 
                    SBIR PROGRAM.

  (a) In General.--Section 9 of the Small Business Act (15 U.S.C. 638), 
as amended by this Act, is further amended by adding at the end the 
following:
  ``(dd) Participation of Small Business Concerns Majority-Owned by 
Venture Capital Operating Companies, Hedge Funds, or Private Equity 
Firms in the SBIR Program.--
          ``(1) Authority.--Upon a written determination described in 
        paragraph (2) provided to the Administrator, the Committee on 
        Small Business and Entrepreneurship of the Senate, and the 
        Committee on Small Business and the Committee on Science, 
        Space, and Technology of the House of Representatives not later 
        than 30 days before the date on which an award is made--
                  ``(A) the Director of the National Institutes of 
                Health, the Secretary of Energy, the Administrator of 
                the National Aeronautics and Space Administration, and 
                the Director of the National Science Foundation may 
                award not more than 45 percent of the funds allocated 
                for the SBIR program of the Federal agency to small 
                business concerns that are owned in majority part by 
                multiple venture capital operating companies, hedge 
                funds, or private equity firms through competitive, 
                merit-based procedures that are open to all eligible 
                small business concerns; and
                  ``(B) the head of a Federal agency other than a 
                Federal agency described in subparagraph (A) that 
                participates in the SBIR program may award not more 
                than 35 percent of the funds allocated for the SBIR 
                program of the Federal agency to small business 
                concerns that are owned in majority part by multiple 
                venture capital operating companies, hedge funds, or 
                private equity firms through competitive, merit-based 
                procedures that are open to all eligible small business 
                concerns.
          ``(2) Determination.--A written determination described in 
        this paragraph is a written determination by the head of a 
        Federal agency that explains how the use of the authority under 
        paragraph (1) will--
                  ``(A) induce additional venture capital, hedge fund, 
                or private equity firm funding of small business 
                innovations;
                  ``(B) substantially contribute to the mission of the 
                Federal agency;
                  ``(C) demonstrate a need for public research; and
                  ``(D) otherwise fulfill the capital needs of small 
                business concerns for additional financing for the SBIR 
                project.
          ``(3) Registration.--A small business concern that is 
        majority-owned by multiple venture capital operating companies, 
        hedge funds, or private equity firms and qualified for 
        participation in the program authorized under paragraph (1) 
        shall--
                  ``(A) register with the Administrator on the date 
                that the small business concern submits an application 
                for an award under the SBIR program; and
                  ``(B) indicate in any SBIR proposal that the small 
                business concern is registered under subparagraph (A) 
                as majority-owned by multiple venture capital operating 
                companies, hedge funds, or private equity firms.
          ``(4) Compliance.--
                  ``(A) In general.--The head of a Federal agency that 
                makes an award under this subsection during a fiscal 
                year shall collect and submit to the Administrator data 
                relating to the number and dollar amount of Phase I 
                awards, Phase II awards, and any other category of 
                awards by the Federal agency under the SBIR program 
                during that fiscal year.
                  ``(B) Annual reporting.--The Administrator shall 
                include as part of each annual report by the 
                Administration under subsection (b)(7) any data 
                submitted under subparagraph (A) and a discussion of 
                the compliance of each Federal agency that makes an 
                award under this subsection during the fiscal year with 
                the maximum percentages under paragraph (1).
          ``(5) Enforcement.--If a Federal agency awards more than the 
        percent of the funds allocated for the SBIR program of the 
        Federal agency authorized under paragraph (1) for a purpose 
        described in paragraph (1), the head of the Federal agency 
        shall transfer an amount equal to the amount awarded in excess 
        of the amount authorized under paragraph (1) to the funds for 
        general SBIR programs from the non-SBIR and non-STTR research 
        and development funds of the Federal agency not later than 180 
        days after the date on which the Federal agency made the award 
        that caused the total awarded under paragraph (1) to be more 
        than the amount authorized under paragraph (1) for a purpose 
        described in paragraph (1).
          ``(6) Final decisions on applications under the sbir 
        program.--
                  ``(A) Definition.--In this paragraph, the term 
                `covered small business concern' means a small business 
                concern that--
                          ``(i) was not majority-owned by multiple 
                        venture capital operating companies, hedge 
                        funds, or private equity firms on the date on 
                        which the small business concern submitted an 
                        application in response to a solicitation under 
                        the SBIR programs; and
                          ``(ii) on the date of the award under the 
                        SBIR program is majority-owned by multiple 
                        venture capital operating companies, hedge 
                        funds, or private equity firms.
                  ``(B) In general.--If a Federal agency does not make 
                an award under a solicitation under the SBIR program 
                before the date that is 9 months after the date on 
                which the period for submitting applications under the 
                solicitation ends--
                          ``(i) a covered small business concern is 
                        eligible to receive the award, without regard 
                        to whether the covered small business concern 
                        meets the requirements for receiving an award 
                        under the SBIR program for a small business 
                        concern that is majority-owned by multiple 
                        venture capital operating companies, hedge 
                        funds, or private equity firms, if the covered 
                        small business concern meets all other 
                        requirements for such an award; and
                          ``(ii) the head of the Federal agency shall 
                        transfer an amount equal to any amount awarded 
                        to a covered small business concern under the 
                        solicitation to the funds for general SBIR 
                        programs from the non-SBIR and non-STTR 
                        research and development funds of the Federal 
                        agency, not later than 90 days after the date 
                        on which the Federal agency makes the award.
          ``(7) Evaluation criteria.--A Federal agency may not use 
        investment of venture capital or investment from hedge funds or 
        private equity firms as a criterion for the award of contracts 
        under the SBIR program or STTR program.''.
  (b) Technical and Conforming Amendment.--Section 3 of the Small 
Business Act (15 U.S.C. 632) is amended by adding at the end the 
following:
  ``(aa) Venture Capital Operating Company.--In this Act, the term 
`venture capital operating company' means an entity described in clause 
(i), (v), or (vi) of section 121.103(b)(5) of title 13, Code of Federal 
Regulations (or any successor thereto).
  ``(bb) Hedge Fund.--In this Act, the term `hedge fund' has the 
meaning given that term in section 13(h)(2) of the Bank Holding Company 
Act of 1956 (12 U.S.C. 1851(h)(2)).
  ``(cc) Private Equity Firm.--In this Act, the term `private equity 
firm' has the meaning given the term `private equity fund' in section 
13(h)(2) of the Bank Holding Company Act of 1956 (12 U.S.C. 
1851(h)(2)).''.

SEC. 107. ENSURING THAT INNOVATIVE SMALL BUSINESSES WITH SUBSTANTIAL 
                    INVESTMENT FROM VENTURE CAPITAL OPERATING 
                    COMPANIES, HEDGE FUNDS, OR PRIVATE EQUITY FIRMS ARE 
                    ABLE TO PARTICIPATE IN THE SBIR AND STTR PROGRAMS.

  Section 9 of the Small Business Act (15 U.S.C. 638), as amended by 
this Act, is further amended by adding at the end the following:
  ``(ee) Venture Capital Operating Companies, Hedge Funds, and Private 
Equity Firms.--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, hedge fund, or private equity firm (or with any other 
        business that the venture capital operating company, hedge 
        fund, or private equity firm has financed) if--
                  ``(A) the venture capital operating company, hedge 
                fund, or private equity firm does not own 50 percent or 
                more of the business concern; and
                  ``(B) employees of the venture capital operating 
                company, hedge fund, or private equity firm 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, 
                hedge funds, or private equity firms;
                  ``(B) there is no single venture capital operating 
                company, hedge fund, or private equity firm that owns 
                50 percent or more of the business concern; and
                  ``(C) there is no single venture capital operating 
                company, hedge fund, or private equity firm the 
                employees of which constitute a majority of the board 
                of directors of the business concern.
          ``(4) If a venture capital operating company, hedge fund, or 
        private equity firm controlled by a business with more than 500 
        employees (in this paragraph referred to as a `VCOC, hedge 
        fund, or private equity firm under large business control') has 
        an ownership interest in a small business concern that is owned 
        in majority part by venture capital operating companies, hedge 
        funds, or private equity firms, the small business concern is 
        eligible to receive an award under the SBIR or STTR program 
        only if--
                  ``(A) not more than two VCOCs, hedge funds, or 
                private equity firms under large business control have 
                an ownership interest in the small business concern; 
                and
                  ``(B) the VCOCs, hedge funds, or private equity firms 
                under large business control do not collectively own 
                more than 20 percent of the small business concern.''.

SEC. 108. SBIR AND STTR SPECIAL ACQUISITION PREFERENCE.

  Section 9(r) of the Small Business Act (15 U.S.C. 638(r)) is amended 
by adding at the end the following:
          ``(4) Phase iii awards.--To the greatest extent practicable, 
        Federal agencies and Federal prime contractors shall issue 
        Phase III awards relating to technology, including sole source 
        awards, to the SBIR and STTR award recipients that developed 
        the technology.''.

SEC. 109. COLLABORATING WITH FEDERAL LABORATORIES AND RESEARCH AND 
                    DEVELOPMENT CENTERS.

  Section 9 of the Small Business Act (15 U.S.C. 638), as amended by 
this Act, is further amended by adding at the end the following:
  ``(ff) Collaborating With Federal Laboratories and Research and 
Development Centers.--
          ``(1) Authorization.--Subject to the limitations under this 
        section, the head of each participating Federal agency may make 
        SBIR and STTR awards to any eligible small business concern 
        that--
                  ``(A) intends to enter into an agreement with a 
                Federal laboratory or federally funded research and 
                development center for portions of the activities to be 
                performed under that award; or
                  ``(B) has entered into a cooperative research and 
                development agreement (as defined in section 12(d) of 
                the Stevenson-Wydler Technology Innovation Act of 1980 
                (15 U.S.C. 3710a(d))) with a Federal laboratory.
          ``(2) Prohibition.--No Federal agency shall--
                  ``(A) condition an SBIR or STTR award upon entering 
                into agreement with any Federal laboratory or any 
                federally funded laboratory or research and development 
                center for any portion of the activities to be 
                performed under that award;
                  ``(B) approve an agreement between a small business 
                concern receiving a SBIR or STTR award and a Federal 
                laboratory or federally funded laboratory or research 
                and development center, if the small business concern 
                performs a lesser portion of the activities to be 
                performed under that award than required by this 
                section and by the SBIR Policy Directive and the STTR 
                Policy Directive of the Administrator; or
                  ``(C) approve an agreement that violates any 
                provision, including any data rights protections 
                provision, of this section or the SBIR and the STTR 
                Policy Directives.
          ``(3) Implementation.--Not later than 180 days after the date 
        of enactment of this subsection, the Administrator shall modify 
        the SBIR Policy Directive and the STTR Policy Directive issued 
        under this section to ensure that small business concerns--
                  ``(A) have the flexibility to use the resources of 
                the Federal laboratories and federally funded research 
                and development centers; and
                  ``(B) are not mandated to enter into agreement with 
                any Federal laboratory or any federally funded 
                laboratory or research and development center as a 
                condition of an award.
          ``(4) Advance payment.--If a small business concern receiving 
        an award under this section enters into an agreement with a 
        Federal laboratory or federally funded research and development 
        center for portions of the activities to be performed under 
        that award, the Federal laboratory or federally funded research 
        and development center may not require advance payment from the 
        small business concern in an amount greater than the amount 
        necessary to pay for 30 days of such activities.''.

SEC. 110. NOTICE REQUIREMENT.

  (a) SBIR Program.--Section 9(g) of the Small Business Act (15 U.S.C. 
638(g)) is amended--
          (1) in paragraph (10), by striking ``and'' at the end;
          (2) in paragraph (11), by striking the period at the end and 
        inserting ``; and''; and
          (3) by adding at the end the following:
          ``(12) provide timely notice to the Administrator of any case 
        or controversy before any Federal judicial or administrative 
        tribunal concerning the SBIR program of the Federal agency.''.
  (b) STTR Program.--Section 9(o) of the Small Business Act (15 U.S.C. 
638(o)) is amended--
          (1) by striking paragraph (15);
          (2) in paragraph (16), by striking the period at the end and 
        inserting ``; and'';
          (3) by redesignating paragraph (16) as paragraph (15); and
          (4) by adding at the end the following:
          ``(16) provide timely notice to the Administrator of any case 
        or controversy before any Federal judicial or administrative 
        tribunal concerning the STTR program of the Federal agency.''.

SEC. 111. ADDITIONAL SBIR AND STTR AWARDS.

  Section 9 of the Small Business Act (15 U.S.C. 638), as amended by 
this Act, is further amended by adding at the end the following:
  ``(gg) Additional SBIR and STTR Awards.--
          ``(1) Express authority for awarding a sequential phase ii 
        award.--A small business concern that receives a Phase II SBIR 
        award or a Phase II STTR award for a project remains eligible 
        to receive one additional Phase II SBIR award or Phase II STTR 
        award for continued work on that project.
          ``(2) Preventing duplicative awards.--The head of a Federal 
        agency shall verify that any activity to be performed with 
        respect to a project with a Phase I or Phase II SBIR or STTR 
        award has not been funded under the SBIR program or STTR 
        program of another Federal agency.''.

          TITLE II--OUTREACH AND COMMERCIALIZATION INITIATIVES

SEC. 201. TECHNICAL ASSISTANCE FOR AWARDEES.

  Section 9(q) of the Small Business Act (15 U.S.C. 638(q)) is 
amended--
          (1) in paragraph (1)--
                  (A) by inserting ``or STTR program'' after ``SBIR 
                program''; and
                  (B) by striking ``SBIR projects'' and inserting 
                ``SBIR or STTR projects'';
          (2) in paragraph (2), by striking ``3 years'' and inserting 
        ``5 years''; and
          (3) in paragraph (3)--
                  (A) in subparagraph (A)--
                          (i) by inserting ``or STTR'' after ``SBIR''; 
                        and
                          (ii) by striking ``$4,000'' and inserting 
                        ``$5,000'';
                  (B) by striking subparagraph (B) and inserting the 
                following:
                  ``(B) Phase ii.--A Federal agency described in 
                paragraph (1) may--
                          ``(i) provide to the recipient of a Phase II 
                        SBIR or STTR award, through a vendor selected 
                        under paragraph (2), the services described in 
                        paragraph (1), in an amount equal to not more 
                        than $5,000 per year; or
                          ``(ii) authorize the recipient of a Phase II 
                        SBIR or STTR award to purchase the services 
                        described in paragraph (1), in an amount equal 
                        to not more than $5,000 per year, which shall 
                        be in addition to the amount of the recipient's 
                        award.''; and
                  (C) by adding at the end the following:
                  ``(C) Flexibility.--In carrying out subparagraphs (A) 
                and (B), each Federal agency shall provide the 
                allowable amounts to a recipient that meets the 
                eligibility requirements under the applicable 
                subparagraph, if the recipient requests to seek 
                technical assistance from an individual or entity other 
                than the vendor selected under paragraph (2) by the 
                Federal agency.
                  ``(D) Limitation.--A Federal agency may not--
                          ``(i) use the amounts authorized under 
                        subparagraph (A) or (B) unless the vendor 
                        selected under paragraph (2) provides the 
                        technical assistance to the recipient; or
                          ``(ii) enter a contract with a vendor under 
                        paragraph (2) under which the amount provided 
                        for technical assistance is based on total 
                        number of Phase I or Phase II awards.''.

SEC. 202. COMMERCIALIZATION READINESS PROGRAM AT DEPARTMENT OF DEFENSE.

  (a) In General.--Section 9(y) of the Small Business Act (15 U.S.C. 
638(y)) is amended--
          (1) in the subsection heading, by striking ``Pilot'' and 
        inserting ``Readiness'';
          (2) by striking ``Pilot'' each place that term appears and 
        inserting ``Readiness'';
          (3) in paragraph (1)--
                  (A) by inserting ``or Small Business Technology 
                Transfer Program'' after ``Small Business Innovation 
                Research Program''; and
                  (B) by adding at the end the following: ``The 
                authority to create and administer a Commercialization 
                Readiness Program under this subsection may not be 
                construed to eliminate or replace any other SBIR 
                program or STTR program that enhances the insertion or 
                transition of SBIR or STTR technologies, including any 
                such program in effect on the date of enactment of the 
                National Defense Authorization Act for Fiscal Year 2006 
                (Public Law 109-163; 119 Stat. 3136).'';
          (4) in paragraph (2), by inserting ``or Small Business 
        Technology Transfer Program'' after ``Small Business Innovation 
        Research Program'';
          (5) in paragraph (5)--
                  (A) by striking ``the Committee on Armed Services and 
                the Committee on Small Business of the House of 
                Representatives'' and inserting ``the Committee on 
                Armed Services, the Committee on Small Business, and 
                the Committee on Science, Space, and Technology of the 
                House of Representatives''; and
                  (B) by striking ``shall include'' and inserting 
                ``shall include, in addition to the information 
                described in paragraph (6)(C)'';
          (6) by redesignating paragraph (5) as paragraph (7);
          (7) by striking paragraph (6); and
          (8) by inserting after paragraph (4) the following:
          ``(5) Insertion incentives.--For any contract with a value of 
        not less than $100,000,000, the Secretary of Defense is 
        authorized to--
                  ``(A) establish goals for the transition of Phase III 
                technologies in subcontracting plans;
                  ``(B) require a prime contractor on such a contract 
                to report the number and dollar amount of contracts 
                entered into by that prime contractor for Phase III 
                SBIR or STTR projects; and
                  ``(C) take action to ensure that, if a prime 
                contractor on such a contract, after consultation with 
                the Secretary, certifies that an appropriate Phase III 
                technology is not available to be incorporated into a 
                project of the prime contractor, such project shall be 
                excluded from any determination of whether goals under 
                subparagraph (A) have been met.
          ``(6) Goal for sbir and sttr technology insertion.--The 
        Secretary of Defense shall--
                  ``(A) set a goal to increase the number of Phase II 
                SBIR contracts and the number of Phase II STTR 
                contracts awarded by that Secretary that lead to 
                technology transition into programs of record or 
                fielded systems;
                  ``(B) use incentives in effect on the date of 
                enactment of the Creating Jobs Through Small Business 
                Innovation Act of 2011, or create new incentives, to 
                encourage agency program managers and prime contractors 
                to meet the goal under subparagraph (A); and
                  ``(C) include in the annual report under this 
                subsection--
                          ``(i) the percentage of Phase II SBIR and 
                        STTR contracts awarded by the Secretary that 
                        led to technology transition into programs of 
                        record or fielded systems;
                          ``(ii) information on the status of each 
                        project that received funding through the 
                        Commercialization Readiness Program and efforts 
                        to transition those projects into programs of 
                        record or fielded systems; and
                          ``(iii) a description of each incentive that 
                        has been used by the Secretary under 
                        subparagraph (B) and the effectiveness of that 
                        incentive with respect to meeting the goal 
                        under subparagraph (A).''.
  (b) Technical and Conforming Amendment.--Section 9(i)(1) of the Small 
Business Act (15 U.S.C. 638(i)(1)) is amended by inserting ``(including 
awards under subsection (y))'' after ``the number of awards''.

SEC. 203. COMMERCIALIZATION READINESS PILOT PROGRAM FOR CIVILIAN 
                    AGENCIES.

  Section 9 of the Small Business Act (15 U.S.C. 638), as amended by 
this Act, is further amended by adding at the end the following:
  ``(hh) Pilot Program.--
          ``(1) Authorization.--The head of each covered Federal agency 
        may allocate not more than 10 percent of the funds allocated to 
        the SBIR program and the STTR program of the covered Federal 
        agency--
                  ``(A) for awards for technology development, testing, 
                evaluation, and commercialization assistance for SBIR 
                and STTR Phase II technologies; or
                  ``(B) to support the progress of research, research 
                and development, and commercialization conducted under 
                the SBIR or STTR programs to Phase III.
          ``(2) Application by federal agency.--
                  ``(A) In general.--A covered Federal agency may not 
                establish a pilot program unless the covered Federal 
                agency makes a written application to the 
                Administrator, not later than 90 days before the first 
                day of the fiscal year in which the pilot program is to 
                be established, that describes a compelling reason that 
                additional investment in SBIR or STTR technologies is 
                necessary, including unusually high regulatory, systems 
                integration, or other costs relating to development or 
                manufacturing of identifiable, highly promising small 
                business technologies or a class of such technologies 
                expected to substantially advance the mission of the 
                agency.
                  ``(B) Determination.--The Administrator shall--
                          ``(i) make a determination regarding an 
                        application submitted under subparagraph (A) 
                        not later than 30 days before the first day of 
                        the fiscal year for which the application is 
                        submitted;
                          ``(ii) publish the determination in the 
                        Federal Register; and
                          ``(iii) make a copy of the determination and 
                        any related materials available to the 
                        Committee on Small Business and 
                        Entrepreneurship of the Senate and the 
                        Committee on Small Business and the Committee 
                        on Science, Space, and Technology of the House 
                        of Representatives.
          ``(3) Maximum amount of award.--The head of a covered Federal 
        agency may not make an award under a pilot program in excess of 
        3 times the dollar amounts generally established for Phase II 
        awards under subsection (j)(2)(D) or (p)(2)(B)(ix).
          ``(4) Registration.--Any applicant that receives an award 
        under a pilot program shall register with the Administrator in 
        a registry that is available to the public.
          ``(5) Award criteria or consideration.--When making an award 
        under this section, the head of a covered Federal agency shall 
        give consideration to whether the technology to be supported by 
        the award is likely to be manufactured in the United States.
          ``(6) Report.--The head of each covered Federal agency shall 
        include in the annual report of the covered Federal agency to 
        the Administrator an analysis of the various activities 
        considered for inclusion in the pilot program of the covered 
        Federal agency and a statement of the reasons why each activity 
        considered was included or not included, as the case may be.
          ``(7) Termination.--The authority to establish a pilot 
        program under this section expires at the end of fiscal year 
        2014.
          ``(8) Definitions.--In this subsection--
                  ``(A) the term `covered Federal agency'--
                          ``(i) means a Federal agency participating in 
                        the SBIR program or the STTR program; and
                          ``(ii) does not include the Department of 
                        Defense; and
                  ``(B) the term `pilot program' means the program 
                established under paragraph (1).''.

SEC. 204. INTERAGENCY POLICY COMMITTEE.

  (a) Establishment.--The Director of the Office of Science and 
Technology Policy shall establish an Interagency SBIR/STTR Policy 
Committee.
  (b) 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) of the Small Business Act (15 U.S.C. 638(k)).
          (2) Federal agency flexibility in establishing Phase I and II 
        award sizes, including appropriate criteria for exercising such 
        flexibility.
          (3) Commercialization assistance best practices of 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 that business concerns face after Phase II but before 
        commercialization.
          (4) Developing and incorporating 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 the SBIR program and 
        STTR program of each Federal agency.
  (c) Reports.--The Interagency SBIR/STTR Policy Committee shall 
transmit to the Committee on Science, Space, 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 
        subsection (b)(1) not later than 1 year after the date of 
        enactment of this Act;
          (2) a report on its review and recommendations under 
        subsection (b)(2) not later than 18 months after the date of 
        enactment of this Act;
          (3) a report on its review and recommendations under 
        subsection (b)(3) not later than 2 years after the date of 
        enactment of this Act; and
          (4) a report on its review and recommendations under 
        subsection (b)(4) not later than 2 years after the date of 
        enactment of this Act.

SEC. 205. CLARIFYING THE DEFINITION OF ``PHASE III''.

  (a) Phase III Awards.--Section 9(e) of the Small Business Act (15 
U.S.C. 638(e)), as amended by this Act, is further amended--
          (1) in paragraph (4)(C), in the matter preceding clause (i), 
        by inserting ``for work that derives from, extends, or 
        completes efforts made under prior funding agreements under the 
        SBIR program'' after ``phase'';
          (2) in paragraph (6)(C), in the matter preceding clause (i), 
        by inserting ``for work that derives from, extends, or 
        completes efforts made under prior funding agreements under the 
        STTR program'' after ``phase'';
          (3) in paragraph (8), by striking ``and'' at the end;
          (4) in paragraph (9), by striking the period at the end and 
        inserting a semicolon; and
          (5) by adding at the end the following:
          ``(10) the term `commercialization' means--
                  ``(A) the process of developing products, processes, 
                technologies, or services; and
                  ``(B) the production and delivery of products, 
                processes, technologies, or services for sale (whether 
                by the originating party or by others) to or use by the 
                Federal Government or commercial markets;''.
  (b) Technical and Conforming Amendments.--Section 9 of the Small 
Business Act (15 U.S.C. 638), as amended by this Act, is further 
amended--
          (1) in subsection (e)--
                  (A) in paragraph (4)(C)(ii), by striking ``scientific 
                review criteria'' and inserting ``merit-based selection 
                procedures'';
                  (B) in paragraph (9), by striking ``the second or the 
                third phase'' and inserting ``Phase II or Phase III''; 
                and
                  (C) by adding at the end the following:
          ``(11) the term `Phase I' means--
                  ``(A) with respect to the SBIR program, the first 
                phase described in paragraph (4)(A); and
                  ``(B) with respect to the STTR program, the first 
                phase described in paragraph (6)(A);
          ``(12) the term `Phase II' means--
                  ``(A) with respect to the SBIR program, the second 
                phase described in paragraph (4)(B); and
                  ``(B) with respect to the STTR program, the second 
                phase described in paragraph (6)(B); and
          ``(13) the term `Phase III' means--
                  ``(A) with respect to the SBIR program, the third 
                phase described in paragraph (4)(C); and
                  ``(B) with respect to the STTR program, the third 
                phase described in paragraph (6)(C).'';
          (2) in subsection (j)--
                  (A) in paragraph (1)(B), by striking ``phase two'' 
                and inserting ``Phase II'';
                  (B) in paragraph (2)--
                          (i) in subparagraph (B)--
                                  (I) by striking ``the third phase'' 
                                each place it appears and inserting 
                                ``Phase III''; and
                                  (II) by striking ``the second phase'' 
                                and inserting ``Phase II'';
                          (ii) in subparagraph (D)--
                                  (I) by striking ``the first phase'' 
                                and inserting ``Phase I''; and
                                  (II) by striking ``the second phase'' 
                                and inserting ``Phase II'';
                          (iii) in subparagraph (F), by striking ``the 
                        third phase'' and inserting ``Phase III'';
                          (iv) in subparagraph (G)--
                                  (I) by striking ``the first phase'' 
                                and inserting ``Phase I''; and
                                  (II) by striking ``the second phase'' 
                                and inserting ``Phase II''; and
                          (v) in subparagraph (H)--
                                  (I) by striking ``the first phase'' 
                                and inserting ``Phase I'';
                                  (II) by striking ``second phase'' 
                                each place it appears and inserting 
                                ``Phase II''; and
                                  (III) by striking ``third phase'' and 
                                inserting ``Phase III''; and
                  (C) in paragraph (3)--
                          (i) in subparagraph (A)--
                                  (I) by striking ``the first phase (as 
                                described in subsection (e)(4)(A))'' 
                                and inserting ``Phase I'';
                                  (II) by striking ``the second phase 
                                (as described in subsection 
                                (e)(4)(B))'' and inserting ``Phase 
                                II''; and
                                  (III) by striking ``the third phase 
                                (as described in subsection 
                                (e)(4)(C))'' and inserting ``Phase 
                                III''; and
                          (ii) in subparagraph (B), by striking 
                        ``second phase'' and inserting ``Phase II'';
          (3) in subsection (k)--
                  (A) by striking ``first phase'' each place it appears 
                and inserting ``Phase I''; and
                  (B) by striking ``second phase'' each place it 
                appears and inserting ``Phase II'';
          (4) in subsection (l)(2)--
                  (A) by striking ``the first phase'' and inserting 
                ``Phase I''; and
                  (B) by striking ``the second phase'' and inserting 
                ``Phase II'';
          (5) in subsection (o)(13)--
                  (A) in subparagraph (B), by striking ``second phase'' 
                and inserting ``Phase II''; and
                  (B) in subparagraph (C), by striking ``third phase'' 
                and inserting ``Phase III'';
          (6) in subsection (p)--
                  (A) in paragraph (2)(B)--
                          (i) in clause (vi)--
                                  (I) by striking ``the second phase'' 
                                and inserting ``Phase II''; and
                                  (II) by striking ``the third phase'' 
                                and inserting ``Phase III''; and
                          (ii) in clause (ix)--
                                  (I) by striking ``the first phase'' 
                                and inserting ``Phase I''; and
                                  (II) by striking ``the second phase'' 
                                and inserting ``Phase II''; and
                  (B) in paragraph (3)--
                          (i) by striking ``the first phase (as 
                        described in subsection (e)(6)(A))'' and 
                        inserting ``Phase I'';
                          (ii) by striking ``the second phase (as 
                        described in subsection (e)(6)(B))'' and 
                        inserting ``Phase II''; and
                          (iii) by striking ``the third phase (as 
                        described in subsection (e)(6)(C))'' and 
                        inserting ``Phase III'';
          (7) in subsection (q)(3)(A)--
                  (A) in the subparagraph heading, by striking ``First 
                phase'' and inserting ``Phase i''; and
                  (B) by striking ``first phase'' and inserting ``Phase 
                I'';
          (8) in subsection (r)--
                  (A) in the subsection heading, by striking ``Third 
                Phase'' and inserting ``Phase III'';
                  (B) in paragraph (1)--
                          (i) in the first sentence--
                                  (I) by striking ``for the second 
                                phase'' and inserting ``for Phase II'';
                                  (II) by striking ``third phase'' and 
                                inserting ``Phase III''; and
                                  (III) by striking ``second phase 
                                period'' and inserting ``Phase II 
                                period''; and
                          (ii) in the second sentence--
                                  (I) by striking ``second phase'' and 
                                inserting ``Phase II''; and
                                  (II) by striking ``third phase'' and 
                                inserting ``Phase III''; and
                  (C) in paragraph (2), by striking ``third phase'' and 
                inserting ``Phase III''; and
          (9) in subsection (u)(2)(B), by striking ``the first phase'' 
        and inserting ``Phase I''.

SEC. 206. SHORTENED PERIOD FOR FINAL DECISIONS ON PROPOSALS AND 
                    APPLICATIONS.

  (a) In General.--Section 9 of the Small Business Act (15 U.S.C. 638), 
as amended by this Act, is further amended--
          (1) in subsection (g)(4)--
                  (A) by inserting ``(A)'' after ``(4)'';
                  (B) by adding ``and'' after the semicolon at the end; 
                and
                  (C) by adding at the end the following:
          ``(B) make a final decision on each proposal submitted under 
        the SBIR program--
                  ``(i) not later than 90 days after the date on which 
                the solicitation closes; or
                  ``(ii) if the Administrator authorizes an extension 
                for a solicitation, not later than 180 days after the 
                date on which the solicitation closes;''; and
          (2) in subsection (o)(4)--
                  (A) by inserting ``(A)'' after ``(4)'';
                  (B) by adding ``and'' after the semicolon at the end; 
                and
                  (C) by adding at the end the following:
          ``(B) make a final decision on each proposal submitted under 
        the STTR program--
                  ``(i) not later than 90 days after the date on which 
                the solicitation closes; or
                  ``(ii) if the Administrator authorizes an extension 
                for a solicitation, not later than 180 days after the 
                date on which the solicitation closes;''.
  (b) NIH Peer Review Process.--Section 9 of the Small Business Act (15 
U.S.C. 638), as amended by this Act, is further amended by adding at 
the end the following:
  ``(ii) NIH Peer Review Process.--Notwithstanding subsections 
(g)(4)(B) and (o)(4)(B), the Director of the National Institutes of 
Health may make an award under the SBIR program or the STTR program of 
the National Institutes of Health only if the application for the award 
has undergone technical and scientific peer review under section 492 of 
the Public Health Service Act (42 U.S.C. 289a).
  ``(jj) NSF Peer Review Process.--Notwithstanding subsections 
(g)(4)(B) and (o)(4)(B), the Director of the National Science 
Foundation may make an award under the SBIR program or the STTR program 
of the National Science Foundation only if the application for the 
award has undergone the National Science Foundation's technical and 
scientific peer review process and met all other applicable peer review 
procedures and guidelines pursuant to the National Science Foundation 
Act of 1950 (42 U.S.C. 1861, et seq.) and other applicable Federal 
law.''.

SEC. 207. PHASE 0 PROOF OF CONCEPT PARTNERSHIP PILOT PROGRAM.

  Section 9 of the Small Business Act (15 U.S.C. 638), as amended by 
this Act, is further amended by adding at the end the following:
  ``(kk) Phase 0 Proof of Concept Partnership Pilot Program.--
          ``(1) In general.--The Director of the National Institutes of 
        Health may use $10,000,000 of the funds allocated under 
        subsection (n)(1) for a Proof of Concept Partnership pilot 
        program to accelerate the creation of small businesses and the 
        commercialization of research innovations from qualifying 
        institutions. To implement this program, the Director shall 
        award, through a competitive, merit-based process, grants to 
        qualifying institutions. These grants shall only be used to 
        administer Proof of Concept Partnership awards in conformity 
        with this subsection.
          ``(2) Definitions.--In this subsection--
                  ``(A) the term `Director' means the Director of the 
                National Institutes of Health;
                  ``(B) the term `pilot program' refers to the Proof of 
                Concept Partnership pilot program; and
                  ``(C) the terms `qualifying institution' and 
                `institution' mean a university or other research 
                institution that participates in the National 
                Institutes of Health's STTR program.
          ``(3) Proof of concept partnerships.--
                  ``(A) In general.--A Proof of Concept Partnership 
                shall be set up by a qualifying institution to award 
                grants to individual researchers. These grants should 
                provide researchers with the initial investment and the 
                resources to support the proof of concept work and 
                commercialization mentoring needed to translate 
                promising research projects and technologies into a 
                viable company. This work may include technical 
                validations, market research, clarifying intellectual 
                property rights position and strategy and investigating 
                commercial or business opportunities.
                  ``(B) Award guidelines.--The administrator of a Proof 
                of Concept Partnership program shall award grants in 
                accordance with the following guidelines:
                          ``(i) The Proof of Concept Partnership shall 
                        use a market-focused project management 
                        oversight process, including--
                                  ``(I) a rigorous, diverse review 
                                board comprised of local experts in 
                                translational and proof of concept 
                                research, including industry, start-up, 
                                venture capital, technical, financial, 
                                and business experts and university 
                                technology transfer officials;
                                  ``(II) technology validation 
                                milestones focused on market 
                                feasibility;
                                  ``(III) simple reporting effective at 
                                redirecting projects; and
                                  ``(IV) the willingness to reallocate 
                                funding from failing projects to those 
                                with more potential.
                          ``(ii) Not more than $100,000 shall be 
                        awarded towards an individual proposal.
                  ``(C) Educational resources and guidance.--The 
                administrator of a Proof of Concept Partnership program 
                shall make educational resources and guidance available 
                to researchers attempting to commercialize their 
                innovations.
          ``(4) Awards.--
                  ``(A) Size of award.--The Director may make awards to 
                a qualifying institution for up to $1,000,000 per year 
                for up to 3 years.
                  ``(B) Award criteria.--In determining which 
                qualifying institutions receive pilot program grants, 
                the Director shall consider, in addition to any other 
                criteria the Director determines necessary, the extent 
                to which qualifying institutions--
                          ``(i) have an established and proven 
                        technology transfer or commercialization office 
                        and have a plan for engaging that office in the 
                        program implementation;
                          ``(ii) have demonstrated a commitment to 
                        local and regional economic development;
                          ``(iii) are located in diverse geographies 
                        and are of diverse sizes;
                          ``(iv) can assemble project management boards 
                        comprised of industry, start-up, venture 
                        capital, technical, financial, and business 
                        experts;
                          ``(v) have an intellectual property rights 
                        strategy or office; and
                          ``(vi) demonstrate a plan for sustainability 
                        beyond the duration of the funding award.
          ``(5) Limitations.--The funds for the pilot program shall not 
        be used--
                  ``(A) for basic research, but to evaluate the 
                commercial potential of existing discoveries, 
                including--
                          ``(i) proof of concept research or prototype 
                        development; and
                          ``(ii) activities that contribute to 
                        determining a project's commercialization path, 
                        to include technical validations, market 
                        research, clarifying intellectual property 
                        rights, and investigating commercial and 
                        business opportunities; or
                  ``(B) to fund the acquisition of research equipment 
                or supplies unrelated to commercialization activities.
          ``(6) Evaluative report.--The Director shall submit to the 
        Committee on Science, Space, and Technology and the Committee 
        on Small Business of the House of Representatives and the 
        Committee on Small Business and Entrepreneurship of the Senate 
        an evaluative report regarding the activities of the pilot 
        program. The report shall include--
                  ``(A) a detailed description of the institutional and 
                proposal selection process;
                  ``(B) an accounting of the funds used in the pilot 
                program;
                  ``(C) a detailed description of the pilot program, 
                including incentives and activities undertaken by 
                review board experts;
                  ``(D) a detailed compilation of results achieved by 
                the pilot program, including the number of small 
                business concerns included and the number of business 
                packages developed, and the number of projects that 
                progressed into subsequent STTR phases; and
                  ``(E) an analysis of the program's effectiveness with 
                supporting data.
          ``(7) Sunset.--The pilot program under this subsection shall 
        terminate at the end of fiscal year 2014.''.

                  TITLE III--OVERSIGHT AND EVALUATION

SEC. 301. STREAMLINING ANNUAL EVALUATION REQUIREMENTS.

  Section 9(b) of the Small Business Act (15 U.S.C. 638(b)) is 
amended--
          (1) in paragraph (7)--
                  (A) by striking ``STTR programs, including the data'' 
                and inserting the following: ``STTR programs, 
                including--
                  ``(A) the data'';
                  (B) by striking ``(g)(10), (o)(9), and (o)(15), the 
                number'' and all that follows through ``under each of 
                the SBIR and STTR programs, and a description'' and 
                inserting the following: ``(g)(8) and (o)(9);
                  ``(B) the number of proposals received from, and the 
                number and total amount of awards to, HUBZone small 
                business concerns and firms with venture capital, hedge 
                fund, or private equity firm investment (including 
                those majority-owned by multiple venture capital 
                operating companies, hedge funds, or private equity 
                firms) under each of the SBIR and STTR programs;
                  ``(C) a description of the extent to which each 
                Federal agency is increasing outreach and awards to 
                firms owned and controlled by women and social or 
                economically disadvantaged individuals under each of 
                the SBIR and STTR programs;
                  ``(D) general information about the implementation 
                of, and compliance with the allocation of funds 
                required under, subsection (dd) for firms owned in 
                majority part by venture capital operating companies, 
                hedge funds, or private equity firms and participating 
                in the SBIR program;
                  ``(E) a detailed description of appeals of Phase III 
                awards and notices of noncompliance with the SBIR 
                Policy Directive and the STTR Policy Directive filed by 
                the Administrator with Federal agencies; and
                  ``(F) a description''; and
                  (C) by striking ``and'' at the end;
          (2) in paragraph (8), by striking the period at the end and 
        inserting ``; and''; and
          (3) by inserting after paragraph (8) the following:
          ``(9) to coordinate the implementation of electronic 
        databases at each of the Federal agencies participating in the 
        SBIR program or the STTR program, including the technical 
        ability of the participating agencies to electronically share 
        data.''.

SEC. 302. DATA COLLECTION FROM AGENCIES FOR SBIR.

  Section 9(g) of the Small Business Act (15 U.S.C. 638(g)), as amended 
by this Act, is further amended--
          (1) by striking paragraph (10);
          (2) by redesignating paragraphs (8) and (9) as paragraphs (9) 
        and (10), respectively; and
          (3) by inserting after paragraph (7) the following:
          ``(8) collect annually, and maintain in a common format in 
        accordance with the simplified reporting requirements under 
        subsection (v), such information from awardees as is necessary 
        to assess the SBIR program, including information necessary to 
        maintain the database described in subsection (k), including--
                  ``(A) whether an awardee--
                          ``(i) has venture capital, hedge fund, or 
                        private equity firm investment or is majority-
                        owned by multiple venture capital operating 
                        companies, hedge funds, or private equity 
                        firms, and, if so--
                                  ``(I) the amount of venture capital, 
                                hedge fund, or private equity firm 
                                investment that the awardee has 
                                received as of the date of the award; 
                                and
                                  ``(II) the amount of additional 
                                capital that the awardee has invested 
                                in the SBIR technology;
                          ``(ii) has an investor that--
                                  ``(I) is an individual who is not a 
                                citizen of the United States or a 
                                lawful permanent resident of the United 
                                States, and if so, the name of any such 
                                individual; or
                                  ``(II) is a person that is not an 
                                individual and is not organized under 
                                the laws of a State or the United 
                                States, and if so the name of any such 
                                person;
                          ``(iii) is owned by a woman or has a woman as 
                        a principal investigator;
                          ``(iv) is owned by a socially or economically 
                        disadvantaged individual or has a socially or 
                        economically disadvantaged individual as a 
                        principal investigator;
                          ``(v) is a faculty member or a student of an 
                        institution of higher education, as that term 
                        is defined in section 101 of the Higher 
                        Education Act of 1965 (20 U.S.C. 1001); or
                          ``(vi) is located in a State described in 
                        subsection (u)(3); and
                  ``(B) a justification statement from the agency, if 
                an awardee receives an award in an amount that is more 
                than the award guidelines under this section;''.

SEC. 303. DATA COLLECTION FROM AGENCIES FOR STTR.

  Section 9(o) of the Small Business Act (15 U.S.C. 638(o)), as amended 
by this Act, is further amended by striking paragraph (9) and inserting 
the following:
          ``(9) collect annually, and maintain in a common format in 
        accordance with the simplified reporting requirements under 
        subsection (v), such information from applicants and awardees 
        as is necessary to assess the STTR program outputs and 
        outcomes, including information necessary to maintain the 
        database described in subsection (k), including--
                  ``(A) whether an applicant or awardee--
                          ``(i) has venture capital, hedge fund, or 
                        private equity firm investment or is majority-
                        owned by multiple venture capital operating 
                        companies, hedge funds, or private equity 
                        firms, and, if so--
                                  ``(I) the amount of venture capital, 
                                hedge fund, or private equity firm 
                                investment that the applicant or 
                                awardee has received as of the date of 
                                the application or award, as 
                                applicable; and
                                  ``(II) the amount of additional 
                                capital that the applicant or awardee 
                                has invested in the SBIR technology;
                          ``(ii) has an investor that--
                                  ``(I) is an individual who is not a 
                                citizen of the United States or a 
                                lawful permanent resident of the United 
                                States, and if so, the name of any such 
                                individual; or
                                  ``(II) is a person that is not an 
                                individual and is not organized under 
                                the laws of a State or the United 
                                States, and if so the name of any such 
                                person;
                          ``(iii) is owned by a woman or has a woman as 
                        a principal investigator;
                          ``(iv) is owned by a socially or economically 
                        disadvantaged individual or has a socially or 
                        economically disadvantaged individual as a 
                        principal investigator;
                          ``(v) is a faculty member or a student of an 
                        institution of higher education, as that term 
                        is defined in section 101 of the Higher 
                        Education Act of 1965 (20 U.S.C. 1001); or
                          ``(vi) is located in a State in which the 
                        total value of contracts awarded to small 
                        business concerns under all STTR programs is 
                        less than the total value of contracts awarded 
                        to small business concerns in a majority of 
                        other States, as determined by the 
                        Administrator in biennial fiscal years, 
                        beginning with fiscal year 2008, based on the 
                        most recent statistics compiled by the 
                        Administrator; and
                  ``(B) if an awardee receives an award in an amount 
                that is more than the award guidelines under this 
                section, a statement from the agency that justifies the 
                award amount;''.

SEC. 304. PUBLIC DATABASE.

  Section 9(k)(1) of the Small Business Act (15 U.S.C. 638(k)(1)) is 
amended--
          (1) in subparagraph (D), by striking ``and'' at the end;
          (2) in subparagraph (E), by striking the period at the end 
        and inserting ``; and''; and
          (3) by adding at the end the following:
                  ``(F) for each small business concern that has 
                received a Phase I or Phase II SBIR or STTR award from 
                a Federal agency, whether the small business concern--
                          ``(i) has venture capital, hedge fund, or 
                        private equity firm investment and, if so, 
                        whether the small business concern is 
                        registered as majority-owned by multiple 
                        venture capital operating companies, hedge 
                        funds, or private equity firms as required 
                        under subsection (dd)(3);
                          ``(ii) is owned by a woman or has a woman as 
                        a principal investigator;
                          ``(iii) is owned by a socially or 
                        economically disadvantaged individual or has a 
                        socially or economically disadvantaged 
                        individual as a principal investigator; or
                          ``(iv) is owned by a faculty member or a 
                        student of an institution of higher education, 
                        as that term is defined in section 101 of the 
                        Higher Education Act of 1965 (20 U.S.C. 
                        1001).''.

SEC. 305. GOVERNMENT DATABASE.

  Section 9(k) of the Small Business Act (15 U.S.C. 638(k)) is 
amended--
          (1) in paragraph (2)--
                  (A) in the matter preceding subparagraph (A), by 
                striking ``Not later'' and all that follows through 
                ``Act of 2000'' and inserting ``Not later than 90 days 
                after the date of enactment of the Creating Jobs 
                Through Small Business Innovation Act of 2011'';
                  (B) by striking subparagraph (C);
                  (C) by redesignating subparagraphs (A) and (B) as 
                subparagraphs (B) and (C), respectively;
                  (D) by inserting before subparagraph (B), as so 
                redesignated, the following:
                  ``(A) contains, for each small business concern that 
                applies for, submits a proposal for, or receives an 
                award under Phase I or Phase II of the SBIR program or 
                the STTR program--
                          ``(i) the name, size, and location, and an 
                        identifying number assigned by the 
                        Administration of the small business concern;
                          ``(ii) an abstract of the project;
                          ``(iii) the specific aims of the project;
                          ``(iv) the number of employees of the small 
                        business concern;
                          ``(v) the names and titles of the key 
                        individuals that will carry out the project, 
                        the position each key individual holds in the 
                        small business concern, and contact information 
                        for each key individual;
                          ``(vi) the percentage of effort each 
                        individual described in clause (iv) will 
                        contribute to the project;
                          ``(vii) whether the small business concern is 
                        majority-owned by multiple venture capital 
                        operating companies, hedge funds, or private 
                        equity firms; and
                          ``(viii) the Federal agency to which the 
                        application is made, and contact information 
                        for the person or office within the Federal 
                        agency that is responsible for reviewing 
                        applications and making awards under the SBIR 
                        program or the STTR program;'';
                  (E) by redesignating subparagraphs (D) and (E) as 
                subparagraphs (E) and (F), respectively;
                  (F) by inserting after subparagraph (C), as so 
                redesignated, the following:
                  ``(D) includes, for each awardee--
                          ``(i) the name, size, location, and any 
                        identifying number assigned to the awardee by 
                        the Administrator;
                          ``(ii) whether the awardee has venture 
                        capital, hedge fund, or private equity firm 
                        investment, and, if so--
                                  ``(I) the amount of venture capital, 
                                hedge fund, or private equity firm 
                                investment as of the date of the award;
                                  ``(II) the percentage of ownership of 
                                the awardee held by a venture capital 
                                operating company, hedge fund, or 
                                private equity firm, including whether 
                                the awardee is majority-owned by 
                                multiple venture capital operating 
                                companies, hedge funds, or private 
                                equity firms; and
                                  ``(III) the amount of additional 
                                capital that the awardee has invested 
                                in the SBIR technology, which 
                                information shall be collected on an 
                                annual basis;
                          ``(iii) the names and locations of any 
                        affiliates of the awardee;
                          ``(iv) the number of employees of the 
                        awardee;
                          ``(v) the number of employees of the 
                        affiliates of the awardee; and
                          ``(vi) the names of, and the percentage of 
                        ownership of the awardee held by--
                                  ``(I) any individual who is not a 
                                citizen of the United States or a 
                                lawful permanent resident of the United 
                                States; or
                                  ``(II) any person that is not an 
                                individual and is not organized under 
                                the laws of a State or the United 
                                States;'';
                  (G) in subparagraph (E), as so redesignated, by 
                striking ``and'' at the end;
                  (H) in subparagraph (F), as so redesignated, by 
                striking the period at the end and inserting ``; and''; 
                and
                  (I) by adding at the end the following:
                  ``(G) includes a timely and accurate list of any 
                individual or small business concern that has 
                participated in the SBIR program or STTR program that 
                has been--
                          ``(i) convicted of a fraud-related crime 
                        involving funding received under the SBIR 
                        program or STTR program; or
                          ``(ii) found civilly liable for a fraud-
                        related violation involving funding received 
                        under the SBIR program or STTR program.''; and
          (2) in paragraph (3), by adding at the end the following:
                  ``(C) Government database.--Not later than 60 days 
                after the date established by a Federal agency for 
                submitting applications or proposals for a Phase I or 
                Phase II award under the SBIR program or STTR program, 
                the head of the Federal agency shall submit to the 
                Administrator the data required under paragraph (2) 
                with respect to each small business concern that 
                applies or submits a proposal for the Phase I or Phase 
                II award.''.

SEC. 306. ACCURACY IN FUNDING BASE CALCULATIONS.

  (a) In General.--Not later than 1 year after the date of enactment of 
this Act, and every year thereafter until the date that is 5 years 
after the date of enactment of this Act, the Comptroller General of the 
United States shall--
          (1) conduct a fiscal and management audit of the SBIR program 
        and the STTR program for the applicable period to--
                  (A) determine whether Federal agencies comply with 
                the expenditure amount requirements under subsections 
                (f)(1) and (n)(1) of section 9 of the Small Business 
                Act (15 U.S.C. 638), as amended by this Act;
                  (B) assess the extent of compliance with the 
                requirements of section 9(i)(2) of the Small Business 
                Act (15 U.S.C. 638(i)(2)) by Federal agencies 
                participating in the SBIR program or the STTR program 
                and the Administration; and
                  (C) determine the portion of the extramural research 
                or research and development budget of a Federal agency 
                that each Federal agency spends for administrative 
                purposes relating to the SBIR program or STTR program, 
                and for what specific purposes, including the portion, 
                if any, of such budget the Federal agency spends for 
                salaries and expenses, travel to visit applicants, 
                outreach events, marketing, and technical assistance; 
                and
          (2) submit a report to the Committee on Small Business and 
        Entrepreneurship of the Senate and the Committee on Small 
        Business and the Committee on Science, Space, and Technology of 
        the House of Representatives regarding the audit conducted 
        under paragraph (1), including the assessments required under 
        subparagraph (B), and the determination made under subparagraph 
        (C) of paragraph (1).
  (b) Definition of Applicable Period.--In this section, the term 
``applicable period'' means--
          (1) for the first report submitted under this section, the 
        period beginning on October 1, 2005, and ending on September 30 
        of the last full fiscal year before the date of enactment of 
        this Act for which information is available; and
          (2) for the second and each subsequent report submitted under 
        this section, the period--
                  (A) beginning on October 1 of the first fiscal year 
                after the end of the most recent full fiscal year 
                relating to which a report under this section was 
                submitted; and
                  (B) ending on September 30 of the last full fiscal 
                year before the date of the report.

SEC. 307. CONTINUED EVALUATION BY THE NATIONAL ACADEMY OF SCIENCES.

  Section 108 of the Small Business Reauthorization Act of 2000 (15 
U.S.C. 638 note) is amended by adding at the end the following:
  ``(e) Extensions and Enhancements of Authority.--
          ``(1) In general.--Not later than 6 months after the date of 
        enactment of the Creating Jobs Through Small Business 
        Innovation Act of 2011, the head of each agency described in 
        subsection (a), in consultation with the Small Business 
        Administration, shall cooperatively enter into an agreement 
        with the National Academy of Sciences for the National Research 
        Council to, not later than 4 years after the date of enactment 
        of the Creating Jobs Through Small Business Innovation Act of 
        2011, and every 4 years thereafter--
                  ``(A) continue the most recent study under this 
                section relating to the issues described in 
                subparagraphs (A), (B), (C), and (E) of subsection 
                (a)(1);
                  ``(B) conduct a comprehensive study of how the STTR 
                program has stimulated technological innovation and 
                technology transfer, including--
                          ``(i) a review of the collaborations created 
                        between small businesses and research 
                        institutions, including an evaluation of the 
                        effectiveness of the program in stimulating new 
                        collaborations and any obstacles that may 
                        prevent or inhibit the creation of such 
                        collaborations;
                          ``(ii) an evaluation of the effectiveness of 
                        the program at transferring technology and 
                        capabilities developed through Federal funding;
                          ``(iii) an evaluation of the program's 
                        success at commercializing technologies 
                        compared with other Federal technology transfer 
                        programs and the SBIR program;
                          ``(iv) to the extent practicable, an 
                        evaluation of the economic benefits achieved by 
                        the STTR program, including the economic rate 
                        of return;
                          ``(v) an analysis of how Federal agencies are 
                        using small businesses that have completed 
                        Phase II under the STTR program to fulfill 
                        their procurement needs; and
                          ``(vi) an analysis of whether the existing 
                        STTR allocation has impacted the effectiveness 
                        of the program in achieving its goals;
                  ``(C) make recommendations with respect to the issues 
                described in subparagraph (A), (D), and (E) of 
                subsection (a)(2) and subparagraph (B) of this 
                paragraph; and
                  ``(D) estimate, to the extent practicable, the number 
                of jobs created by the SBIR program or STTR program of 
                the agency.
          ``(2) Consultation.--An agreement under paragraph (1) shall 
        require the National Research Council to ensure that there is 
        participation by and consultation with the small business 
        community, the Administration, and other interested parties as 
        described in subsection (b).
          ``(3) Reporting.--An agreement under paragraph (1) shall 
        require that--
                  ``(A) not later than 4 years after the date of 
                enactment of the Creating Jobs Through Small Business 
                Innovation Act of 2011, and every 4 years thereafter, 
                the National Research Council shall submit to the head 
                of the agency entering into the agreement, the 
                Committee on Small Business and Entrepreneurship of the 
                Senate, and the Committee on Small Business and the 
                Committee on Science, Space, and Technology of the 
                House of Representatives, a report regarding the study 
                conducted under paragraph (1) and containing the 
                recommendations described in paragraph (1); and
                  ``(B) not later than 2 years after the date of 
                enactment of the Creating Jobs Through Small Business 
                Innovation Act of 2011, the National Research Council 
                shall submit to the head of the agency entering into 
                the agreement, the Committee on Small Business and 
                Entrepreneurship of the Senate, and the Committee on 
                Small Business and the Committee on Science, Space, and 
                Technology of the House of Representatives, a report of 
                preliminary findings and recommendations regarding the 
                study conducted under paragraph (1)(B).''.

SEC. 308. TECHNOLOGY INSERTION REPORTING REQUIREMENTS.

  Section 9 of the Small Business Act (15 U.S.C. 638), as amended by 
this Act, is further amended by adding at the end the following:
  ``(ll) Phase III Reporting.--The annual SBIR or STTR report to 
Congress by the Administration under subsection (b)(7) shall include, 
for each Phase III award made by the Federal agency--
          ``(1) the name of the agency or component of the agency or 
        the non-Federal source of capital making the Phase III award;
          ``(2) the name of the small business concern or individual 
        receiving the Phase III award; and
          ``(3) the dollar amount of the Phase III award.''.

SEC. 309. OBTAINING CONSENT FROM SBIR AND STTR APPLICANTS TO RELEASE 
                    CONTACT INFORMATION TO ECONOMIC DEVELOPMENT 
                    ORGANIZATIONS.

  Section 9 of the Small Business Act (15 U.S.C. 638), as amended by 
this Act, is further amended by adding at the end the following:
  ``(mm) 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 or an STTR 
        program shall enable a small business concern that is an SBIR 
        applicant or an STTR applicant to indicate to the Federal 
        agency whether the Federal agency has the consent of the 
        concern to--
                  ``(A) identify the concern to appropriate local and 
                State-level economic development organizations as an 
                SBIR applicant or an STTR applicant; and
                  ``(B) release the contact information of the concern 
                to such organizations.
          ``(2) Rules.--The Administrator shall establish rules to 
        implement this subsection. The rules shall include a 
        requirement that a Federal agency include in the SBIR and STTR 
        application a provision through which the applicant can 
        indicate consent for purposes of paragraph (1).''.

SEC. 310. PILOT TO ALLOW FUNDING FOR ADMINISTRATIVE, OVERSIGHT, AND 
                    CONTRACT PROCESSING COSTS.

  (a) In General.--Section 9 of the Small Business Act (15 U.S.C. 638), 
as amended by this Act, is further amended by adding at the end the 
following:
  ``(nn) Assistance for Administrative, Oversight, and Contract 
Processing Costs.--
          ``(1) In general.--Subject to paragraph (2), for the 3 full 
        fiscal years beginning after the date of enactment of this 
        subsection, the Administrator shall allow each Federal agency 
        required to conduct an SBIR program to use not more than 3 
        percent of the funds allocated to the SBIR program of the 
        Federal agency for--
                  ``(A) the administration of the SBIR program or the 
                STTR program of the Federal agency;
                  ``(B) the provision of outreach and technical 
                assistance relating to the SBIR program or STTR program 
                of the Federal agency, including technical assistance 
                site visits and personnel interviews;
                  ``(C) the implementation of commercialization and 
                outreach initiatives that were not in effect on the 
                date of enactment of this subsection;
                  ``(D) carrying out the program under subsection (y);
                  ``(E) activities relating to oversight and 
                congressional reporting, including waste, fraud, and 
                abuse prevention activities;
                  ``(F) targeted reviews of recipients of awards under 
                the SBIR program or STTR program of the Federal agency 
                that the head of the Federal agency determines are at 
                high risk for fraud, waste, or abuse, to ensure 
                compliance with requirements of the SBIR program or 
                STTR program, respectively;
                  ``(G) the implementation of oversight and quality 
                control measures, including verification of reports and 
                invoices and cost reviews;
                  ``(H) carrying out subsection (dd);
                  ``(I) carrying out subsection (hh);
                  ``(J) contract processing costs relating to the SBIR 
                program or STTR program of the Federal agency; and
                  ``(K) funding for additional personnel and assistance 
                with application reviews.
          ``(2) Performance criteria.--A Federal agency may not use 
        funds as authorized under paragraph (1) until after the 
        effective date of performance criteria, which the Administrator 
        shall establish, to measure any benefits of using funds as 
        authorized under paragraph (1) and to assess continuation of 
        the authority under paragraph (1).
          ``(3) Rules.--Not later than 180 days after the date of 
        enactment of this subsection, the Administrator shall issue 
        rules to carry out this subsection.
          ``(4) Coordination with ig.--Each Federal agency shall 
        coordinate the activities funded under subparagraph (E), (F), 
        or (G) of paragraph (1) with their respective Inspectors 
        General, when appropriate, and each Federal agency that 
        allocates more than $50,000,000 to the SBIR program of the 
        Federal agency for a fiscal year may share such funding with 
        its Inspector General when the Inspector General performs such 
        activities.''.
  (b) Technical and Conforming Amendments.--
          (1) In general.--Section 9 of the Small Business Act (15 
        U.S.C. 638), as amended by this Act, is further amended--
                  (A) in subsection (f)(2), by striking ``shall not'' 
                and all that follows through ``make available for the 
                purpose'' and inserting ``shall not make available for 
                the purpose''; and
                  (B) in subsection (y)--
                          (i) by striking paragraph (4);
                          (ii) by redesignating paragraphs (5), (6), 
                        and (7) as paragraphs (4), (5), and (6), 
                        respectively; and
                          (iii) in paragraph (6), as so redesignated, 
                        by striking ``described in paragraph (6)(C)'' 
                        and inserting ``described in paragraph 
                        (5)(C)''.
          (2) Transitional rule.--Notwithstanding the amendments made 
        by paragraph (1), subsection (f)(2) and (y)(4) of section 9 of 
        the Small Business Act (15 U.S.C. 638), as in effect on the day 
        before the date of enactment of this Act, shall continue to 
        apply to each Federal agency until the effective date of the 
        performance criteria established by the Administrator under 
        subsection (nn)(2) of section 9 of the Small Business Act, as 
        added by subsection (a).
          (3) Prospective repeal.--Effective on the first day of the 
        fourth full fiscal year following the date of enactment of this 
        Act, section 9 of the Small Business Act (15 U.S.C. 638), as 
        amended by paragraph (1) of this section, is amended--
                  (A) in subsection (f)(2), by striking ``shall not 
                make available for the purpose'' and inserting the 
                following: ``shall not--
                  ``(A) use any of its SBIR budget established pursuant 
                to paragraph (1) for the purpose of funding 
                administrative costs of the program, including costs 
                associated with salaries and expenses; or
                  ``(B) make available for the purpose''; and
                  (B) in subsection (y)--
                          (i) by redesignating paragraphs (4), (5), and 
                        (6) as paragraphs (5), (6), and (7), 
                        respectively;
                          (ii) in paragraph (7), as so redesignated, by 
                        striking ``described in paragraph (5)(C)'' and 
                        inserting ``described in paragraph (6)(C)''; 
                        and
                          (iii) by inserting after paragraph (3) the 
                        following:
          ``(4) Funding.--
                  ``(A) In general.--The Secretary of Defense and each 
                Secretary of a military department may use not more 
                than an amount equal to 1 percent of the funds 
                available to the Department of Defense or the military 
                department pursuant to the Small Business Innovation 
                Research Program for payment of expenses incurred to 
                administer the Commercialization Pilot Program under 
                this subsection.
                  ``(B) Limitations.--The funds described in 
                subparagraph (A)--
                          ``(i) shall not be subject to the limitations 
                        on the use of funds in subsection (f)(2); and
                          ``(ii) shall not be used to make Phase III 
                        awards.''.

SEC. 311. GAO STUDY WITH RESPECT TO VENTURE CAPITAL OPERATING COMPANY, 
                    HEDGE FUND, AND PRIVATE EQUITY FIRM INVOLVEMENT.

  Not later than 2 years after the date of enactment of this Act, and 
every 2 years thereafter, the Comptroller General of the United States 
shall--
          (1) conduct a study of the impact of requirements relating to 
        venture capital operating company, hedge fund, and private 
        equity firm involvement under section 9 of the Small Business 
        Act; and
          (2) submit to Congress a report regarding the study conducted 
        under paragraph (1).

SEC. 312. REDUCING VULNERABILITY OF SBIR AND STTR PROGRAMS TO FRAUD, 
                    WASTE, AND ABUSE.

  (a) Fraud, Waste, and Abuse Prevention.--
          (1) Amendments required for fraud, waste, and abuse 
        prevention.--Not later than 90 days after the date of enactment 
        of this Act, the Administrator shall amend the SBIR Policy 
        Directive and the STTR Policy Directive to include measures to 
        prevent fraud, waste, and abuse in the SBIR program and the 
        STTR program.
          (2) Content of amendments.--The amendments required under 
        paragraph (1) shall include--
                  (A) definitions or descriptions of fraud, waste, and 
                abuse;
                  (B) guidelines for the monitoring and oversight of 
                applicants to and recipients of awards under the SBIR 
                program or the STTR program;
                  (C) a requirement that each Federal agency that 
                participates in the SBIR program or STTR program 
                include information concerning the method established 
                by the Inspector General of the Federal agency to 
                report fraud, waste, and abuse (including any telephone 
                hotline or Web-based platform)--
                          (i) on the website of the Federal agency; and
                          (ii) in any solicitation or notice of funding 
                        opportunity issued by the Federal agency for 
                        the SBIR program or the STTR program; and
                  (D) a requirement that each applicant for and small 
                business concern that receives funding under the SBIR 
                program or the STTR program shall certify whether the 
                applicant or small business concern is in compliance 
                with the laws relating to the SBIR program and the STTR 
                program and the conduct guidelines established under 
                the SBIR Policy Directive and the STTR Policy 
                Directive.
          (3) Consultation.--The Administrator shall develop the 
        certification required under paragraph (2)(D) in cooperation 
        with the Council of Inspectors General on Integrity and 
        Efficiency and the Office of Advocacy of the Administration.
          (4) Certification.--The certification developed under 
        paragraph (3) may--
                  (A) cover the lifecycle of the award to require 
                certifications at the application, funding, reporting, 
                and closeout phases of every SBIR and STTR award;
                  (B) require the small business concern to certify 
                compliance with the ``principal investigator primary 
                employment'' requirement, the ``small business 
                concern'' definition requirement, and the ``performance 
                of work'' requirements as set forth in the Directive 
                applicable to the award;
                  (C) require the small business concern to disclose 
                whether it has applied for, plans to apply for, or 
                received an SBIR or STTR award for the same or 
                overlapping work, and require the concern to certify 
                that the award that it is applying for or obtaining 
                funding for is not the same or overlapping with work it 
                has performed, or will perform, in connection with any 
                other SBIR or STTR award that the concern has applied 
                for or received from any other agency except as fully 
                disclosed to all funding agencies; and
                  (D) require that the small business concern certify 
                that it will or did perform the work on the award at 
                its facilities with its employees, unless otherwise 
                indicated.
          (5) Inspectors general.--The Inspector General of each 
        Federal agency that participates in the SBIR program or STTR 
        program shall cooperate to prevent fraud, waste, and abuse in 
        the SBIR program and the STTR program by--
                  (A) establishing fraud detection indicators;
                  (B) reviewing regulations and operating procedures of 
                the Federal agency;
                  (C) coordinating information sharing between Federal 
                agencies, to the extent otherwise permitted under 
                Federal law; and
                  (D) improving the education and training of, and 
                outreach to--
                          (i) administrators of the SBIR program and 
                        the STTR program of the Federal agency;
                          (ii) applicants to the SBIR program or the 
                        STTR program; and
                          (iii) recipients of awards under the SBIR 
                        program or the STTR program.
  (b) Study and Report.--Not later than 1 year after the date of 
enactment of this Act to establish a baseline of changes made to the 
program to fight fraud, waste, and abuse, and every 3 years thereafter 
to evaluate the effectiveness of the agency strategies, the Comptroller 
General of the United States shall--
          (1) conduct a study that evaluates--
                  (A) the implementation by each Federal agency that 
                participates in the SBIR program or the STTR program of 
                the amendments to the SBIR Policy Directive and the 
                STTR Policy Directive made pursuant to subsection (a);
                  (B) the effectiveness of the management information 
                system of each Federal agency that participates in the 
                SBIR program or STTR program in identifying duplicative 
                SBIR and STTR projects;
                  (C) the effectiveness of the risk management 
                strategies of each Federal agency that participates in 
                the SBIR program or STTR program in identifying areas 
                of the SBIR program or the STTR program that are at 
                high risk for fraud;
                  (D) technological tools that may be used to detect 
                patterns of behavior that may indicate fraud by 
                applicants to the SBIR program or the STTR program;
                  (E) the success of each Federal agency that 
                participates in the SBIR program or STTR program in 
                reducing fraud, waste, and abuse in the SBIR program or 
                the STTR program of the Federal agency; and
                  (F) the extent to which the Inspector General of each 
                Federal agency that participates in the SBIR and STTR 
                program effectively conducts investigations, audits, 
                inspections, and outreach relating to the SBIR and STTR 
                programs of the Federal agency; and
          (2) submit to the Committee on Small Business and 
        Entrepreneurship of the Senate, the Committee on Small Business 
        and the Committee on Science, Space, and Technology of the 
        House of Representatives, and the head of each Federal agency 
        that participates in the SBIR program or STTR program a report 
        on the results of the study conducted under subparagraph (A).

SEC. 313. SIMPLIFIED PAPERWORK REQUIREMENTS.

  Section 9(v) of the Small Business Act (15 U.S.C. 638(v)) is 
amended--
          (1) in the subsection heading, by striking ``Simplified 
        Reporting Requirements'' and inserting ``Reducing Paperwork and 
        Compliance Burden'';
          (2) by striking ``The Administrator'' and inserting the 
        following:
          ``(1) Standardization of reporting requirements.--The 
        Administrator''; and
          (3) by adding at the end the following:
          ``(2) Simplification of application and award process.--Not 
        later than one year after the date of enactment of this 
        paragraph, and after a period of public comment, the 
        Administrator shall issue regulations or guidelines, taking 
        into consideration the unique needs of each Federal agency, to 
        ensure that each Federal agency required to carry out an SBIR 
        program or STTR program simplifies and standardizes the program 
        proposal, selection, contracting, compliance, and audit 
        procedures for the SBIR program or STTR program of the Federal 
        agency (including procedures relating to overhead rates for 
        applicants and documentation requirements) to reduce the 
        paperwork and regulatory compliance burden on small business 
        concerns applying to and participating in the SBIR program or 
        STTR program.''.

SEC. 314. REDUCING FRAUD, WASTE, AND ABUSE.

  Not later than 4 years after the date of enactment of this Act, and 
every 4 years thereafter, the Comptroller General of the United States 
shall--
          (1) conduct a study of the effectiveness of the government 
        and public databases described in section 9(k) of the Small 
        Business Act (15 U.S.C. 638(k)) in reducing vulnerabilities of 
        the SBIR program and the STTR program to fraud, waste, and 
        abuse, particularly with respect to Federal agencies funding 
        duplicative proposals and business concerns falsifying 
        information in proposals;
          (2) make recommendations with respect to the issues described 
        in paragraph (1); and
          (3) submit to the head of each agency described in section 
        108(a) of the Small Business Reauthorization Act of 2000 (15 
        U.S.C. 638 note), the Committee on Small Business and 
        Entrepreneurship of the Senate, and the Committee on Small 
        Business and the Committee on Science, Space, and Technology of 
        the House of Representatives a report regarding the study 
        conducted under paragraph (1) and containing the 
        recommendations described in paragraph (2).

                      TITLE IV--POLICY DIRECTIVES

SEC. 401. CONFORMING AMENDMENTS TO THE SBIR AND THE STTR POLICY 
                    DIRECTIVES.

  (a) In General.--Not later than 180 days after the date of enactment 
of this Act, the Administrator shall promulgate amendments to the SBIR 
Policy Directive and the STTR Policy Directive to conform such 
directives to this Act and the amendments made by this Act.
  (b) Publishing SBIR Policy Directive and the STTR Policy Directive in 
the Federal Register.--Not later than 180 days after the date of 
enactment of this Act, the Administrator shall publish the amended SBIR 
Policy Directive and the amended STTR Policy Directive in the Federal 
Register.

                       TITLE V--OTHER PROVISIONS

SEC. 501. REPORT ON SBIR AND STTR PROGRAM GOALS.

  Section 9 of the Small Business Act (15 U.S.C. 638), as amended by 
this Act, is further amended by adding at the end the following:
  ``(oo) Annual Report on SBIR and STTR Program Goals.--
          ``(1) Development of metrics.--The head of each Federal 
        agency required to participate in the SBIR program or the STTR 
        program shall develop metrics to evaluate the effectiveness, 
        and the benefit to the people of the United States, of the SBIR 
        program and the STTR program of the Federal agency that--
                  ``(A) are science-based and statistically driven;
                  ``(B) reflect the mission of the Federal agency; and
                  ``(C) include factors relating to the economic impact 
                of the programs.
          ``(2) Evaluation.--The head of each Federal agency described 
        in paragraph (1) shall conduct an annual evaluation using the 
        metrics developed under paragraph (1) of--
                  ``(A) the SBIR program and the STTR program of the 
                Federal agency; and
                  ``(B) the benefits to the people of the United States 
                of the SBIR program and the STTR program of the Federal 
                agency.
          ``(3) Report.--
                  ``(A) In general.--The head of each Federal agency 
                described in paragraph (1) shall submit to the 
                appropriate committees of Congress and the 
                Administrator an annual report describing in detail the 
                results of an evaluation conducted under paragraph (2).
                  ``(B) Public availability of report.--The head of 
                each Federal agency described in paragraph (1) shall 
                make each report submitted under subparagraph (A) 
                available to the public online.
                  ``(C) Definition.--In this paragraph, the term 
                `appropriate committees of Congress' means--
                          ``(i) the Committee on Small Business and 
                        Entrepreneurship of the Senate; and
                          ``(ii) the Committee on Small Business and 
                        the Committee on Science, Space, and Technology 
                        of the House of Representatives.''.

SEC. 502. COMPETITIVE SELECTION PROCEDURES FOR SBIR AND STTR PROGRAMS.

  Section 9 of the Small Business Act (15 U.S.C. 638), as amended by 
this Act, is further amended by adding at the end the following:
  ``(pp) Competitive Selection Procedures for SBIR and STTR Programs.--
All funds awarded, appropriated, or otherwise made available in 
accordance with subsection (f) or (n) must be awarded pursuant to 
competitive and merit-based selection procedures.''.

SEC. 503. LOAN RESTRICTIONS.

  (a) Rule Required.--For purposes of section 9 of the Small Business 
Act (15 U.S.C. 638), the Administrator shall promulgate a rule not 
later than 180 days after the date of enactment of this Act that 
determines what restrictions, conditions, or covenants contained in a 
note, bond, debenture, other evidence of indebtedness, or preferred 
stock constitute affiliation for purposes of section 121.103(a) of 
title 13, Code of Federal Regulations, as in effect on January 1, 2011.
  (b) Failure to Promulgate.--If the Administrator fails to promulgate 
a rule in the time period required under subsection (a), the holder of 
a note, bond, debenture, other evidence of indebtedness, or preferred 
stock shall be considered to be affiliated with the debtor or issuer of 
the preferred stock until such time as the Administrator promulgates 
the rule required under subsection (a).

SEC. 504. LIMITATION ON PILOT PROGRAMS.

  Section 9 of the Small Business Act (15 U.S.C. 638), as amended by 
this Act, is further amended by adding at the end the following:
  ``(qq) Limitation on Pilot Programs.--
          ``(1) In general.--The Administrator may only carry out a 
        covered pilot program if in accordance with paragraphs (2) and 
        (3).
          ``(2) Existing pilot programs.--With respect to a covered 
        pilot program in operation on the date of enactment of this 
        subsection, such program may only be carried out during the 3-
        year period beginning on such date of enactment.
          ``(3) New pilot programs.--With respect to a covered pilot 
        program established after the date of enactment of this 
        subsection, such program--
                  ``(A) may only be carried out during the 3-year 
                period beginning on the date on which such program is 
                established; and
                  ``(B) may not continue or be based on, in any manner, 
                a previously established covered pilot program.
          ``(4) Covered pilot program defined.--In this subsection, the 
        term `covered pilot program' means any initiative, project, 
        innovation, or other activity--
                  ``(A) relating to an SBIR or STTR program; and
                  ``(B) not specifically authorized by law.''.

SEC. 505. ENSURING EQUITY IN SBIR AND STTR AWARDS TO INDIVIDUAL 
                    COMPANIES.

  Section 9 of the Small Business Act (15 U.S.C. 638), as amended by 
this Act, is further amended by adding at the end the following:
  ``(rr) Ensuring Equity in SBIR and STTR Awards to Individual 
Companies.--A small business concern, including affiliates of the small 
business concern, may not receive an SBIR or STTR award in a fiscal 
year if, at the time the award is made--
          ``(1) the small business concern has received an aggregate 
        dollar amount of such awards in such fiscal year that exceeds 
        50 percent of the aggregate dollar amount of such awards 
        received, in the preceding fiscal year, by the median State 
        with respect to such aggregate amount; or
          ``(2) the small business concern has received an aggregate 
        number of such awards in such fiscal year that exceeds 50 
        percent of the aggregate number of such awards received, in the 
        preceding fiscal year, by the median State with respect to such 
        aggregate number.''.

SEC. 506. INSPECTOR GENERAL REPORTS.

  Not later than October 1 of each year, the Inspector General of each 
Federal agency that participates in the SBIR program or STTR program 
shall submit to the Committee on Small Business and Entrepreneurship of 
the Senate and the Committee on Small Business and the Committee on 
Science, Space, and Technology of the House of Representatives a report 
describing--
          (1) the number of cases referred to the Inspector General in 
        the preceding year that related to fraud, waste, or abuse with 
        respect to the SBIR program or STTR program;
          (2) the actions taken in each case described in paragraph (1) 
        if fraud, waste, or abuse was determined to have occurred;
          (3) if no action was taken in a case described in paragraph 
        (1) and fraud, waste, or abuse was determined to have occurred, 
        the justification for action not being taken; and
          (4) an accounting of the funds used to address fraud, waste, 
        and abuse, including a description of personnel and resources 
        funded and funds that were recovered or saved.

SEC. 507. TIMING.

  Federal agencies participating in the SBIR program or STTR program 
shall, to the extent possible, attempt to shorten the amount of time 
between the provision of notice of an award under the SBIR program or 
STTR program and the subsequent release of funding with respect to the 
award.

SEC. 508. PUBLICATION OF CERTAIN INFORMATION.

  Section 9 of the Small Business Act (15 U.S.C. 638), as amended by 
this Act, is further amended by adding at the end the following:
  ``(ss) Publication of Certain Information.--In order to increase the 
number of small businesses receiving awards under the SBIR or STTR 
programs of participating agencies, and to simplify the application 
process for such awards, the Administrator shall establish and maintain 
a public Internet website on which the Administrator shall publish such 
information relating to notice of and application for awards under the 
SBIR program and STTR program of each participating Federal agency as 
the Administrator determines appropriate.''.

SEC. 509. PREFERENCE FOR CLEAN COAL TECHNOLOGY RESEARCH.

  Section 9 of the Small Business Act (15 U.S.C. 638), as amended by 
this Act, is further amended by adding at the end the following:
  ``(tt) Clean Coal Technology Research Preference.--In making awards 
under this section, a Federal agency shall give priority to 
applications in a manner that increases the number of SBIR and STTR 
award recipients conducting research with respect to clean coal 
technology, including the gasification of coal.''.

SEC. 510. REPORT ON ENHANCEMENT OF MANUFACTURING ACTIVITIES.

  Section 9 of the Small Business Act (15 U.S.C. 638), as amended by 
this Act, is further amended by adding at the end the following:
  ``(uu) Report on Enhancement of Manufacturing Activities.--Not later 
than October 1, 2011, and annually thereafter, the head of each Federal 
agency that makes more than $50,000,000 in awards under the SBIR and 
STTR programs of the agency combined shall submit to the Committee on 
Small Business and Entrepreneurship of the Senate and the Committee on 
Small Business and the Committee on Science, Space, and Technology of 
the House of Representatives a report that includes--
          ``(1) a description of efforts undertaken by the head of the 
        Federal agency to enhance manufacturing activities;
          ``(2) a comprehensive description of the actions undertaken 
        each year by the head of the Federal agency in carrying out the 
        SBIR or STTR program of the agency in support of Executive 
        Order 13329 (69 Fed. Reg. 9181; relating to encouraging 
        innovation in manufacturing);
          ``(3) an assessment of the effectiveness of the actions 
        described in paragraph (2) at enhancing the research and 
        development of manufacturing technologies and processes; and
          ``(4) recommendations that the program managers of the SBIR 
        or STTR program of the agency consider appropriate for 
        additional actions to increase the effectiveness of enhancing 
        manufacturing activities.''.

SEC. 511. EXPRESS AUTHORITY TO ``FAST-TRACK'' PHASE II AWARDS FOR 
                    PROMISING PHASE I RESEARCH.

  Section 9 of the Small Business Act (15 U.S.C. 638), as amended by 
this Act, is further amended by adding at the end the following:
  ``(vv) Authority to `Fast-Track' Phase II Awards for Promising Phase 
I Research.--To address the delay between an award for Phase I of an 
SBIR program and the application for and extension of an award for 
Phase II of such program, each Federal agency with an SBIR program may 
develop `fast-track' programs to eliminate such delay by issuing Phase 
II SBIR awards as soon as practicable, including in appropriate cases 
simultaneously with the issuance of the Phase I SBIR award. The 
Administrator shall encourage the development of such `fast-track' 
programs.''.

SEC. 512. 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 by 
this Act, is further amended by adding at the end the following:
  ``(ww) 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 Phase III.
          ``(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.''.

SEC. 513. PREFERENCE FOR ACID MINE DRAINAGE RESEARCH.

  Section 9 of the Small Business Act (15 U.S.C. 638), as amended by 
this Act, is further amended by adding at the end the following:
  ``(xx) Acid Mine Drainage Research Preference.--In making awards 
under this section, a Federal agency shall give priority to 
applications in a manner that increases the number of SBIR and STTR 
award recipients conducting research related to reducing the 
environmental impact, including with respect to water quality, of acid 
mine drainage.''.

SEC. 514. PREFERENCE FOR HYDRAULIC FRACTURING RESEARCH.

  Section 9 of the Small Business Act (15 U.S.C. 638), as amended by 
this Act, is further amended by adding at the end the following:
  ``(yy) Hydraulic Fracturing Research Preference.--In making awards 
under this section, a Federal agency shall give priority to 
applications in a manner that increases the number of SBIR and STTR 
award recipients conducting research related to reducing the 
environmental impact, including with respect to water quality, of the 
use of hydraulic fracturing during natural gas exploration 
activities.''.

                  II. Purpose of the Bill and Summary

    The Creating Jobs Through Small Business Innovation Act of 
2011 extends through fiscal year 2014 the Federal government's 
largest small business research and development programs. The 
legislation modernizes and reauthorizes the Small Business 
Innovation Research (SBIR) and Small Business Technology 
Transfer (STTR) programs, changing the legislative guidelines 
and policies in order to update the programs in response to the 
unique challenges facing small research companies and the 
changing research priorities of federal agencies.
    The legislation is aimed at three broad goals. First, the 
bill seeks to encourage greater commercialization by 
instituting commercialization initiatives at federal agencies 
that administer SBIR programs. Under current law, certain 
federal agencies have the authority to develop 
commercialization programs. This bill extends to all agencies 
the authority to develop programs designed to support the 
commercialization of SBIR-funded research. Second, the bill 
seeks to encourage greater participation in SBIR. An increase 
in the number of small businesses applying for SBIR is critical 
to the success of the program. Thirdly, the bill permits small 
companies that are majority-owned by qualifying venture 
capital, private equity and hedge funds to participate in the 
programs. A 2003 ruling by the Small Business Administration 
has made small firms with investments from venture capital 
companies ineligible to participate in the SBIR program. The 
SBA ruling forces many small businesses to choose between 
accepting investments from private firms and participating in 
the Federal government's largest research and development 
program for small business concerns.
    Additionally, the bill seeks to codify the programmatic 
flexibility that federal agencies need in order to administer 
SBIR awards in a manner that is most consistent with the 
agency's specific mission. While granting federal agencies 
greater autonomy, the bill also requires federal agencies to 
establish more concrete goals and objectives with respect to 
their SBIR programs. Finally, the bill improves oversight by 
requiring agencies to provide more detailed periodic reports to 
Congress.

  ADVANCING COMMERCIALIZATION OF SBIR-FUNDED RESEARCH AND DEVELOPMENT 
                                PROJECTS

    To support the successful commercialization of SBIR-funded 
research, the bill permits an agency to grant one additional 
Phase II award to a particularly promising concept and requires 
agencies to establish initiatives designed to encourage 
partnerships between SBIR awardees and prime contractors, 
private investment companies, and larger businesses. The 
legislation also allows an agency to issue a Phase II award to 
a qualifying applicant, even if the applicant's research 
proposal had not been awarded a Phase I grant.
    The legislation also increases from $4,000 to $5,000 the 
amount of discretionary technical assistance that SBIR and STTR 
agencies can contract out to provide to awardees for both Phase 
I and Phase II awards. The technical assistance that can be 
obtained can run the gamut from developing business plans all 
the way to commercialization support.
    The bill further defines ``Phase III'' of the SBIR program 
and permits agencies to establish Commercialization Readiness 
Programs (at a pilot program status) that support the progress 
of SBIR awardees towards Phase III of the SBIR program. The 
legislation also makes permanent the Commercialization Pilot 
Program at the Department of Defense (DOD) and renames it the 
Commercialization Readiness Program (CRP). Given the 
Committee's position that the SBIR program is designed to 
commercialize research in order to meet the needs of federal 
agencies and the specialized needs of the DOD, the CRP meets 
both of those objectives.

           ENCOURAGING GREATER PARTICIPATION IN SBIR AND STTR

    The legislation includes a number of provisions designed to 
encourage more small firms to apply for SBIR and STTR awards. 
The bill increases the size of SBIR and STTR awards for both 
Phase I and Phase II grants and establishes a 90-day timeline 
for issuing a final decision on an SBIR application after the 
solicitation is closed and requires agencies, to the greatest 
extent possible, to shorten the time between the notification 
of an award and the time of disbursement of funds to the small 
business.
    The bill authorizes agencies to use a portion of the funds 
allocated for an agency's administrative, oversight, and 
contract processing costs. This will ensure that agencies have 
sufficient funds to expand outreach and bring new firms into 
the programs.

 PERMITTING SMALL COMPANIES THAT ARE MORE THAN 50%-OWNED BY QUALIFYING 
            PRIVATE INVESTMENT FIRMS TO PARTICIPATE IN SBIR

    To qualify for SBIR awards, small firms must affirm that 
they meet certain ownership criteria, such as being 51 percent 
or more owned by individuals who are U.S. citizens or permanent 
resident aliens. In 2003, an SBA administrative law judge 
issued a decision that venture capital firms could not be 
considered as ``individuals'' for the purpose of satisfying the 
ownership criteria of the SBIR program. As a result, a number 
of firms that are majority-owned by venture capital firms that 
had once been eligible to participate in the SBIR program 
before the 2003 ruling are no longer eligible. Small venture-
backed companies that have been ruled ineligible for SBIR are 
unable to secure necessary funding to conduct important 
research activities.
    The ruling created confusion among program participants and 
has led some firms to steer away from the program. Many of the 
small research companies that are rendered ineligible by the 
SBA's 2003 ruling have fewer than 100 employees and--in the 
case of small biotechnology companies--no revenue.
    With the advent and expansion of private equity and hedge 
fund investment in small companies, the Committee believes it 
prudent to clearly define and address these newer funding 
mechanisms and finds that venture capital companies should not 
be placed at a disadvantage to other entities (such as hedge 
funds or private equity firms) that provide capital to 
businesses. As a result, the Committee treats private equity 
and hedge funds the same way it treats venture capital 
companies.
    Legislation is needed so that small firms with significant 
private investment can compete for and win SBIR awards. 
However, legislation should also prohibit small firms from 
receiving and competing for SBIR awards if either: (1) a single 
private investment company owns a majority of the small firm; 
or (2) a single private investment company controls a majority 
of the small business concern's board of directors' seats.
    The bill includes provisions that establish clear 
guidelines governing the participation of small businesses with 
substantial private investment from venture capital, private 
equity, or hedge fund companies in the SBIR program. The 
provisions will allow the National Institutes of Health, the 
Department of Energy, the National Aeronautics and Space 
Administration, and the National Science Foundation to award up 
to 45 percent of all grants to companies that are majority-
owned by qualifying private investment firms, and up to 35 
percent of such awards at all other participating agencies.
    The provisions will allow a small company that is majority-
owned by qualifying private investment firms to participate in 
the SBIR program, so long as the small business concerns do not 
have (1) a single private investment company owning a majority 
of the small business concern or (2) private investment company 
controlling a majority of the small business concern's board of 
directors' seats. Additional safeguards are included to limit 
the ability of large corporations to use subsidiaries to 
participate in these programs.

                   RETAINING PROGRAMMATIC FLEXIBILITY

    The Committee's legislation makes these meaningful changes 
to the SBIR program without reducing the programmatic 
flexibility that is a central feature of the SBIR program as it 
is currently administered.

                III. Background and Need for Legislation

    In 1982, Congress passed the Small Business Innovation 
Development Act which established the SBIR program. The intent 
of the Act was to increase government funding of small, 
innovative companies for the performance of research and 
development with commercial potential. Supporters of the SBIR 
program argued that while small companies were highly 
innovative, such firms traditionally were underrepresented in 
federal research and development activities.
    The potential of small companies to be sources of 
significant innovation led Congress to establish the SBIR 
program. From the program's original development, SBIR has been 
intended to stimulate technological innovation related to each 
participating agency's goals and mission, use small businesses 
for federal research and development needs and increase private 
sector commercialization of innovations derived from federal 
research and development expenditures. To meet these 
objectives, the Act required that Federal departments with an 
extramural research budget of $100 million or more set aside a 
small percentage of their agency's overall research budget and 
award technology development contracts to small firms. The 
percentage of research and development activities to be 
conducted by small firms originally was set at 1.25 percent but 
has increased to 2.5 percent where it now stands.
    Currently, eleven agencies have research budgets large 
enough to require participation in the SBIR program. In 2010, 
Federal agencies awarded more than $2 billion to small research 
firms through the SBIR program. That year, the Department of 
Defense alone awarded more than $1 billion to small firms for 
the development of advanced technologies. From the program's 
inception in FY1983 through FY2010, over $29 billion have been 
awarded through 92,000 grants.
    A key element of the SBIR program is that it establishes a 
three-phase development system for participants. During Phase 
I, participating agencies fund a proposed idea to determine if 
it has scientific and technical merit and is feasible. Projects 
that demonstrate potential after the initial endeavor can 
compete for Phase II awards (lasting one or two years) to 
perform the principal research and, more importantly, the 
development of a prototype. Generally, Phase I and Phase II 
awards may not exceed $100,000 and $750,000, respectively. A 
third phase of the program (Phase III), aimed at the 
commercialization of a product or process developed in the 
earlier phases, is intended to be funded by the private sector 
or non-SBIR federal dollars.

              INDEPENDENT EVALUATIONS OF THE SBIR PROGRAM

    Since the first awards were made in 1983, the program has 
been the focus of numerous studies, assessments, and 
evaluations. The Government Accountability Office (GAO) has 
issued a series of reports on the implementation of the Small 
Business Development Act. The National Academies of Science 
completed a comprehensive three-year evaluation of the SBIR 
program in 2007. Additionally, participating agencies have also 
provided assessments of their agency's SBIR program.
    A 1987 GAO study found that both the evaluation and 
selection processes were sufficient to ``reasonably'' ensure 
awards were based on technical merit. In 1989, GAO reported 
that agency heads found the SBIR effort to be beneficial and 
met the organizations' research and development needs. A GAO 
report issued in May 1992 noted that almost two-thirds of the 
projects already had sales or received additional funding 
(primarily from the private sector) totaling approximately $1.1 
billion. Another GAO study, released in April 1998, noted that 
between 35% and 50% of SBIR projects had resulted in sales or 
additional private sector investment. A June 2005 GAO report 
found that the effort appears to be achieving its goal of 
``enhanced'' participation of small business in federal 
research and development.
    As part of the reauthorization of the SBIR program in 2000, 
Congress directed the National Research Council (NRC) of the 
National Academies of Science to ``conduct a comprehensive 
study of how the SBIR program has stimulated technological 
innovation and used small businesses to meet Federal research 
and development needs''\1\ and make any appropriate 
recommendations with respect to the SBIR program.\2\ After more 
than three years of research and analysis, the NRC study 
released its assessment of the SBIR program as administered by 
the five federal agencies (Department of Defense, National 
Institutes of Health, the National Aeronautics and Space 
Administration, the Department of Energy, and the National 
Science Foundation) that together make up some 96 percent of 
SBIR program expenditures in July 2007. The core finding of the 
study is that the SBIR program is sound in concept and 
effective in practice. In support of the report's core finding, 
the NRC concluded that the SBIR program is: (1) stimulating 
technological innovations; (2) increasing private sector 
commercialization of research; (3) using small businesses to 
meet federal research and development needs; and (4) providing 
widely distributed support for innovation activity.\3\
---------------------------------------------------------------------------
    \1\Small Business Reauthorization Act of 2000, Sec. 108(a)(1), 114 
Stat. 2763, 2763A-6-71 (2000).
    \2\Id.
    \3\National Research Council, National Academies of Science, An 
Assessment of The Small Business Innovation Research Program 49 (2007).
---------------------------------------------------------------------------

 2009 NRC REPORT ON VENTURE CAPITAL FUNDING IN THE NATIONAL INSTITUTES 
                           OF HEALTH (NIH)\4\
---------------------------------------------------------------------------

    \4\National Research Council, National Academies of Science, 
Benture Funding and the NIH SBIR Program (2009).
---------------------------------------------------------------------------
    A recent NRC report on the venture capital prohibition in 
the SBIR program found that the impact of the 2003 ruling falls 
disproportionately on the most promising firms i.e., those 
firms that have repeatedly been selected by both NIH for the 
promising technologies and by venture investors for their 
commercial potential.\5\
---------------------------------------------------------------------------
    \5\Id. at 3.
---------------------------------------------------------------------------
    While the report does site a percentage of venture-backed 
firms likely excluded from the SBIR program (4.1 percent to 
11.9 percent), it qualifies this by stating that there is a 
downward bias--meaning the percentage excluded is likely 
higher.\6\ This is due to the fact that venture capital 
investment in smaller firms considered by the study (1) was 
just beginning in the 1990s and (2) has matured dramatically in 
the last five years to favor investment in commercially viable 
technologies and therapies. The result is that the level of 
exclusion is likely much higher than the report states.
---------------------------------------------------------------------------
    \6\Id.
---------------------------------------------------------------------------
    The report concludes that restricting access to SBIR 
funding for firms that benefit from venture investments would 
thus appear to disproportionately affect some of the most 
commercially promising small firms. To this extent, the SBA 
ruling has the potential to diminish the positive impact of the 
nation's investments in research and development in the 
biomedical area.\7\ The restriction then is contrary to one of 
the four key research goals of the SBIR program, the 
commercialization of federal research. The implementation of 
the SBA ruling appears to be negatively affecting current 
participation by firms and the long-term commercialization 
potential of the NIH SBIR program.
---------------------------------------------------------------------------
    \7\Id.
---------------------------------------------------------------------------

    THE NEED TO REAUTHORIZE AND MODERNIZE THE SBIR AND STTR PROGRAMS

    The SBIR program has been reauthorized three times since 
its enactment, first in 1986 and subsequently in 1993 and 2000. 
The latest authorization was set to expire on September 30, 
2008 but has been temporarily extended by Congress through 
September 30, 2011. The STTR program was last reauthorized in 
2000 and has the same expiration date as SBIR.
    The positive evaluations of the SBIR program issued by 
independent research organizations and testimony presented to 
the Committee on Small Business during the 110th, 111th, and 
112th Congresses in support of the SBIR and STTR programs 
create the basis of support for H.R. 1425. Small companies, 
federal agencies, patient advocacy groups, economic development 
organizations, and academics have testified in strong support 
of reauthorization of the SBIR and STTR programs.
    During the eleven years that have elapsed since Congress 
last authorized the SBIR and STTR programs, the country's 
research and development priorities and the role of small 
innovative companies in the economy have changed. The manner in 
which the participating federal agencies administer their SBIR 
programs has also changed in the past eleven years. Reflective 
of these changes, participating small firms, participating 
federal agencies, research organizations and other interested 
parties support modernizing the SBIR program. Specifically, 
expert witnesses have testified that legislation is necessary 
to make the following important changes to the SBIR program.

 EXPAND COMMERCIALIZATION OPPORTUNITIES FOR SBIR AND STTR RESEARCH AND 
                          DEVELOPMENT PROJECTS

    Witnesses have testified before the Committee that small 
businesses face serious challenges in commercializing their 
research following Phases I and II. Many potential partners and 
investors require that a product achieve a certain degree of 
technological readiness before they are willing to support or 
invest in a given product's later stage development. This is 
described as the ``valley of death,'' where promising research 
is derailed because the small business does not have the 
funding required to develop the product to the requisite 
technological readiness. Witnesses have described how SBIR- and 
STTR-funded projects can stall or fail at the end of a Phase II 
award due to a lack of available funding to continue developing 
the product.
    In order to address the ``valley of death,'' several 
federal agencies have developed initiatives within their SBIR 
programs that offer commercialization support to SBIR awardees. 
These initiatives include business planning assistance, 
business-to-business mentoring, manufacturing assistance, 
technology transition assistance, and/or additional funding. 
Although these initiatives are only a few years old, early 
anecdotal evidence from these agencies suggest that the 
programs are increasing commercialization of SBIR-funded 
research and development projects.

              RESOURCES FOR SBIR MANAGEMENT AND EVALUATION

    Under current law, participating federal agencies are 
prohibited from using any of the 2.5 percent SBIR set aside to 
fund the program's administrative costs, including costs 
associated with salaries and expenses. Federal agencies that 
set aside special funds to pay for SBIR management expenses 
have asserted that they have more effective programs than 
agencies that do not set aside special funds for the 
administration.
    In their 2007 study, the NRC stressed that increased 
funding is needed to provide effective oversight, program 
review, systematic third party assessments, and other necessary 
management activities. Legislation is necessary to change the 
statutory prohibition on using a small portion of SBIR funds to 
administer the program.

          INCREASE AWARD SIZE AND SIMPLIFY APPLICATION PROCESS

    According to witnesses, the SBIR application process may be 
overly burdensome and applicants often do not receive a timely 
decision. Witnesses also have recommended that the size of SBIR 
awards be increased. The award levels set out in the 
legislation have not increased since 1992 and the value of 
awards has been eroded by inflation. Simplifying the 
application process and increasing the award levels would, 
according to witness testimony, increase competition for SBIR 
awards, and provide more useful assistance to firms, and 
generate a greater likelihood of commercialization success.

                              IV. Hearings

    In the 112th Congress, the Committee on Small Business held 
two hearings on the SBIR and STTR programs and related 
legislation. On March 16, 2011, the Committee convened a 
hearing titled ``Spurring Innovation and Job Creation: The SBIR 
Program.'' Testimony was received from small business owners, 
academics, and disease research groups that use, support, and 
study these programs in a wide variety of arenas. Following 
that hearing, on April 7, 2011, the Subcommittee on Healthcare 
and Technology held a hearing titled ``The Creating Jobs 
Through Small Business Innovation Act of 2011.'' The purpose of 
this hearing was for witnesses to discuss the legislation in 
its draft form.
    In the 111th Congress, the Committee on Small Business held 
three hearings on the SBIR and STTR programs and related 
legislation. On June 17, 2009, the Committee convened a hearing 
entitled ``Legislative Initiatives to Strengthen and Modernize 
the SBIR and STTR Programs.'' Testimony was taken from a wide 
range of small businesses that use these programs in the 
defense, health care, and energy arenas. This hearing followed 
a previous full Committee hearing on April 22, 2009, which 
explored issues related to the overall effectiveness of the 
SBIR program and a legislative hearing in the Committee's 
Contracting and Technology Subcommittee on June 4, 2009.
    In the 110th Congress, the Committee on Small Business also 
convened three hearings on the reauthorization of the SBIR and 
STTR programs. On January 29, 2008, the House Committee on 
Small Business convened a hearing entitled ``SBIR: America's 
Technology Development Incubator.'' The hearing explored the 
numerous contributions that the SBIR program makes to national 
security priorities, economic development objectives and 
America's international economic competitiveness. On February 
13, 2008 the House Committee on Small Business Subcommittee on 
Investigations and Oversight convened a hearing entitled 
``SBIR: Advancing Medical Innovations.'' The Subcommittee 
hearing examined the impact of the SBIR program on the 
development of innovative medical technologies, therapies and 
products. On March 13, 2008, the Committee on Small Business 
held a hearing to review a Committee Print of proposed 
legislation that would reauthorize and modernize the SBIR 
program.

                       V. Committee Consideration

    The Committee on Small Business met in open session on May 
11, 2011 and ordered H.R. 1425 reported, as amended to the 
House by a voice vote. Twenty-four amendments were offered at 
the markup. The amendments listed below are in numerical order 
and not in the order in which the amendments were considered 
during the Committee markup.
    Ms. Velazquez, the Ranking Democratic Member (D-NY), 
offered Amendment 001 that failed by a roll call vote of 8 yeas 
to 13 nos. The amendment sought to strike Section 310 of the 
bill, authorizing SBIR participating agencies to use three 
percent of the funding allocated to the program for 
administrative, oversight, and contract processing costs.
    Ms. Velazquez, the Ranking Democratic Member (D-NY), 
offered Amendment 003 that failed by a roll call vote of 10 
yeas to 15 nos. The amendment sought to strike Sections 202 and 
203, and in its place institute a voucher program for 
technology development, testing, evaluation and 
commercialization assistance for SBIR and STTR technologies.
    Mr. Tipton (R-CO) offered Amendment 007 that was accepted 
by voice vote. The amendment requires the SBA to establish and 
maintain a website collecting information on applications and 
awards for all agencies participating in the SBIR program.
    Mr. Tipton (R-CO) offered Amendment 008 that was accepted 
by voice vote. The amendment changes the word ``shall'' to 
``may'' concerning the establishment of a Phase 0 Proof of 
Concept Partnership pilot program.
    Mr. Tipton (R-CO) offered Amendment 009 that was accepted 
by voice vote. The amendment requires that agencies 
participating in the SBIR program attempt to shorten the time 
between the notification stage of winning an award and the 
subsequent release of funding for that award.
    Mr. Cicilline (D-RI) offered Amendment 009 that failed by a 
roll call vote of 9 yeas to 15 nos. The amendment sought to 
create an outreach program to provide grants to states for the 
purpose of outreach, financial support, and technical 
assistance to technology-based small business concerns 
participating in or interested in participating in an SBIR or 
STTR program.
    Mr. Cicilline (D-RI) offered Amendment 010 that was 
accepted by voice vote. The amendment requires agencies with 
over $50 million in SBIR grants to report on efforts to enhance 
manufacturing activities.
    Mr. Cicilline (D-RI) offered Amendment 011 that failed by a 
roll call vote of 10 yeas to 14 nos. The amendment sought to 
allocate 2 percent of the 10 percent of agency funding for 
commercialization programs to carry out an outreach program to 
technology-based small businesses owned and operated by a 
minority, woman, or veteran.
    Mr. West (R-FL) offered Amendment 011 that was accepted by 
voice vote. The amendment requires an annual DOD report on the 
Commercialization Readiness Program. It also requires the DOD 
to share more information about their efforts to include SBIR 
technology and companies in DOD programs. Finally, the 
amendment holds prime contractors harmless against those goals 
if they can certify that no suitable SBIR technology is 
available to include in such program.
    Ms. Velazquez, the Ranking Democratic Member (D-NY), 
offered Amendment 012 that was accepted by voice vote. The 
amendment limits the SBA's authority to establish new pilot 
programs under Section 9 of the Small Business Act.
    Mr. Critz (D-PA) offered Amendment 012 that was accepted by 
voice vote. The amendment directs each appropriate Federal 
agency with an SBIR program to give priority to proposals 
related to reducing the environmental impact of the use of 
hydraulic fracturing during natural gas exploration activities.
    Ms. Velazquez, the Ranking Democratic Member (D-NY), 
offered Amendment 013 that was accepted by voice vote. The 
amendment prohibits any single SBIR or STTR awardee from 
obtaining more than one half of the median state's SBIR or STTR 
awards, be they in terms of dollars or number of awards.
    Mr. Critz (D-PA) offered Amendment 013 that was accepted by 
voice vote. The amendment directs each appropriate Federal 
agency with an SBIR program to give priority to proposals 
related to reducing the environmental impact of acid mine 
drainage.
    Mr. Critz (D-PA) offered Amendment 014 that was accepted by 
voice vote. The amendment directs each appropriate Federal 
agency with an SBIR program to give priority to research 
proposals related to clean coal technology, including the 
gasification of coal.
    Mr. Critz (D-PA) offered Amendment 015 that failed by a 
roll call vote of 9 yeas to 15 nos. The amendment sought to add 
a new section to the bill creating a Clean Coal Technology 
Commercialization Pilot Program at the SBA to assist the 
commercialization of technologies developed in the SBIR program 
relating to clean coal, including the gasification of coal.
    Mr. Schrader (D-OR) offered Amendment 015 that failed by a 
roll call vote of 10 yeas to 14 nos. The amendment sought to 
require that the SBA, rather than each participating agency, 
develop metrics to evaluate the effectiveness of the SBIR and 
STTR programs.
    Mr. Schrader (D-OR) offered Amendment 017 that was accepted 
by voice vote. The amendment requires that the Offices of the 
Inspector General for the SBIR participating agencies submit an 
annual report on the actions taken to eliminate fraud in the 
SBIR program.
    Ms. Chu (D-CA) offered Amendment 025 that failed by a roll 
call vote of 9 yeas to 15 nos. The amendment sought to increase 
the guideline amounts for Phase I and Phase II to $225,000 and 
$2,000,000 respectively. It also sought to increase the SBIR 
and STTR allocations by .5% and .2% respectively.
    Ms. Chu (D-CA) offered Amendment 026 that failed by a roll 
call vote of 10 yeas to 14 nos. The amendment sought to create 
a minority institution program by taking part of the funding 
from Phase III commercialization programs and make them 
available to minority institutions in an effort to increase the 
number of applications submitted by minority-owned small 
businesses.
    Ms. Chu (D-CA) offered Amendment 027 that was withdrawn. 
The amendment sought to require that members of the small 
business community be members of the Interagency Policy 
Committee.
    Mr. Owens (D-NY) offered Amendment 029 that was accepted by 
voice vote. The amendment allows agencies to create Fast-Track 
programs that aim to decrease the time between Phase I and II 
awards, including the ability to simultaneously issue a Phase 
II award and Phase I award.
    Mr. Owens (D-NY) offered Amendment 030 that was accepted by 
voice vote. The amendment requires agencies to establish 
initiatives that encourage partnerships between SBIR awardees 
and prime contractors, venture capital companies, business 
incubators, and larger businesses.
    Mr. Owens (D-NY) offered Amendment 031 that failed by a 
roll call vote of 12 yeas to 12 nos. The amendment sought to 
create a veteran preference for SBIR applications and increases 
the amount of awards for these veteran-owned small businesses 
to $300,000 for a Phase I and $2.25 million for a Phase II.
    Mr. King (R-IA) offered Amendment 191 that was accepted by 
a vote of 13 yeas to 11 nos. The amendment eliminated Section 
504, a provision requiring agencies to seek applications from 
specific subcategories of small businesses.

                          VI. Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the recorded 
votes on the motion to report legislation and amendments 
thereto.

                Amendment to Committee Print Offered by 
                       Ms. Velazquez of New York

    Beginning on page 69, line 3, strike section 310, and 
redesignate succeeding sections accordingly.


                Amendment to Committee Print Offered by 
                       Ms. Velazquez of New York

  Beginning on page 25, line 8, strike sections 202 and 203, 
and insert the following, redesignating succeeding sections 
accordingly:

SEC. 202 VOUCHER PROGRAM.

  Section 9 of the Small Business Act (15 U.S.C. 638), as 
amended by this Act, is further amended by adding at the end 
the following:
  ``(hh) Pilot Program.--The Administrator shall establish a 
voucher program under which small business concerns may apply 
for vouchers for technology development, testing, evaluation, 
and commercialization assistance for SBIR and STTR technologies 
from the head of each Federal agency participating in the SBIR 
program or the STTR program. The head of each such Federal 
agency may allocate not more than 10 percent of the funds 
allocated to the SBIR program and the STTR program of the 
Federal agency for such vouchers.''.


                Amendment to Committee Print Offered by 
                         Mr. Tipton of Colorado

  Add, at the end of the bill, the following (and conform the 
table of contents accordingly):

SEC. 505. PUBLICATION OF CERTAIN INFORMATION.

  Section 9 of the Small Business Act (15 U.S.C. 638), as 
amended by this Act, is further amended by adding at the end 
the following:
  ``(qq) Publication of Certain Information.--In order to 
increase the number of small businesses concerns receiving 
awards under the SBIR or STTR programs of participating 
agencies, and to simplify the application process for such 
awards, the Administrator shall establish and maintain a public 
Internet website on which the Administrator shall publish such 
information relating to notice of and application for awards 
under the SBIR program and STTR program of each participating 
Federal agency as the Administrator determines appropriate.''.
                              ----------                              


              Amendment to the Committee Print Offered by 
                         Mr. Tipton of Colorado

  Page 42, line 22, strike ``shall'' and insert ``may''.
                              ----------                              


              Amendment to the Committee Print Offered by 
                         Mr. Tipton of Colorado

  Page 87, after line 6, insert the following (and conform the 
table of contents accordingly):

SEC. 505. TIMING.

  Federal agencies participating in the SBIR program or STTR 
program shall, to the extent possible, attempt to shorten the 
amount of time between the provision of notice of an award 
under the SBIR program or STTR program and the subsequent 
release of funding with respect to the award.
                              ----------                              


                Amendment to Committee Print Offered by 
                     Mr. Cicilline of Rhode Island

  Page 26, after line 8, insert the following and redesignate 
subsequent paragraphs accordingly:
          (5) in paragraph (4), by inserting after ``under this 
        subsection'' the following: ``and to establish and 
        carry out an outreach program described in subsection 
        (qq)''.
  Page 28, line 12, strike ``(A) for awards'' and insert the 
following: ``(A)(i) for awards''.
  Page 28, line 16, strike ``(B) to support'' and insert the 
following: ``(ii) to support''.
  Page 28, line 19, strike the period at the end and insert the 
following ``; and''.
  Page 28, after line 19, insert the following:
                  ``(B) to establish and carry out an outreach 
                program described in subsection (qq).''.
  Add, at the end of the bill, the following:

SEC. 505. OUTREACH PROGRAM.

  Section 9 of the Small Business Act (15 U.S.C. 638), as 
amended by this Act, is further amended by adding at the end 
the following:
  ``(qq) Outreach Program.--
          ``(1) An outreach program described in this 
        subsection is a program that provides grants to States 
        for the purpose of outreach, financial support, and 
        technical assistance to technology-based small business 
        concerns participating in or interested in 
        participating in an SBIR program or STTR program, 
        including initiatives--
                  ``(A) to make grants or loans to companies to 
                pay a portion or all of the cost of developing 
                SBIR or STTR proposals;
                  ``(B) to establish or operate a mentoring 
                program to provide business advice and 
                counseling that will assist small business 
                concerns that have been identified by program 
                managers of participating SBIR agencies, the 
                Administration, or other entities that are 
                knowledgeable about the SBIR and STTR programs 
                as good candidates for the SBIR and STTR 
                programs;
                  ``(C) to create or participate in a training 
                program for individuals providing SBIR or STTR 
                outreach and assistance at the State and local 
                levels; and
                  ``(D) to encourage the commercialization of 
                technology developed through funding under the 
                SBIR program or the STTR program.
          ``(2) The Administrator shall ensure that the 
        outreach program described in this subsection receives 
        funds in accordance with subsections (y)(4) and 
        (hh)(1)(B).''.
        
        
                Amendment to Committee Print Offered by 
                     Mr. Cicilline of Rhode Island

  Add at the end the following:

SEC. 505. REPORT ON ENHANCEMENT OF MANUFACTURING ACTIVITIES.

  Section 9 of the Small Business Act (15 U.S.C. 638), as 
amended by this Act, is further amended by adding at the end 
the following:
  ``(qq) Report on Enhancement of Manufacturing Activities.--
Not later than October 1, 2011, and annually thereafter, the 
head of each Federal agency that makes more than $50,000,000 in 
awards under the SBIR and STTR programs of the agency combined 
shall submit to the Committee on Small Business and 
Entrepreneurship of the Senate and the Committee on Small 
Business and the Committee on Science, Space, and Technology of 
the House of Representatives a report that includes--
          ``(1) a description of efforts undertaken by the head 
        of the Federal agency to enhance manufacturing 
        activities;
          ``(2) a comprehensive description of the actions 
        undertaken each year by the head of the Federal agency 
        in carrying out the SBIR or STTR program of the agency 
        in support of Executive Order 13329 (69 Fed. Reg. 38; 
        relating to encouraging innovation in manufacturing);
          ``(3) an assessment of the effectiveness of the 
        actions described in paragraph (2) at enhancing the 
        research and development of manufacturing technologies 
        and processes; and
          ``(4) recommendations that the program managers of 
        the SBIR or STTR program of the agency consider 
        appropriate for additional actions to increase the 
        effectiveness of enhancing manufacturing activities.''.
                              ----------                              


  Amendment to the Committee Print Offered by Mr. Cicilline of Rhode 
    Island, for himself and Ms. Chu of California, Mr. Richmond of 
                 Louisiana, and Ms. Clarke of New York

  Page 87, after line 6, insert the following (and conform the 
table of contents accordingly):

SEC. 505. OUTREACH PROGRAM.

  Section 9 of the Small Business Act (15 U.S.C. 638), as 
amended by this Act, is further amended by adding at the end 
the following:
  ``(qq) Outreach Program.--
          ``(1) In general.--An outreach program described in 
        this paragraph is a program that provides outreach and 
        technical assistance to technology-based small business 
        concerns owned and operated by a minority, woman, or 
        veteran, including initiatives--
                  ``(A) to increase the participation of such 
                businesses in the programs under this section; 
                and
                  ``(B) to create training programs for such 
                businesses when seeking to participate in the 
                programs under this section.
          ``(2) Funding.--Applicable Federal agencies shall 
        carry out an outreach program described in paragraph 
        (1) each fiscal year using 2 percent of the 10 percent 
        of funds allocated for commercialization activities 
        under subsections (y)(4) and (hh)(1), and the 
        allocation for activities under those subsections may 
        not be increased as a result of funds being made 
        available for such an outreach program.''.
        
        
              Amendment to the Committee Print Offered by 
                          Mr. West of Florida

  Page 26, strike line 9 and insert the following:
          (5) in paragraph (5)--
                  (A) by striking ``the Committee on Armed 
                Services and the Committee on Small Business of 
                the House of Representatives'' and inserting 
                ``the Committee on Armed Services, the 
                Committee on Small Business, and the Committee 
                on Science, Space, and Technology of the House 
                of Representatives''; and
                  (B) by striking ``shall include'' and 
                inserting ``shall include, in addition to the 
                information described in paragraph (6)(C)'';
          (6) by redesignating paragraph (5) as paragraph (7);
          (7) by striking paragraph (6); and
  Page 26, line 10, strike ``(6)'' and insert ``(8)''.
  Page 26, line 17, strike ``and''.
  Page 26, line 22, strike ``projects.'' and insert ``projects; 
and''.
  Page 26, after line 22, insert the following:
                  ``(C) take action to ensure that, if a prime 
                contractor on such a contract, after 
                consultation with the Secretary, certifies that 
                an appropriate Phase III technology is not 
                available to be incorporated into a project of 
                the prime contractor, such project shall be 
                excluded from any determination of whether 
                goals under subparagraph (A) have been met.
  Page 27, strike lines 12 through 19 and insert the following:
                  ``(C) include in the annual report under 
                paragraph (7)--
                          ``(i) the percentage of Phase II SBIR 
                        and STTR contracts awarded by the 
                        Secretary that led to technology 
                        transition into programs of record or 
                        fielded systems;
                          ``(ii) information on the status of 
                        each project that received funding 
                        through the Commercialization Readiness 
                        Program and efforts to transition those 
                        projects into programs of record or 
                        fielded systems; and
                          ``(iii) a description of each 
                        incentive that has been used by the 
                        Secretary under subparagraph (B) and 
                        the effectiveness of that incentive 
                        with respect to meeting the goal under 
                        subparagraph (A).''.
  Page 72, strike lines 5 through 7 and insert the following:
                          (ii) by redesignating paragraphs (5), 
                        (6), and (7) as paragraphs (4), (5), 
                        and (6), respectively.
  Page 73, strike lines 8 through 10 and insert the following:
                          (i) by redesignating paragraphs (4), 
                        (5), and (6) as paragraphs (5), (6), 
                        and (7), respectively; and
                              ----------                              


              Amendment to the Committee Print Offered by 
                       Ms. Velazquez of New York

  Page 87, after line 6, insert the following (and conform the 
table of contents accordingly):

SEC. 505. LIMITATION ON PILOT PROGRAMS.

  Section 9 of the Small Business Act (15 U.S.C. 638), as 
amended by this Act, is further amended by adding at the end 
the following:
  ``(qq) Limitation on Pilot Programs.--
          ``(1) In general.--The Administrator of the Small 
        Business Administration may only carry out a covered 
        pilot program if in accordance with paragraphs (2) and 
        (3).
          ``(2) Existing pilot programs.--With respect to a 
        covered pilot program in operation on the date of 
        enactment of this subsection, such program may only be 
        carried out during the 3-year period beginning on such 
        date of enactment.
          ``(3) New pilot programs.--With respect to a covered 
        pilot program established after the date of enactment 
        of this subsection, such program--
                  ``(A) may only be carried out during the 3-
                year period beginning on the date on which such 
                program is established; and
                  ``(B) may not continue or be based on, in any 
                manner, a previously established covered pilot 
                program.
          ``(4) Covered pilot program defined.--In this 
        subsection, the term `covered pilot program' means any 
        initiative, project, innovation or other activity--
                  ``(A) relating to an SBIR or STTR program; 
                and
                  ``(B) not specifically authorized by law.''.
                              ----------                              


              Amendment to the Committee Print Offered by 
                       Mr. Critz of Pennsylvania

  Page 87, after line 6, insert the following (and conform the 
table of contents accordingly):

SEC. 505. PREFERENCE FOR HYDRAULIC FRACTURING RESEARCH.

  Section 9 of the Small Business Act (15 U.S.C. 638), as 
amended by this Act, is further amended by adding at the end 
the following:
  ``(qq) Hydraulic Fracturing Research Preference.--In making 
awards under this section, a Federal agency shall give priority 
to applications in a manner that increases the number of SBIR 
and STTR award recipients conducting research related to 
reducing the environmental impact, including with respect to 
water quality, of the use of hydraulic fracturing during 
natural gas exploration activities.''.
                              ----------                              


              Amendment to the Committee Print Offered by 
                       Ms. Velazquez of New York

  Page 87, after line 6, insert the following (and conform the 
table of contents accordingly):

SEC. 505. ENSURING EQUITY IN SBIR AND STTR AWARDS TO INDIVIDUAL 
                    COMPANIES.

  Section 9 of the Small Business Act (15 U.S.C. 638), as 
amended by this Act, is further amended by adding at the end 
the following:
  ``(qq) Ensuring Equity in SBIR and STTR Awards to Individual 
Companies.--A small business concern, including affiliates of 
the small business concern, may not receive an SBIR or STTR 
award in a fiscal year if, at the time the award is made--
          ``(1) the small business concern has received an 
        aggregate dollar amount of such awards in such fiscal 
        year that exceeds 50 percent of the aggregate dollar 
        amount of such awards received, in the preceding fiscal 
        year, by the median State with respect to such 
        aggregate amount; or
          ``(2) the small business concern has received an 
        aggregate number of such awards in such fiscal year 
        that exceeds 50 percent of the aggregate number of such 
        awards received, in the preceding fiscal year, by the 
        median State with respect to such aggregate number.''.
                              ----------                              


              Amendment to the Committee Print Offered by 
                       Mr. Critz of Pennsylvania

  Page 87, after line 6, insert the following (and conform the 
table of contents accordingly):

SEC. 505. PREFERENCE FOR ACID MINE DRAINAGE RESEARCH.

  Section 9 of the Small Business Act (15 U.S.C. 638), as 
amended by this Act, is further amended by adding at the end 
the following:
  ``(qq) Acid Mine Drainage Research Preference.--In making 
awards under this section, a Federal agency shall give priority 
to applications in a manner that increases the number of SBIR 
and STTR award recipients conducting research related to 
reducing the environmental impact, including with respect to 
water quality, of acid mine drainage.''.
                              ----------                              


              Amendment to the Committee Print Offered by 
                       Mr. Critz of Pennsylvania

  Page 87, after line 6, insert the following (and conform the 
table of contents accordingly):

SEC. 505. PREFERENCE FOR CLEAN COAL TECHNOLOGY RESEARCH.

  Section 9 of the Small Business Act (15 U.S.C. 638), as 
amended by this Act, is further amended by adding at the end 
the following:
  ``(qq) Clean Coal Technology Research Preference.--In making 
awards under this section, a Federal agency shall give priority 
to applications in a manner that increases the number of SBIR 
and STTR award recipients conducting research with respect to 
clean coal technology, including the gasification of coal.''.
                              ----------                              


              Amendment to the Committee Print Offered by 
                       Mr. Critz of Pennsylvania

  Page 87, after line 6, insert the following (and conform the 
table of contents accordingly):

SEC. 505. CLEAN COAL TECHNOLOGY.

  Section 9 of the Small Business Act (15 U.S.C. 638), as 
amended by this Act, is further amended by adding at the end 
the following:
  ``(qq) Clean Coal Technology Commercialization Pilot 
Program.--The Administrator of the Small Business 
Administration shall establish a program to assist the 
commercialization of technologies--
          ``(1) related to clean coal, including the 
        gasification of coal; and
          ``(2) that were developed under the SBIR program.''.
        
        
                Amendment to Committee Print Offered by 
                         Mr. Schrader of Oregon

  Page 83, beginning on line 11, strike ``The head of each 
Federal agency'' through ``or the STTR program'' on line 13, 
and insert the following: ``The Administrator''.
  Page 83, line 11, insert ``outcome-based performance'' before 
``metrics''.
  Page 83, line 14, insert ``a single set of uniform outcome-
based performance'' before ``metrics''.
  Page 83, beginning on line 15, strike ``of the SBIR program'' 
through ``the Federal agency'' on line 16 and insert ``the SBIR 
programs and STTR programs of participating Federal agencies''.
  Page 83, beginning on line 21, strike subparagraph (B) and 
redesignate succeeding subparagraphs accordingly.
  Page 83, line 23, strike the period at the end and insert ``; 
and''.
  Page 83, after line 23, insert the following:
                  ``(C) include factors relating to 
                commercialization such as the number of 
                projects for which Phase III awards were made, 
                percentage of SBIR projects successfully 
                integrated into a program of record, and the 
                amount of Federal dollars received by SBIR 
                projects through non-SBIR Federal contracts.''.
  Page 83, beginning on line 24, strike ``head of each Federal 
agency described in paragraph (1)'' and insert 
``Administrator''.
  Page 84, line 1, insert ``outcome-based performance'' before 
``metrics''.
  Page 84, line 3, strike ``program'' and insert ``programs''.
  Page 84, line 4, strike ``program'' and insert ``programs''.
  Page 84, line 4, strike ``the Federal agency'' and insert 
``participating Federal agencies''.
  Page 84, line 6, strike ``program'' and insert ``programs''.
  Page 84, line 7, strike ``program'' and insert ``programs''.
  Page 84, line 7, strike ``the Federal agency'' and insert 
``participating Federal agencies''.
  Page 84, beginning on line 9, strike ``head of each Federal 
agency described in paragraph (1)'' and insert 
``Administrator''.
  Page 84, line 12, strike ``and the Administrator''.
  Page 84, beginning on line 16, strike ``head of each Federal 
agency described in paragraph (1)'' and insert 
``Administrator''.


              Amendment to the Committee Print Offered by 
                         Mr. Schrader of Oregon

  Page 87, after line 6, insert the following (and conform the 
table of contents accordingly):

SEC. 505. INSPECTOR GENERAL REPORTS.

  Not later than October 1 of each year, the Inspector General 
of each Federal agency that participates in the SBIR program or 
STTR program shall submit to the Committee on Small Business 
and Entrepreneurship of the Senate and the Committee on Small 
Business and the Committee on Science, Space, and Technology of 
the House of Representatives a report describing--
          (1) the number of cases referred to the Inspector 
        General in the preceding year that related to fraud, 
        waste, or abuse with respect to the SBIR program or 
        STTR program;
          (2) the actions taken in each case described in 
        paragraph (1) if fraud, waste, or abuse was determined 
        to have occurred;
          (3) if no action was taken in a case described in 
        paragraph (1) and fraud, waste, or abuse was determined 
        to have occurred, the justification for action not 
        being taken; and
          (4) an accounting of the funds used to address fraud, 
        waste, and abuse, including a description of personnel 
        and resources funded and funds that were recovered or 
        saved.
                              ----------                              


                Amendment to Committee Print Offered by 
                         Ms. Chu of California

  Page 4, line 6, strike ``$150,000'' and insert ``$225,000''.
  Page 4, line 8, strike ``$1,000,000'' and insert 
``$2,000,000''.
  Page 4, line 13, strike ``$150,000'' and insert ``$225,000''.
  Page 4, line 15, strike ``$1,000,000'' and insert 
``$2,000,000''.
  Add, at the end of the bill, the following:

SEC. 505. ADJUSTMENTS TO REQUIRED EXPENDITURE AMOUNTS.

  (a) SBIR Programs.--Section 9(f) of the Small Business Act 
(15 U.S.C. 638(f)), as amended by this Act, is further 
amended--
          (1) in paragraph (2)(C), by striking ``2.5 percent'' 
        and inserting ``the lesser of 3 percent and any 
        percentage specified in paragraph (4) for that fiscal 
        year'';
          (2) by adding at the end the following:
          ``(4) Percentage adjustments.--The percentage 
        specified in this paragraph shall be equal to--
                  ``(A) for fiscal year 2012, 2.6 percent;
                  ``(B) for fiscal year 2013, 2.7 percent;
                  ``(C) for fiscal year 2014, 2.8 percent; and
                  ``(D) for fiscal year 2015, 2.9 percent.''.
  (b) STTR Programs.--Section 9(n) of the Small Business Act 
(15 U.S.C. 638(n)), as amended by this Act, is further 
amended--
          (1) in paragraph (1)(B)(ii) by striking ``0.3 
        percent'' and inserting ``the lesser of 0.5 percent and 
        any percentage specified in paragraph (4) for that 
        fiscal year''; and
          (2) by adding at the end the following:
          ``(4) Percentage adjustments.--The percentage 
        specified in this paragraph shall be equal to--
                  ``(A) for fiscal year 2012, 0.3 percent; and
                  ``(B) for fiscal years 2013 and 2014, 0.4 
                percent.''.
  (c) Application.--The amendments made by this section shall 
apply to fiscal years beginning with fiscal year 2012.


                Amendment to Committee Print Offered by 
                         Ms. Chu of California

  Page 26, after line 8, insert the following and redesignate 
subsequent paragraphs accordingly:
          (5) in paragraph (4), by inserting after ``under this 
        subsection'' the following: ``and to establish and 
        carry out a minority institution program described in 
        subsection (qq)''.
  Page 28, line 12, strike ``(A) for awards'' and insert the 
following: ``(A)(I) for awards''.
  Page 28, line 16, strike ``(B) to support'' and insert the 
following: ``(ii) to support''.
  Page 28, line 19, strike the period at the end and insert the 
following ``; and''.
  Page 28, after line 19, insert the following:
                  ``(B) to establish and carry out a minority 
                institution program described in subsection 
                (qq).''.
  Add at the end of the bill the following:

SEC. 505. MINORITY INSTITUTION PROGRAM.

  Section 9 of the Small Business Act (15 U.S.C. 638), as 
amended by this Act, is further amended by adding at the end 
the following:
  ``(qq) Minority Institution Program.--
          ``(1) Program described.--A minority institution 
        program described in this subsection is a program to 
        make grants to minority institutions that partner with 
        nonprofit organizations that have experience developing 
        relationships between industry, minority institutions, 
        and other entities, for the purpose of increasing the 
        number of SBIR and STTR program applications by 
        minority-owned small businesses.
          ``(2) Application.--To be eligible to receive a grant 
        under paragraph (1), a minority institution shall 
        submit an application to the head of the Federal agency 
        carrying out the program at such time, in such manner, 
        and containing such information and assurances as the 
        head may require.
          ``(3) Matching requirement.--As a condition of a 
        grant under paragraph (1), the head of the Federal 
        agency carrying out the program shall require that a 
        minority institution provide a matching amount from a 
        source other than the Federal Government that is equal 
        to the amount of the grant.
          ``(4) Minority institution defined.--In this 
        subsection, the term `minority institution' has the 
        meaning given that term in section 365(3) of the Higher 
        Education Act of 1965 (20 U.S.C. 1067k(3)) and shall 
        include Asian American Native American Pacific Islander 
        Serving Institutions, Historically Black Colleges and 
        Universities, Hispanic Serving Institutions, and Tribal 
        Colleges and Universities.''.
        
        
                Amendment to Committee Print Offered by 
                         Ms. Chu of California

  Page 31, line 16, insert after ``Policy Committee.'' the 
following: ``The Interagency SBIR/STTR Policy Committee shall 
include representatives from small business concerns among its 
members.''.
                              ----------                              


                Amendment to Committee Print Offered by 
                         Mr. Owens of New York

  Add at the end of the bill the following:

SEC. 505. 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 by this Act, is further amended by adding at the end 
the following:
  ``(qq) 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.''.
                              ----------                              


                Amendment to Committee Print Offered by 
                         Mr. Owens of New York

  Add at the end of the bill the following:

SEC. 505. 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 by this Act, is further amended by adding at the end 
the following:
  ``(qq) 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.''.
                              ----------                              


                Amendment to Committee Print Offered by 
                         Mr. Owens of New York

  Add, at the end of the bill, the following:

SEC. 505. ENHANCING VETERAN PARTICIPATION IN SBIR.

  Section 9 of the Small Business Act (15 U.S.C. 638), as 
amended by this Act, is further amended by adding at the end 
the following:
  ``(qq) Enhancing Veteran Participation in SBIR.--
          ``(1) Special rules for awards.--Notwithstanding any 
        other provision of this section, a small business 
        concern owned and controlled by veterans may--
                  ``(A) receive a Phase I award in the amount 
                of $300,000 under an SBIR program and a Phase 
                II award in the amount of $2,250,000 under an 
                SBIR program, with such amounts able to be 
                exceeded if the Federal agency making the award 
                notifies the Administrator of such excess; and
                  ``(B) receive a Phase II award under an SBIR 
                program with respect to a project without 
                having received a Phase I award with respect to 
                such project.
          ``(2) Veteran 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 that are small business concerns 
        owned and controlled by veterans.''.
        
        
                Amendment to Committee Print Offered by 
                            Mr. King of Iowa

  Beginning on page 86, line 9, strike section 504.


             VII. Section-by-Section Analysis of H.R. 1425


         TITLE 1--REAUTHORIZATION OF THE SBIR AND STTR PROGRAMS

Sec. 101. Extension length

    This section extends the SBIR and STTR programs for 3 years 
until September 30, 2014. A shorter authorization allows the 
Committee to make needed alterations in a program designed to 
commercialize the rapidly changing field of technological 
innovation.

Sec. 102. SBIR and STTR award levels

    This section increases the maximum size of SBIR and STTR 
awards from $100,000 to $150,000 for Phase I and from $750,000 
to $1 million for Phase II. The SBA also is required to make 
annual adjustments of the maximum award sizes for inflation. 
The provision prohibits any agency from issuing an SBIR or STTR 
award if the size of the award exceeds the award guidelines 
established in this section by more than 50 percent. Finally, 
the provision requires federal agencies to maintain information 
on awards exceeding the award guidelines including: the award 
amount; justifications for exceeding the guidelines; the 
identity and location of the recipient; the recipient firm's 
receipt, if any, of venture capital, hedge fund, or private 
equity investment; and the ownership stake by one or more 
venture capital companies, hedge funds, or private equity 
firms. Nothing shall prevent a federal agency from 
supplementing an award under the SBIR or STTR programs with 
federal funds that are outside of the SBIR and STTR 
allocations.
    The award sizes in the program have not been raised since 
1982--almost 30 years ago. As a result, award sizes need to 
change simply to cover the cost of inflation. To avoid such 
problems in the future, this section also authorizes the SBA to 
periodically adjust the size of the award to account for 
inflation.
    The legislation contemplates allowing agencies to exceed 
the maximum award sizes. By requiring the collection of data on 
agency awards in excess of the statutory caps, it will enable 
Congress to adjust those award sizes in order to meet the needs 
of the program and the small businesses seeking to 
commercialize their technology.

Sec. 103. Agency and program flexibility

    Section 103 allows SBIR and STTR applicants to receive 
awards for subsequent SBIR or STTR phases at another agency and 
also enables small business concerns which received SBIR or 
STTR awards to receive awards for subsequent phases in either 
the STTR or SBIR program, respectively. Given the range of 
agencies and technologies covered by the SBIR and STTR 
programs, one of its great strengths is the flexibility 
provided to the agencies. This section will authorize one 
agency to combine a SBIR or STTR award with that of another 
agency when both find the innovation promising, 
commercialization likely, and the needs of both agencies may be 
met by the one innovation.

Sec. 104. Elimination of Phase II invitations

    This section requires that federal agencies conduct their 
solicitation of Phase II SBIR and STTR proposals without any 
invitation, pre-screening, pre-selection, or down-selection 
(reduction in the number of contractors or sub-contractors 
working on a project as it moves from one phase to another) 
process between the first and second phase. The SBIR and STTR 
programs rely on open competitions to ensure that awards are 
made to the best possible technologies. If agencies limit 
competition at Phase II by invitation or screening of 
companies, it inhibits the competitive nature of the programs 
by favoring certain firms at the Phase II level. This section 
simply ensures that agencies do not structure any Phase II 
competitions in a way that inhibits all interested Phase I 
awardees from applying for a Phase II award.

Sec. 105. Phase flexibility

    This section grants agencies the authority to provide a 
Phase II award if an agency finds that the small business 
concern has already completed the work typically done during 
Phase I. If a company has already completed the work that would 
typically be done during Phase I, no logical reason exists to 
require the business to first obtain a Phase I award. Spending 
scarce federal dollars when the research already has been 
performed is not a wise use of taxpayer dollars. Finally, 
allowing a business to obtain a Phase II award without going 
through a Phase I award will promote the commercialization of 
technology--the primary objective of the program.

Sec. 106. Participation by firms with substantial investment from 
        multiple venture capital operating companies, hedge funds, or 
        private equity firms in a portion of the SBIR program

    Section 106 authorizes the Departments of Health and Human 
Services and Energy, the National Science Foundation and the 
National Aeronautics and Space Administration to permit firms 
majority-owned and controlled by one or more venture capital 
companies, one or more hedge funds, or one or more private 
equity firms to compete for up to 45 percent of the agency's 
SBIR funds. All other qualifying federal agencies shall allow 
majority-owned private investment backed small businesses to 
compete for up to 35 percent of the agency's SBIR funds.
    The Committee believes that the capital structure of a 
small business concern is irrelevant for the purposes of the 
SBIR program. This is supported by the series of hearings 
conducted by the Committee over the last four years and 
independent research. The National Research Council (NRC) of 
the National Academy of Sciences found in its May 2009 research 
report that small businesses engaged in federal research 
require sufficient sources of external capital to successfully 
commercialize their research. This is readily apparent in the 
medical and defense industries, but also in other fields 
including transportation and energy. As a result, the Committee 
believes that the overriding policy focus should be on 
enhancing small firms' access to financing--including equity 
investment in the form of venture capital. The Committee 
believes that the recent NRC report provides further 
justification for restoring the SBIR program to its pre-2003 
status when venture capital investment was permitted. 
Furthermore, the Committee finds that venture capital companies 
should not be placed at a disadvantage to other entities that 
provide capital to businesses, such as hedge funds or private 
equity firms. As a result, the Committee treats private equity 
and hedge funds in the same manner as it treats venture capital 
companies.

Sec. 107. Ensuring that firms with substantial investment from multiple 
        venture capital operating companies, hedge funds, or private 
        equity firms participate in a portion of the SBIR and STTR 
        programs

    This section delineates the affiliations between various 
outside investors (such as venture capital companies, private 
equity firms, etc.) and small business concerns for purposes of 
determining whether the combination is eligible for an award 
under the SBIR program. Under the section, the Administrator 
shall not consider a business concern to be affiliated with a 
venture capital operating company, hedge fund, or private 
equity firm (or any other business that the venture capital 
operating company, hedge fund, or private equity firm has 
financed) if such outside investment companies do not own 50 
percent or more of the business concern and employees of such 
private investment companies do not constitute a majority of 
the board of directors of the business concern. Further, 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 of venture capital operating companies, hedge 
funds, or private equity firms; there is no single venture 
capital operating company, hedge fund, or private equity firm 
that owns 50 percent or more of the business concern; and there 
is no single venture capital operating company, hedge fund, or 
private equity firm the employees of which constitute a 
majority of the board of directors of the business concern. The 
section further places limits to prevent large companies from 
participating in the program. A small business concern shall 
only be deemed eligible to participate in the SBIR or STTR 
program if not more than two venture capital operating 
companies hedge funds, or private equity firms under large 
business control have an ownership interest in the small 
business concern; and the venture capital operating companies, 
hedge funds, or private equity firms under large business 
control do not collectively own more than 20 percent of the 
small business concern.
    The Committee concludes that the other portfolio companies 
owned by a venture capital company, hedge fund, or private 
equity firm are immaterial to the dealings of the small 
business concern participating in the SBIR or STTR program. As 
a result, this section clearly defines that the employees for 
the small business concern and the employees of the firm 
providing equity investment company are the only ones that 
shall be counted in determining eligibility pursuant to 13 
C.F.R. 121.702(b) (or any successor regulation) for 
participation in the SBIR or STTR program. In essence, this 
section limits the reach and scope of the SBA's affiliation 
rules set forth in 13 C.F.R. Part 121 for the purposes of the 
SBIR and STTR programs.

Sec. 108. SBIR and STTR special acquisition preference

    This section codifies the language from the SBIR and STTR 
policy directives confirming the intent of Congress to 
establish a special acquisition preference for SBIR and STTR 
Phase III awards. The provision clarifies that agencies should, 
to the extent possible, award contracts to those firms that 
developed technologies using SBIR or STTR funds. If the 
objective of the SBIR and STTR programs is to commercialize 
technology in order to meet the needs of federal agencies, then 
the firms that developed the technology using taxpayer dollars 
should be the preferred source for federal agencies. Moreover, 
the provision enhances a robust, competitive small business 
industrial base.

Sec. 109. Collaborating with federal laboratories and research and 
        development centers

    Section 109 expands opportunities for firms receiving SBIR 
or STTR grants to enter into cooperative research and 
development agreements with federal agencies and laboratories. 
The provision authorizes (but does not require) that an agency 
may award a grant under the SBIR or STTR program while 
simultaneously signing a cooperative research and development 
agreement with the same firm. Furthermore, it prevents an 
agency from requiring a firm to enter into a cooperative 
research and development agreement in order to obtain a SBIR or 
STTR award. Finally, the provision reduces fees that small 
businesses must pay when utilizing the facilities of a federal 
laboratory or federally funded research and development center.
    The Committee believes that entering into a cooperative 
research and development agreement should not preclude a small 
business concern also from obtaining an SBIR or STTR award. The 
use of both funding channels may ensure that the small business 
has sufficient funds to commercialize its research and meet the 
needs of the government. Finally, by reducing fees that small 
businesses must pay to conduct their own research at federal 
laboratories, the provision will free up scarce financial 
resources that the small business can devote to other needs 
including commercialization of other technologies developed 
with SBIR and STTR funds.

Sec. 110. Notice requirement

    The SBIR and STTR programs are run by multiple agencies and 
the SBA is not necessarily cognizant any time the SBIR or STTR 
program arises in an administrative or judicial challenge. This 
section requires such notification. By requiring notification 
when an issue arises under the SBIR and STTR programs, it will 
enable the SBA, in conjunction with the agency, to examine 
whether any policies, including the Policy Directives, issued 
by the SBA, need alteration as a result of the administrative 
or judicial challenge.

Sec. 111. Additional SBIR and STTR awards

    Section 111 allows SBIR and STTR applicants to receive one 
additional Phase II award for a single project. It also 
requires agencies to verify that any activity to be performed 
with respect to a project with a Phase I and Phase II award has 
not been funded from another federal agency. By allowing 
agencies the flexibility to award an additional Phase II for 
further development of a promising technology, this provision 
will further the efforts of commercialization that is core goal 
of the SBIR and STTR programs.

          TITLE II--COMMERCIALIZATION AND OUTREACH INITIATIVES

Sec. 201. Technical assistance for awardees

    This section improves the ability of the SBIR and STTR 
awardees to obtain necessary technical assistance. It increases 
the amount of discretionary technical assistance from non-
federal sources to $5,000 for Phases I and II. Any federal 
agency contracts for the provision of technical assistance must 
ensure that assistance is provided to SBIR and STTR awardees 
rather than for some other purpose. In lieu of federal 
contracting for such services, the provision authorizes the 
SBIR or STTR awardee to obtain its own assistance and be 
reimbursed up to the amount authorized in this section. 
Technical assistance provided under this section will not 
increase an agency's overall SBIR or STTR award.
    A significant number of small businesses have been started 
as a result of SBIR and STTR grants. While technically 
proficient, some innovators have very little, if any, prior 
business experience. The Committee believes that business 
management assistance, be it the development of business plans 
to commercialization strategies, will be a valuable asset to 
firms participating in the SBIR and STTR programs.

Sec. 202. Commercialization Readiness Program at Department of Defense

    Section 202 makes permanent the SBIR Commercialization 
Pilot Program (CPP) at the Department of Defense (DOD), extends 
it to the Department's STTR program, and alters the name to 
reflect the permanency of the program. The provision requires 
both the Secretary and prime contractors for contracts in 
excess of $100 million to utilize technologies developed by 
SBIR and STTR awardees in meeting the needs of the warfighter. 
The CPP was successful in commercializing technologies 
developed under the SBIR and STTR program and meeting the 
warfighting needs of DOD. Given the Committee's position that 
the SBIR and STTR programs are designed to commercialize 
research in order to meet the needs of federal agencies and the 
specialized needs of the DOD, the CPP program, with additional 
reporting requirements should be made permanent.

Sec. 203. Commercialization Readiness Pilot Program for civilian 
        agencies

    This section authorizes agencies other than the DOD to 
create Commercialization Readiness Pilot Programs (CRPs) by 
allocating no more than 10 percent of their program 
authorization to such pilot programs. In order for agencies to 
maximize effective use of these limited funds, the CRPs must 
focus on supporting advanced development of small business 
technologies which are facing high manufacturing or regulatory 
costs. The provision authorizes these agencies to grant post-
Phase II awards up to three times the size of a Phase II Award 
(which is equal to $3 million). Given the overall success of 
the DOD CPP, other agencies should have the opportunity to 
establish similar Phase III commercialization programs. It is 
the view of the Committee that such Phase III commercialization 
programs only should be established when the commercialization 
of Phase II technologies will, as it did with DOD, meet the 
procurement needs of the agency. Although authorized to do so, 
no agency is required to establish such a program.

Sec. 204. Interagency Policy Committee

    This section directs the Office of Science and Technology 
Policy to establish an SBIR and STTR Interagency Policy 
Committee to review and make policy recommendations on ways to 
improve the effectiveness and efficiency of the SBIR and STTR 
programs. While the SBA provides policy directives for the SBIR 
and STTR programs, there is no central mechanism for obtaining 
input by all the agencies covered under section 9 of the Small 
Business Act in order to determine which agencies have the best 
practices or otherwise modify their operations to maximize the 
benefits to small businesses. The Committee believes that an 
interagency policy board on which the SBA sits and which 
receives periodic input from the small business community would 
be would be the optimal mechanism for improving the SBIR and 
STTR programs.

Sec. 205. Clarifying definition of Phase III

    This section revises the definition of ``Phase Three'' of 
the SBIR program to clarify that such work shall be directed 
toward commercial applications derived from research and 
development completed in Phase I or Phase II. This provision 
clearly defines ``commercialization'' as ``the production and 
delivery of products, processes, technologies, or services for 
sale (whether by the originating party of by others) for use by 
the federal government or commercial markets.'' By adopting 
this definition, the Committee is ensuring that Phase III 
focuses on commercialization of technology first for the 
federal government needs and then for commercial markets.

Sec. 206. Shortened period for final decisions on proposals and 
        applications

    Section 206 requires that not later than 90 days after, and 
if the Administrator authorizes an extension, then not later 
than 180 days from, the date on which the solicitation closes 
for SBIR and STTR programs, that the agency make a decision on 
each proposal submitted. It also allows the Director of NIH and 
the Director of the NSF to make an award under the SBIR or STTR 
programs only when an application for award undergoes a 
technical and scientific peer review.
    The Committee has received testimony from numerous 
witnesses that the length of time it takes for the entire 
process to be completed from submission of a grant proposal to 
final notice of award is too long and overly erratic. This 
provision is necessary to provide applicants with certainty 
concerning whether they will or will not obtain an award. As a 
result, small businesses will be able to plan their future 
operations accordingly. Except for those awards necessitating a 
technical and scientific peer review, agencies should have the 
capability of making decisions on Phase I or Phase II in less 
than 90 days. Finally, the Committee believes that the SBIR and 
STTR programs should support the best science available; given 
the scope of research performed at NIH and NSF, it makes sense 
to require those agencies to seek out advice from appropriate 
experts, including ones outside the agency.

Sec. 207. Phase 0 proof of concept partnership pilot program

    This section creates a three-year pilot program which 
terminates at the end of Fiscal Year 2014, under which the 
Director of the National Institutes of Health (NIH) may use $10 
million of the NIH STTR allocation to provide awards to 
qualifying universities and research institutions to set up 
``Proof of Concept'' Partnerships. Grants of up to $100,000 
shall be awarded to qualifying universities or research 
institutions for the purposes of awarding smaller grants to 
individual researchers looking to start a small business to 
support translational proof-of-concept work including market 
analysis and mentoring activities. The proof-of-concept 
programs would be required to use an industry project 
management board composed of local, technical and business 
experts. This board would monitor the progress of grant 
recipients, imposing market-driven milestones and reporting 
requirements. The board also should be quick to eliminate any 
failing projects. Additionally, the NIH Director shall submit a 
report to the congressional committees of jurisdiction 
evaluating the activities of the program.
    The committee believes that these grants can help 
researchers identify the most promising markets and direct 
their new small business accordingly. An initial ``Phase 0'' 
grant given to help researchers identify their most promising 
research can be beneficial to discovery of new technologies 
that can be applied to the SBIR or STTR programs and enhance 
the probability of success for the small business involved.

                  TITLE III--OVERSIGHT AND EVALUATION

Sec. 301. Streamlining annual evaluation requirements

    Section 301 requires the Administrator to report to 
Congress, at least annually, the number of proposals and awards 
received from firms with venture capital, private equity, or 
hedge fund investment, including those owned and controlled by 
multiple venture capital, private equity, or hedge fund firms. 
It also requires the Administrator to report on efforts to 
increase outreach to firms owned and controlled by women and 
socially or economically disadvantaged individuals; the 
implementation and compliance with the allocation of funds for 
firms majority-owned and controlled by multiple venture 
capital, private equity or hedge fund companies; and appeals of 
Phase III awards and notices of noncompliance with the SBIR and 
the STTR policy directives. Finally, the section requires the 
Administrator to coordinate the implementation of electronic 
databases at the participating agencies.
    One of the most common complaints about the SBIR and STTR 
program is that the agencies are not required to collect enough 
specific information that enables Congress, the SBA, and the 
agencies themselves to assess the performance of the programs 
and make needed alterations in programs to maximize their 
utility to a wide range of small businesses. The metrics that 
must be collected and reported fills that gap. Another tool to 
assist in the assessment of the programs, as well as provide 
transparency to Congress and small business participants, is 
through the development of the central database required by 
this section.

Sec. 302. Data collection from agencies for SBIR

    This section adds a new requirement that agencies with an 
SBIR program collect data annually on: the amount of 
investment, if any, from venture capital, private equity or 
hedge fund firms; majority ownership and control by multiple 
venture capital, private equity, or hedge fund firms; the 
amount of outside capital received at the time of award; any 
foreign investors and their identity; ownership by women or 
socially or economically disadvantaged individuals; and any 
university affiliation. The provision also requires agencies to 
justify awards given that exceed the statutory guidelines. 
Finally, agencies must collect data and report annually on 
whether or not the award winner is from a state receiving less 
federal research funding for small businesses than a majority 
of other states.
    With the significant changes to the participation by small 
businesses with significant outside private investment in the 
SBIR program, the Committee believes that requiring agencies to 
collect this information is necessary for proper evaluation of 
the program. Furthermore, without such data, it would be 
impossible to ascertain whether the percentage limitations set 
forth elsewhere in this bill are actually met or exceeded. 
Since the bill also requires greater outreach to various 
sectors of American society, it is impossible to see whether 
that outreach is successful unless demographic data is 
collected. The provision also corrects the data gap on the 
propriety of agencies exceeding the statutory maximum on awards 
by requiring those justifications to be collected and reported.

Sec. 303. Data collection from agencies for STTR

    This section requires agencies to collect the same 
information for their STTR programs as it does for the SBIR 
program. The rationale for the collection of such information 
for the SBIR program applies with equal force to the STTR 
program and will for the sake of brevity not be repastinated.

Sec. 304. Public database

    This section requires that the public database maintained 
by the Administrator add the following elements: SBIR or STTR 
awardee ownership by venture capital, private equity or hedge 
fund investment; ownership by multiple venture capital, hedge 
fund or private equity firms; amounts of outside capital; 
ownership by certain specific demographic segments; and any 
university affiliation. The need for additional information in 
the public database is necessitated by other changes made to 
the program such as the need to collect more detailed 
demographic and financial information. The public database also 
enables interested parties to provide input on the operation of 
the SBIR and STTR programs. Finally, transparency to the public 
will help agencies identify possible waste, fraud, and abuse in 
the programs, especially with respect to firm eligibility.

Sec. 305. Government database

    In addition to the information that must be collected 
pursuant to section 304 (as it amends the SBIR and STTR 
programs), section 305 adds the following data collection 
elements: the name, size, location and an identifying number 
assigned by the Administrator to the small business concern; an 
abstract of the project; the number of employees of the small 
business concern; the names and titles of the key individuals 
that will carry out the project; the position each key 
individual holds in the small business concern; contact 
information for each key individual; the percentage of effort 
each individual employee will contribute to the project; 
majority-ownership, if applicable, by multiple venture capital 
operating companies, hedge funds, or private equity firms; the 
federal agency to which the application is made; and contact 
information for the person or office within the federal agency 
that is responsible for reviewing the applications and making 
awards under the SBIR or STTR programs.
    Given the fact that agencies and Congress need data on 
outside investors that benefit from the SBIR program, this 
provision collects the necessary data. The government database 
collects additional information, such as a description of the 
project receiving awards, the specific aim of the project 
receiving an award, the number of employees and certain 
proprietary information that should not be part of a public 
database. Ultimately, Congress will use this data along with 
other reports to expand or contract participation by firms with 
significant outside investment.

Sec. 306. Accuracy in funding base calculations

    This section requires the Comptroller General of the United 
States (GAO) to conduct an audit of the SBIR and STTR programs 
to determine whether federal agencies are complying with the 
expenditure requirements. The Committee is unaware of any 
audits, either by the SBA or the agencies that operate the 
programs, demonstrating compliance with the requirement to set 
aside the percentage of appropriated funds required under 
section 9 of the Small Business Act. As the independent audit 
arm of the Congress and a recognized expert in appropriations 
matters, the Committee considered it logical to have GAO 
conduct the audit of the agencies to ascertain whether funds 
are being apportioned properly. Such transparency is vital to 
the proper functioning of the programs and the ability of 
Congress to oversee them.

Sec. 307. Continued evaluation by the National Academy of Sciences

    Section 307 authorizes the NRC to continue its evaluation 
of the SBIR program. These evaluations are to be provided every 
four years. The evaluation is required to contain: an estimate 
of the job growth created through the programs; an assessment 
of other economic effects of the programs; an evaluation of 
federal agency use of Phase II award winners in fulfilling 
procurement needs; and an examination of the effectiveness of 
the programs.
    In addition, the NRC is to perform a separate review of the 
STTR program focusing on the adequacy of the STTR allocation 
and whether it is sufficient to generate appropriate 
collaborations between small businesses and research 
universities. The review also shall include a comprehensive 
study on how the STTR program has stimulated technological 
innovation and technology transfer.
    The NRC completed the most thorough and complete study of 
the SBIR program in 2007. That study is widely cited and used 
benchmark for determining the effectiveness and scope of the 
SBIR program. Given the quality of the study, the NRC's 
expertise in evaluating scientific research, and the need for a 
third party (unaffiliated either with Congress or federal 
agencies) to examine the program, the Committee determined that 
periodic comprehensive assessments from the NRC would be the 
optimal tool to evaluate the SBIR and STTR programs during 
Congressional periodic reevaluations.

Sec. 308. Technology insertion reporting requirements

    This section requires the Administrator to include in the 
annual report to Congress information on Phase III awards 
issued by SBIR and STTR agencies. The information in the report 
shall include: recipient name; dollar amount of award; and 
agency or subagency making the award. In the opinion of the 
Committee, the goal of the SBIR and STTR programs is not to 
find out the results of research, but to create products using 
innovative technologies that will be of utility to federal 
agencies in fulfilling their missions. Therefore, the end-
result of the SBIR and STTR programs should be Phase III 
awards. Despite this goal, nothing in section 9 of the Small 
Business Act requires that agencies collect any data on Phase 
III. This section ameliorates that problem through the annual 
report by the Administrator to Congress.

Sec. 309. Obtaining consent from SBIR and STTR applicants to release 
        contact information to economic development organizations

    Section 309 requires each Federal agency that conducts an 
SBIR or STTR program to enable awardees to be identified to 
appropriate state and local economic development agencies or 
organizations. While the goal of the SBIR and STTR programs is 
to provide useful products to federal agencies, nothing 
prevents commercialization of the research in other sectors. 
State and local economic development organizations may be able 
to provide significant assistance in transferring the 
technology from federal agencies to other uses, be they non-
federal governmental or commercial. However, such collaborative 
efforts necessitate that the awardees must be known to 
appropriate state and local organizations. This section simply 
gives the awardees the option of having their information 
supplied to such organizations.

Sec. 310. Pilot to allow funding for administrative, oversight, and 
        contract processing costs

    This section authorizes the participating agencies to 
utilize up to three percent of their allocations under the SBIR 
program for various administrative functions associated with 
operation of the SBIR and STTR programs. In addition to normal 
administrative functions, the funds authorized in this section 
also shall be used to increase agency detection of waste, fraud 
and abuse in their SBIR and STTR programs, including needed 
cooperation with the agency's Inspector General. For large 
research agencies, the administrative funds can be shared with 
the Inspector General in carrying out programs to eliminate 
waste, fraud, and abuse in the SBIR and STTR program.
    Under current law, agencies are prohibited from using SBIR 
funds to manage the program. This section authorizes 
participating agencies to set aside 3 percent of their SBIR 
account for administrative, oversight, and outreach costs 
related to the SBIR and STTR programs. Over the years, the 
Committee has found that agencies are reluctant to use non-SBIR 
dollars to operate a program they do not view as part of their 
core missions. As a result, agencies may not be awarding 
anywhere near there 2.5 percent allocation. As a result, the 
Committee determined that utilization of a small amount of 
appropriated dollars dedicated to administration of the SBIR 
and STTR programs will ensure maximum funding of small business 
research. In essence, the Committee believes that it is better 
to have a full allocation of 2.425 percent (2.5 percent minus 
the administrative cost allocation) rather than some lower 
percentage (such as 2 percent) because the agency did not have 
the administrative resources to fully implement the program.

Sec. 311. GAO Study with respect to outside investment involvement

    This section requires that not later than 2 years after the 
date of the enactment of this Act, and every 2 years 
thereafter, GAO conduct a study on the impact of requirements 
relating to venture capital operating company, private equity 
firm, and hedge fund involvement in the SBIR and STTR programs. 
The bill allows small business concerns with significant 
outside investment from venture capital, hedge fund and private 
equity firms to participate in the program. Given the potential 
effects of firms with that type of financial backing, the 
Committee determined that a GAO evaluation on a more frequent 
basis than the NRC study authorized in section 307 is required.

Sec. 312. Reducing vulnerability of SBIR and STTR programs to fraud, 
        waste, and abuse

    In overseeing the operation of the program, the 
Administrator issues policy directives. Section 312 requires 
that the Administrator issue a new policy directive addressing 
the issues of fraud, waste and abuse in these programs. In 
addition to the material mandated by this section, the 
Administrator's policy directive is required to include input 
on the types of fraud detection mechanisms needed to remove 
vulnerabilities in the SBIR and STTR programs. In addition to 
the policy directive, this section requires the Administrator 
to establish a telephone hotline to receive reports of waste, 
fraud and abuse in the SBIR and STTR Program.
    In 2009, the Senate Commerce Committee conducted an 
investigation into potential fraudulent practices by SBIR and 
STTR program participants. Their investigation found 29 cases 
of SBIR fraud between 1990 and 2009. These cases involved more 
than 300 SBIR or STTR contracts valued at more than $100 
million dollars. Obviously, insufficient attention was paid by 
program managers to the potential for fraud in these programs. 
Such fraud undermines trust in the program and reduces the 
amount of funds available to legitimate businesses seeking 
awards. In times of severe fiscal restraint, it is necessary to 
ensure optimal use of federal dollars directed to the purposes 
intended by Congress. By creating a more comprehensive fraud 
prevention and detection program, the provisions in Section 312 
will ensure that funds reach legitimate small businesses 
interested in commercializing technology.

Sec. 313. Simplified paperwork requirements

    This section directs the Administrator to issue regulations 
or guidelines (to the extent possible) to standardize SBIR and 
STTR applications and reporting forms across the disparate 
agency participants in the programs. The Committee has 
recognized that a one-size-fits-all approach to operation of 
the SBIR and STTR programs is not appropriate. Flexibility is 
needed simply because the missions (and the research to support 
them) vary widely among federal agencies. That flexibility 
creates problems for small businesses operating in more than 
one agency; the disparate application and reporting 
requirements impose unnecessary regulatory burdens on firms 
that should be focused on the development of new technologies 
rather than reporting requirements of diverse federal agencies. 
This section palliates that problem by requiring the 
Administrator to develop a common set of applications and 
reporting requirements. However, the Committee fully expects 
that those forms and reporting requirements will in no way 
undermine the flexibility that agencies have to operate the 
programs in the manner best meeting the needs of the agency.

Sec. 314. Reducing fraud, waste, and abuse

    This section directs GAO to periodically study the 
effectiveness of the government and public databases in 
reducing vulnerabilities of the SBIR and STTR programs to 
fraud, waste, and abuse. In addition to the other fraud 
detection and prevention measures established elsewhere in this 
legislation, the Committee believes more can and should be done 
to prevent waste, fraud, and abuse. Thus, the Committee 
requires GAO to assess the adequacy of the public databases in 
uncovering waste, fraud and abuse.

                      TITLE IV--POLICY DIRECTIVES

Sec. 401. Conforming amendments to the SBIR and the STTR policy 
        directives

    This section requires the policy directives issued by the 
Administrator be conformed to the changes made in this 
legislation. Further, it requires such policy directives to be 
published in the Code of Federal Regulations. The legislation 
makes significant changes to the operation of the SBIR and STTR 
programs. As a result, the policy directives from the 
Administrator need to be updated as expeditiously as possible 
so that small businesses may utilize the program. In addition, 
the Committee recognizes that the current directives are nearly 
impossible to find and can be changed at the whim of the 
Administrator. By requiring codification in the Code of Federal 
Regulations, it ensures easy access to the directives (by 
visiting www.gpo.gov/fdsys/) while requiring the Administrator 
to use normal rulemaking procedures to modify the directives 
thereby ensuring input from agencies and small business 
participants in the programs.

                       TITLE V--OTHER PROVISIONS

Sec. 501. Report on SBIR and STTR program goals

    This provision directs each federal agency that 
participates in an SBIR or STTR program to: develop metrics in 
conjunction with the Interagency Policy Committee described in 
section 204 in order that they are able to evaluate the 
effectiveness and benefit of the programs; conduct an annual 
evaluation of their programs using such metrics; and report the 
evaluation results annually to the Administrator and relevant 
congressional committees. The Committee asserts that 
establishing viable performance metrics is critical to the 
improvement of the SBIR and STTR programs. The Committee 
believes that using the recommendations of the Interagency 
Policy Committee (those who are closest to the program on a 
day-to-day basis) is an effective strategy to provide the best 
metrics for program evaluation and enable Congress to consider 
appropriate legislative modifications.

Sec. 502. Competitive selection procedures for SBIR and STTR programs

    This section requires all SBIR or STTR funds to be awarded 
pursuant to competitive and merit-based selection procedures. 
The primary benefit of the SBIR and STTR programs is their 
competitive nature, i.e., the agency selects the best science 
presented. Anything that undermines competition in these 
programs, in the opinion of the Committee, should be 
prohibited.

Sec. 503. SBA regulations on loan restrictions

    Section 503 requires the Administrator to promulgate 
regulations concerning affiliation between a small business 
concern and a lender based on the restrictive covenants in the 
loan documents. The Committee is aware of firms (publicly 
traded) that, in return for debt capital, accept highly 
restrictive loan covenants. These limitations may include 
restraints on the alienation of property, restrictions on the 
types of businesses that the firms may enter, and requiring 
that certain levels of cash be maintained in specific bank 
accounts. These restrictions appear very similar to those 
currently used to identify affiliation for purposes of the 
Administrator's size standard regulations. As a result, it 
seems prudent to have the Administrator draft regulations for 
purposes of section 9 of the Small Business Act to determine 
what constitutes affiliation for these types of restrictive 
loan covenants. The purpose of these regulations is to ensure 
that firms cannot evade the affiliation rules simply by 
changing the form of their outside investment.

Sec. 504. Limitation on pilot programs

    This section limits the SBA's authority to establish new 
pilot programs under Section 9 of the Small Business Act. 
Existing pilot programs would be limited to a three-year 
authorization following enactment of the legislation and new 
pilot programs would have a mandatory three-year sunset period. 
This section only corresponds to pilot programs related to the 
SBIR or STTR program and only to those pilot programs not 
specifically authorized in section 9 of the Small Business Act, 
as amended by this legislation. The Committee has longstanding 
concerns about the proliferation of pilot programs at the SBA 
created without direction from Congress. These pilots then 
undermine the ability of the SBA to implement programs mandated 
by Congress. The limitation on pilot programs in the 
implementation of section 9 is the Committee's first effort at 
ensuring that it gives first priority to directives from the 
branch of the government vested by the Constitution with the 
legislative powers.

Sec. 505. Ensuring equity in SBIR and STTR awards to individual 
        companies

    This section prohibits any single SBIR or STTR awardee from 
obtaining more than one-half of the median state's SBIR or STTR 
awards, be they in terms of dollars or number of awards. 
Section 9(j)(2)(H) of the Small Business Act requires that any 
firm that receives more than 15 Phase II awards in a five-year 
period must be able to demonstrate the extent to which it 
received Phase III funding. This demonstrates congressional 
intent that the primary, if not sole, purpose of the SBIR and 
STTR programs is to commercialize technology. However, some 
firms have become expert at obtaining Phase I and Phase II 
awards without necessarily demonstrating any ability or 
interest in obtaining Phase III funding. For instance, one 
company which testified before the committee this year has 
received over 370 Phase I awards and over 185 Phase II awards 
for more than $150 million over its life in the SBIR program. 
That one company has received more SBIR dollars than 26 states 
and territories including Missouri, Montana, Delaware, Rhode 
Island, and Iowa. In fact, this company by itself has won more 
in SBIR funds than Idaho, Mississippi, Wyoming, and North 
Dakota combined. The problem is not confined to just one 
company; there are many other examples in which one company has 
won hundreds of awards. The Committee finds these statistics 
troubling because it is evident that program administrators in 
covered agencies find it easier to make awards for Phase I and 
Phase II rather than finding a diverse set of small businesses 
that are interested in moving federally funded research to 
Phase III as recognized by Section 9(j)(2)(H). This then turns 
an effort at commercialization into nothing more than a 
procurement set-aside program for performing contract research 
needed by federal agencies. As a result, the Committee 
determined to impose limits on the ability of firms to win an 
unlimited number of Phase I and Phase II awards to ensure a 
diverse research and development industrial base interested in 
commercializing federally funded research. The Committee 
expects that this will refocus the SBIR and STTR programs on 
Phase III commercialization.

Sec. 506. Inspector General reports

    This section requires that the Offices of the Inspector 
General for the SBIR participating agencies submit an annual 
report on the actions taken to eliminate fraud in the SBIR 
program. The changes made in this legislation require far 
greater input from Inspector Generals in detecting fraud, waste 
and abuse in the SBIR and STTR programs. This section simply 
requires that those activities be reported to Congress.

Sec. 507. Timing

    This section requires that agencies participating in the 
SBIR program attempt to shorten the time between the 
notification stage of winning an award and the subsequent 
release of funding for that award. The Committee has heard from 
numerous SBIR participants that the time between notification 
of an award and the actual dispersal of funds for that award 
can be erratic. This provision simply eliminates the disparate 
and often lengthy delays in dispersal of funds by participating 
agencies.

Sec. 508. Publication of certain information

    Section 508 requires the SBA to establish and maintain a 
website collecting information on applications and awards for 
all agencies participating in the SBIR program. There are a 
number of agencies with multiple research opportunities. For 
small businesses new to the SBIR or STTR programs, this can be 
a daunting task to navigate the application process. By 
requiring the Administrator to create a centralized database, 
it will enable small businesses to match more readily their 
capabilities with agency needs.

Sec. 509. Preference for clean coal technology research

    This section directs each appropriate federal agency with 
an SBIR program to give priority to research proposals related 
to clean coal technology, including the gasification of coal. 
Given the reliance on imported fossil fuels in the United 
States and the abundance of coal, the Committee believes that 
using the SBIR and STTR programs to uncover new and innovative 
ways to provide clean coal technology makes sense.

Sec. 510. Report on enhancement of manufacturing activities

    This section requires agencies with over $50 million in 
SBIR grants to report on efforts to enhance manufacturing 
activities. Manufacturing is important to American economic 
growth. And technological innovation is crucial to a strong 
manufacturing sector. Given the multitude of small businesses 
involved in manufacturing, the Committee believes that greater 
effort should be made by certain agencies to utilize the SBIR 
and STTR programs to enhance the capability of America's 
manufacturers.

Sec. 511. Express authority to ``Fast Track'' Phase II awards for 
        promising Phase I research

    This section permits agencies to create ``Fast-Track'' 
programs that aim to decrease the time between Phase I and II 
awards, including the ability to simultaneously deliver a Phase 
II award in conjunction with a Phase I award. If the purpose of 
the SBIR and STTR programs is to commercialize research, a 
business should not necessarily have to submit separate 
applications for research and development if it is ready to 
undertake both tasks when it applies for a Phase I award. This 
section ensures that a business prepared to quickly move from 
research to construction of a prototype can take advantage of a 
``Fast Track'' simultaneous grant of a Phase I and Phase II 
award.

Sec. 512. Increased partnerships between SBIR awardees and prime 
        contractors, venture capital investment companies, and larger 
        businesses

    This section requires agencies to establish initiatives 
that encourage partnerships between SBIR awardees and prime 
contractors, venture capital companies, business incubators, 
and larger businesses. SBA contracting programs are replete 
with efforts to encourage joint ventures or other types of 
collaboration among businesses, including between large and 
small businesses. If these types of strategic partnerships can 
assist small businesses in other government contracting arenas, 
they also should help in the context of the SBIR and STTR 
programs. This section requires participating agencies to 
develop such partnerships. Given the expertise of the SBA, the 
Committee would expect that the agencies consult with the SBA 
to determine the best mechanisms for increasing the 
collaboration sought by Congress.

Sec. 513. Preference for acid mine drainage research

    This section directs each appropriate federal agency with 
an SBIR program to give priority to proposals related to 
reducing the environmental impact of acid mine drainage. If the 
SBIR and STTR programs are going to increase the utilization of 
clean coal, it also makes sense that agencies utilize small 
business innovations to ameliorate any adverse environmental 
consequences associated with the mining of coal.

Sec. 514. Preference for hydraulic fracturing research

    This section directs each appropriate federal agency with 
an SBIR program to give priority to proposals related to 
reducing the environmental impact of the use of hydraulic 
fracturing during natural gas exploration activities. Given the 
increased development of natural gas from shale formations, 
agencies should use the SBIR and STTR programs to find 
innovative technologies developed by small businesses to 
address any environmental consequences from the extraction of 
natural gas from shale.

            VIII. Congressional Budget Office Cost Estimate

    H.R. 1425 would extend and expand programs that require 
certain federal agencies to set aside portions of their 
research and development budgets for small businesses. The bill 
would also require participating agencies to collect and report 
information about program participants that would be used both 
for program evaluation and for business development. In 
addition, H.R. 1425 would authorize the Government 
Accountability Office (GAO) and the National Academy of 
Sciences (NAS) to study the operation and effectiveness of the 
programs.
    Based on information from the Small Business Administration 
(SBA) and other participating agencies, CBO estimates that 
implementing H.R. 1425 would cost $14 million over the 2012-
2016 period, subject to appropriation of the necessary amounts. 
Pay-as-you-go procedures do not apply to this legislation 
because it would not affect direct spending or revenues.

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, June 2, 2011.
Hon. Sam Graves,
Chairman, Committee on Small Business, House of Representatives, 
        Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1425, the Creating 
Jobs Through Small Business Innovation Act of 2011.
    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,
                                                          Director.
    Enclosure.

H.R. 1425--Creating Jobs Through Small Business Innovation Act of 2011

    Summary: H.R. 1425 would extend and expand programs that 
require certain federal agencies to set aside portions of their 
research and development budgets for small businesses. The bill 
also would require participating agencies to collect and report 
information about program participants that would be used both 
for program evaluation and for business development. In 
addition, H.R. 1425 would authorize the Government 
Accountability Office (GAO) and the National Academy of 
Sciences (NAS) to study the operation and effectiveness of the 
programs.
    Based on information from the Small Business Administration 
(SBA) and other participating agencies, CBO estimates that 
implementing H.R. 1425 would cost $14 million over the 2012-
2016 period, subject to appropriation of the necessary amounts. 
Pay-as-you-go procedures do not apply to this legislation 
because it would not affect direct spending or revenues.
    H.R. 1425 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. 1425 is shown in the following table. 
The costs of this legislation fall within several budget 
functions, including 050 (national defense), 250 (general 
science, space, and technology), and 550 (health).

----------------------------------------------------------------------------------------------------------------
                                                                    By fiscal year, in millions of dollars--
                                                              --------------------------------------------------
                                                                2012    2013    2014    2015    2016   2012-2016
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

National Academy of Science Study:
    Estimated Authorization Level............................       6       0       0       0       8        14
    Estimated Outlays........................................       1       2       2       1       1         7
Additional Agency Activities:
    Estimated Authorization Level............................       3       2       1       1       1         8
    Estimated Outlays........................................       2       2       1       1       1         7
Total Changes Under H.R. 1425:
    Estimated Authorization Level............................       9       2       1       1       9        22
    Estimated Outlays........................................       3       4       3       2       2        14
----------------------------------------------------------------------------------------------------------------

    Basis of estimate: For this estimate, CBO assumes that the 
bill will be enacted near the end of fiscal year 2011 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. 1425 would cost $14 
million over the 2012-2016 period, assuming appropriation of 
the necessary amounts.
    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 consist 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, award contracts, prepare 
reports, and track outcomes. The organizational structure of 
the program offices varies. 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.

                   NATIONAL ACADEMY OF SCIENCES STUDY

    H.R. 1425 would direct certain agencies participating in 
the SBIR program to enter into an agreement with the NAS for 
the National Research Council to study the degree to which the 
SBIR and STIR programs have stimulated innovation and 
encouraged the use of small businesses to meet federal R&D 
needs. Reports presenting results of the studies would be due 
four years after enactment and every four years thereafter. 
Using those results, NAS also would develop recommendations for 
improving the SBIR and STTR programs. Based on information from 
NAS, CBO estimates that conducting the studies as required by 
H.R. 1425 would cost $7 million over the 2012-2016 period.

                      ADDITIONAL AGENCY ACTIVITIES

    H.R. 1425 would require SBA to upgrade the data systems 
used to consolidate information from participating agencies and 
evaluate their performance. The bill also would require SBA to 
develop new performance measures and regulations to reflect 
changes in the SBIR and STTR programs. Based on information 
from SBA, CBO estimates that those new efforts would cost $5 
million over the 2012-2016 period, assuming appropriation of 
the necessary amounts.
    The bill also would require GAO to conduct several studies 
for the Congress, including one to determine whether the 
agencies participating in the SBIR and STTR programs are 
complying with the programs' requirements to allocate a 
specific portion of their R&D budgets and another to assess 
whether agencies participating in the SBIR program are 
sufficiently protecting the intellectual property rights of the 
small businesses that receive awards under the program. CBO 
estimates that conducting such studies would cost about $2 
million over the 2012-2016 period, subject to the availability 
of appropriated funds.

      REAUTHORIZATION AND EXPANSION OF THE SBIR AND STTR PROGRAMS

    The bill would extend both the SBIR and STTR programs 
through 2014; under current law, both programs are scheduled to 
terminate on September 30, 2011.
    To cover the administrative costs of the programs, H.R. 
1425 would establish a three-year pilot program that would 
authorize participating agencies to use up to 3 percent of the 
R&D amounts set aside for the SBIR program, rather than paying 
those costs from general operating funds. The pilot program 
also would allow agencies to use R&D funds to provide outreach 
and technical assistance to recipients of awards and to carry 
out additional duties as required under the bill. CBO estimates 
that the amount allocated for administrative expenses under the 
pilot program would equal the costs that would be incurred by 
participating agencies in 2012, 2013, and 2014, when 
authorization for the programs would expire.
    Pay-as-you-go considerations: None.
    Intergovernmental and private-sector impact: H.R. 1425 
contains no intergovernmental or private-sector mandates as 
defined in UMRA. The bill would create a grant program to 
assist public universities in the commercialization of research 
and technology. Any costs to universities would be incurred 
voluntarily.
    Previous CBO estimate: On May 18, 2011, CBO transmitted a 
cost estimate for H.R. 1425, the Creating Jobs through Small 
Business Innovation Act of 2011, as ordered reported by the 
House Committee on Science, Space, and Technology on May 4, 
2011. The bill as ordered reported by the Committee on Small 
Business contains several provisions that are not included in 
the version ordered reported by the Committee on Science, 
Space, and Technology that would affect how awards are granted 
by participating agencies. Those differences would not 
significantly affect the cost of implementing the bill; 
therefore, the cost estimates for both versions of the bill are 
the same.
    On March 11, 2011, CBO transmitted a cost estimate for S. 
493, the SBIR/STTR Reauthorization Act of 2011, as ordered 
reported by the Senate Committee on Small Business and 
Entrepreneurship on March 9, 2011. The Senate bill would extend 
the programs through 2019 and raise the amounts that 
participating agencies would set aside for the SBIR and STTR 
programs. The Senate bill also would authorize funds for the 
Federal and State Technology Partnership Program. CBO estimates 
that implementing S. 493 would cost $150 million over the 2012-
2016 period.
    Estimate prepared by: Federal costs: Susan Willie and 
Martin von Gnechten; Impact on state, local, and tribal 
governments: Elizabeth Cove Delisle; Impact on the private 
sector: Sam Wice.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

         IX. New Budget Authority, Entitlement Authority, and 
                            Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                         X. Oversight Findings

    In accordance with clause 2(b)(1) of rule X of the Rules of 
the House of Representatives, the oversight findings and 
recommendations of the Committee on Small Business with respect 
to the subject matter contained in H.R. 1425 are incorporated 
into the descriptive portions of this report.

               XI. Statement of Constitutional Authority

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
authority for this legislation in Art. I, Sec. 8, cl.2; Art. I, 
Sec. 8, cl.7; Art. I, Sec. 8, cl.11; and Art. I, Sec. 8, cl.12.

                     XII. Compliance With Law 104-4

    H.R. 1425 contains no unfunded mandates.
    H.R. 1425 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.

                 XIII. Congressional Accountability Act

    H.R. 1425 does not relate to the terms and conditions of 
employment or access to public services or accommodations with 
the meaning of section 102(b)(3) of P.L. 104-1.

               XIV. Federal Advisory Committee Statement

    This legislation does not establish or authorize the 
establishment of any new advisory committees.

                      XV. Statement of No Earmarks

    Pursuant to clause 9 of rule XXI, H.R. 1425 does not 
contain any congressional earmarks, limited tax benefits, or 
limited tariff benefits as defined in clause 9(e), 9(f), or 
9(g) of Rule XXI.

                 XVI. Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation:
    H.R. 1425 includes a number of provisions designed to 
modernize and make more effective the SBIR and STTR programs.

               XVII. Applicability to Legislative Branch

    The Committee finds that the legislation 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.


       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. 3. (a)(1) * * *

           *       *       *       *       *       *       *

  (aa) Venture Capital Operating Company.--In this Act, the 
term ``venture capital operating company'' means an entity 
described in clause (i), (v), or (vi) of section 121.103(b)(5) 
of title 13, Code of Federal Regulations (or any successor 
thereto).
  (bb) Hedge Fund.--In this Act, the term ``hedge fund'' has 
the meaning given that term in section 13(h)(2) of the Bank 
Holding Company Act of 1956 (12 U.S.C. 1851(h)(2)).
  (cc) Private Equity Firm.--In this Act, the term ``private 
equity firm'' has the meaning given the term ``private equity 
fund'' in section 13(h)(2) of the Bank Holding Company Act of 
1956 (12 U.S.C. 1851(h)(2)).

           *       *       *       *       *       *       *

  Sec. 9. (a) * * *
  (b) It shall be the duty of the Administration, and it is 
hereby empowered--
          (1) * * *

           *       *       *       *       *       *       *

          (7) to report not less than annually to the Committee 
        on Small Business of the Senate, and to the Committee 
        on Science and the Committee on Small Business of the 
        House of Representatives, on the SBIR and STTR programs 
        of the Federal agencies and the Administration's 
        information and monitoring efforts related to the SBIR 
        and [STTR programs, including the data] STTR programs, 
        including--
                  (A) the data on output and outcomes collected 
                pursuant to subsections [(g)(10), (o)(9), and 
                (o)(15), the number of proposals received from, 
                and the number and total amount of awards to, 
                HUBZone small business concerns under each of 
                the SBIR and STTR programs, and a description] 
                (g)(8) and (o)(9);
                  (B) the number of proposals received from, 
                and the number and total amount of awards to, 
                HUBZone small business concerns and firms with 
                venture capital, hedge fund, or private equity 
                firm investment (including those majority-owned 
                by multiple venture capital operating 
                companies, hedge funds, or private equity 
                firms) under each of the SBIR and STTR 
                programs;
                  (C) a description of the extent to which each 
                Federal agency is increasing outreach and 
                awards to firms owned and controlled by women 
                and social or economically disadvantaged 
                individuals under each of the SBIR and STTR 
                programs;
                  (D) general information about the 
                implementation of, and compliance with the 
                allocation of funds required under, subsection 
                (dd) for firms owned in majority part by 
                venture capital operating companies, hedge 
                funds, or private equity firms and 
                participating in the SBIR program;
                  (E) a detailed description of appeals of 
                Phase III awards and notices of noncompliance 
                with the SBIR Policy Directive and the STTR 
                Policy Directive filed by the Administrator 
                with Federal agencies; and
                  (F) a description of the extent to which 
                Federal agencies are providing in a timely 
                manner information needed to maintain the 
                database described in subsection (k); [and]
          (8) to provide for and fully implement the tenets of 
        Executive Order No. 13329 (Encouraging Innovation in 
        Manufacturing)[.]; and
          (9) to coordinate the implementation of electronic 
        databases at each of the Federal agencies participating 
        in the SBIR program or the STTR program, including the 
        technical ability of the participating agencies to 
        electronically share data.

           *       *       *       *       *       *       *

  (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) * * *
                  (B) a second phase, [to further] which shall 
                not include any invitation, pre-screening, pre-
                selection, or down-selection process for 
                eligibility for Phase II, that will further 
                develop proposals which meet particular program 
                needs, in which awards shall be made based on 
                the scientific and technical merit and 
                feasibility of the proposals, as evidenced by 
                the first phase, considering, among other 
                things, the proposal's commercial potential, as 
                evidenced by--
                          (i) * * *

           *       *       *       *       *       *       *

                  (C) where appropriate, a third phase for work 
                that derives from, extends, or completes 
                efforts made under prior funding agreements 
                under the SBIR program--
                          (i) * * *
                          (ii) for which awards from non-SBIR 
                        Federal funding sources are used for 
                        the continuation of research or 
                        research and development that has been 
                        competitively selected using peer 
                        review or [scientific review criteria] 
                        merit-based selection procedures;

           *       *       *       *       *       *       *

          (6) the term ``Small Business Technology Transfer 
        Program'' or ``STTR'' means a program under which a 
        portion of a Federal agency's extramural research or 
        research and development effort is reserved for award 
        to small business concerns for cooperative research and 
        development through a uniform process having--
                  (A) * * *
                  (B) a second phase, [to further develop 
                proposed ideas to] which shall not include any 
                invitation, pre-screening, pre-selection, or 
                down-selection process for eligibility for 
                Phase II, that will further develop proposals 
                that meet particular program needs, in which 
                awards shall be made based on the scientific, 
                technical, and commercial merit and feasibility 
                of the idea, as evidenced by the first phase 
                and by other relevant information; and
                  (C) where appropriate, a third phase for work 
                that derives from, extends, or completes 
                efforts made under prior funding agreements 
                under the STTR program--
                          (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] 
        Phase II or Phase III of the Small Business Innovation 
        Research Program and of the Small Business Technology 
        Transfer Program, as defined in this subsection[.];
          (10) the term ``commercialization'' means--
                  (A) the process of developing products, 
                processes, technologies, or services; and
                  (B) the production and delivery of products, 
                processes, technologies, or services for sale 
                (whether by the originating party or by others) 
                to or use by the Federal Government or 
                commercial markets;
          (11) the term ``Phase I'' means--
                  (A) with respect to the SBIR program, the 
                first phase described in paragraph (4)(A); and
                  (B) with respect to the STTR program, the 
                first phase described in paragraph (6)(A);
          (12) the term ``Phase II'' means--
                  (A) with respect to the SBIR program, the 
                second phase described in paragraph (4)(B); and
                  (B) with respect to the STTR program, the 
                second phase described in paragraph (6)(B); and
          (13) the term ``Phase III'' means--
                  (A) with respect to the SBIR program, the 
                third phase described in paragraph (4)(C); and
                  (B) with respect to the STTR program, the 
                third phase described in paragraph (6)(C).
  (f) Federal Agency Expenditures for the SBIR Program.--
          (1) * * *
          (2) Limitations.--A Federal agency [shall not--
                  [(A) use any of its SBIR budget established 
                pursuant to paragraph (1) for the purpose of 
                funding administrative costs of the program, 
                including costs associated with salaries and 
                expenses; or
                  [(B) make available for the purpose] shall 
                not make available for the purpose of meeting 
                the requirements of paragraph (1) an amount of 
                its extramural budget for basic research which 
                exceeds the percentages specified in paragraph 
                (1).

 [Effective on the first day of the fourth full fiscal year following 
 the date of enactment, section 310(b)(3)(A) of H.R. 1425 provides for 
  amendments to section 9(f)(2) of the Small Business Act as follows:]

          (2) Limitations.--A Federal agency [shall not make 
        available for the purpose] shall not--
                  (A) use any of its SBIR budget established 
                pursuant to paragraph (1) for the purpose of 
                funding administrative costs of the program, 
                including costs associated with salaries and 
                expenses; or
                  (B) make available for the purpose of meeting 
                the requirements of paragraph (1) an amount of 
                its extramural budget for basic research which 
                exceeds the percentages specified in paragraph 
                (1).

           *       *       *       *       *       *       *

  (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) * * *

           *       *       *       *       *       *       *

          (4)(A) unilaterally receive and evaluate proposals 
        resulting from SBIR proposals; and
          (B) make a final decision on each proposal submitted 
        under the SBIR program--
                  (i) not later than 90 days after the date on 
                which the solicitation closes; or
                  (ii) if the Administrator authorizes an 
                extension for a solicitation, not later than 
                180 days after the date on which the 
                solicitation closes;

           *       *       *       *       *       *       *

          (8) collect annually, and maintain in a common format 
        in accordance with the simplified reporting 
        requirements under subsection (v), such information 
        from awardees as is necessary to assess the SBIR 
        program, including information necessary to maintain 
        the database described in subsection (k), including--
                  (A) whether an awardee--
                          (i) has venture capital, hedge fund, 
                        or private equity firm investment or is 
                        majority-owned by multiple venture 
                        capital operating companies, hedge 
                        funds, or private equity firms, and, if 
                        so--
                                  (I) the amount of venture 
                                capital, hedge fund, or private 
                                equity firm investment that the 
                                awardee has received as of the 
                                date of the award; and
                                  (II) the amount of additional 
                                capital that the awardee has 
                                invested in the SBIR 
                                technology;
                          (ii) has an investor that--
                                  (I) is an individual who is 
                                not a citizen of the United 
                                States or a lawful permanent 
                                resident of the United States, 
                                and if so, the name of any such 
                                individual; or
                                  (II) is a person that is not 
                                an individual and is not 
                                organized under the laws of a 
                                State or the United States, and 
                                if so the name of any such 
                                person;
                          (iii) is owned by a woman or has a 
                        woman as a principal investigator;
                          (iv) is owned by a socially or 
                        economically disadvantaged individual 
                        or has a socially or economically 
                        disadvantaged individual as a principal 
                        investigator;
                          (v) is a faculty member or a student 
                        of an institution of higher education, 
                        as that term is defined in section 101 
                        of the Higher Education Act of 1965 (20 
                        U.S.C. 1001); or
                          (vi) is located in a State described 
                        in subsection (u)(3); and
                  (B) a justification statement from the 
                agency, if an awardee receives an award in an 
                amount that is more than the award guidelines 
                under this section;
          [(8)] (9) make an annual report on the SBIR program 
        to the Small Business Administration and the Office of 
        Science and Technology Policy;
          [(9)] (10) include, as part of its annual performance 
        plan as required by subsections (a) and (b) of section 
        1115 of title 31, United States Code, a section on its 
        SBIR program, and shall submit such section to the 
        Committee on Small Business of the Senate, and the 
        Committee on Science and the Committee on Small 
        Business of the House of Representatives;
          [(10) collect, and maintain in a common format in 
        accordance with subsection (v), such information from 
        awardees as is necessary to assess the SBIR program, 
        including information necessary to maintain the 
        database described in subsection (k); and]
          (11) provide for and fully implement the tenets of 
        Executive Order No. 13329 (Encouraging Innovation in 
        Manufacturing)[.]; and
          (12) provide timely notice to the Administrator of 
        any case or controversy before any Federal judicial or 
        administrative tribunal concerning the SBIR program of 
        the Federal agency.

           *       *       *       *       *       *       *

  (i) Annual Reporting.--
          (1) In general.--Each Federal agency required by this 
        section to have an SBIR program or to establish goals 
        shall report annually to the Small Business 
        Administration the number of awards (including awards 
        under subsection (y)) pursuant to grants, contracts, or 
        cooperative agreements over $10,000 in amount and the 
        dollar value of all such awards, identifying SBIR 
        awards and comparing the number and amount of such 
        awards with awards to other than small business 
        concerns.

           *       *       *       *       *       *       *

  (j)(1) Policy Directives.--The Small Business Administration, 
after consultation with the Administrator of the Office of 
Federal Procurement Policy, the Director of the Office of 
Science and Technology Policy, and the Intergovernmental 
Affairs Division of the Office of Management and Budget, shall, 
within one hundred and twenty days of the enactment of the 
Small Business Innovation Development Act of 1982, issue policy 
directives for the general conduct of the SBIR programs within 
the Federal Government, including providing for--
          (A) * * *
          (B) a simplified, standardized funding process which 
        provides for (i) the timely receipt and review of 
        proposals; (ii) outside peer review for at least [phase 
        two] Phase II proposals, if appropriate; (iii) 
        protection of proprietary information provided in 
        proposals; (iv) selection of awardees; (v) retention of 
        rights in data generated in the performance of the 
        contract by the small business concern; (vi) transfer 
        of title to property provided by the agency to the 
        small business concern if such a transfer would be more 
        cost effective than recovery of the property by the 
        agency; (vii) cost sharing; and (viii) cost principles 
        and payment schedules;

           *       *       *       *       *       *       *

  (2) Modifications.--Not later than 90 days after the date of 
enactment of the Small Business Research and Development 
Enhancement Act of 1992, the Administrator shall modify the 
policy directives issued pursuant to this subsection to provide 
for--
          (A) * * *
          (B) continued use by a small business concern 
        participating in [the third phase] Phase III of the 
        SBIR program, as a directed bailment, of any property 
        transferred by a Federal agency to the small business 
        concern in [the second phase] Phase II of an SBIR 
        program for a period of not less than 2 years, 
        beginning on the initial date of the concern's 
        participation in [the third phase] Phase III of such 
        program;

           *       *       *       *       *       *       *

          (D) an increase to [$100,000] $150,000 in the amount 
        of funds which an agency may award in [the first phase] 
        Phase I of an SBIR program, and to [$750,000] 
        $1,000,000 in [the second phase] Phase II of an SBIR 
        program, and an adjustment of such amounts [once every 
        5 years to reflect economic adjustments and 
        programmatic considerations] every year for inflation;

           *       *       *       *       *       *       *

          (F) enhanced outreach efforts to increase the 
        participation of socially and economically 
        disadvantaged small business concerns, as defined in 
        section 8(a)(4), and the participation of small 
        businesses that are 51 percent owned and controlled by 
        women in technological innovation and in SBIR programs, 
        including [the third phase] Phase III of such programs, 
        and the collection of data to document such 
        participation;
          (G) technical and programmatic guidance to encourage 
        agencies to develop gap-funding programs to address the 
        delay between an award for [the first phase] Phase I of 
        an SBIR program and the application for and extension 
        of an award for [the second phase] Phase II of such 
        program;
          (H) procedures to ensure that a small business 
        concern that submits a proposal for a funding agreement 
        for [the first phase] Phase I of an SBIR program and 
        that has received more than 15 [second phase] Phase II 
        SBIR awards during the preceding 5 fiscal years is able 
        to demonstrate the extent to which it was able to 
        secure [third phase] Phase III funding to develop 
        concepts resulting from previous [second phase] Phase 
        II SBIR awards; and

           *       *       *       *       *       *       *

  (3) Additional Modifications.--Not later than 120 days after 
the date of the enactment of the Small Business Innovation 
Research Program Reauthorization Act of 2000, the Administrator 
shall modify the policy directives issued pursuant to this 
subsection--
          (A) to clarify that the rights provided for under 
        paragraph (2)(A) apply to all Federal funding awards 
        under this section, including [the first phase (as 
        described in subsection (e)(4)(A))] Phase I, [the 
        second phase (as described in subsection (e)(4)(B))] 
        Phase II, and [the third phase (as described in 
        subsection (e)(4)(C))] Phase III;
          (B) to provide for the requirement of a succinct 
        commercialization plan with each application for a 
        [second phase] Phase II award that is moving toward 
        commercialization;

           *       *       *       *       *       *       *

  (k) Database.--
          (1) Public database.--Not later than 180 days after 
        the date of the enactment of the Small Business 
        Innovation Research Program Reauthorization Act of 
        2000, the Administrator shall develop, maintain, and 
        make available to the public a searchable, up-to-date, 
        electronic database that includes--
                  (A) the name, size, location, and an 
                identifying number assigned by the 
                Administrator, of each small business concern 
                that has received a [first phase] Phase I or 
                [second phase] Phase II SBIR or STTR award from 
                a Federal agency;
                  (B) a description of each [first phase] Phase 
                I or [second phase] Phase II SBIR or STTR award 
                received by that small business concern, 
                including--
                          (i) * * *

           *       *       *       *       *       *       *

                  (D) information regarding mentors and 
                Mentoring Networks, as required by section 
                35(d); [and]
                  (E) with respect to assistance under the STTR 
                program only--
                          (i) * * *

           *       *       *       *       *       *       *

                          (iv) how the proceeds from 
                        commercialization, marketing, or sale 
                        of technology resulting from each 
                        assisted STTR project were allocated 
                        (by percentage) between the small 
                        business concern and the research 
                        institution[.]; and
                  (F) for each small business concern that has 
                received a Phase I or Phase II SBIR or STTR 
                award from a Federal agency, whether the small 
                business concern--
                          (i) has venture capital, hedge fund, 
                        or private equity firm investment and, 
                        if so, whether the small business 
                        concern is registered as majority-owned 
                        by multiple venture capital operating 
                        companies, hedge funds, or private 
                        equity firms as required under 
                        subsection (dd)(3);
                          (ii) is owned by a woman or has a 
                        woman as a principal investigator;
                          (iii) is owned by a socially or 
                        economically disadvantaged individual 
                        or has a socially or economically 
                        disadvantaged individual as a principal 
                        investigator; or
                          (iv) is owned by a faculty member or 
                        a student of an institution of higher 
                        education, as that term is defined in 
                        section 101 of the Higher Education Act 
                        of 1965 (20 U.S.C. 1001).
          (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] Not later than 90 days after the date of 
        enactment of the Creating Jobs Through Small Business 
        Innovation Act of 2011, 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 small business concern 
                that applies for, submits a proposal for, or 
                receives an award under Phase I or Phase II of 
                the SBIR program or the STTR program--
                          (i) the name, size, and location, and 
                        an identifying number assigned by the 
                        Administration of the small business 
                        concern;
                          (ii) an abstract of the project;
                          (iii) the specific aims of the 
                        project;
                          (iv) the number of employees of the 
                        small business concern;
                          (v) the names and titles of the key 
                        individuals that will carry out the 
                        project, the position each key 
                        individual holds in the small business 
                        concern, and contact information for 
                        each key individual;
                          (vi) the percentage of effort each 
                        individual described in clause (iv) 
                        will contribute to the project;
                          (vii) whether the small business 
                        concern is majority-owned by multiple 
                        venture capital operating companies, 
                        hedge funds, or private equity firms; 
                        and
                          (viii) the Federal agency to which 
                        the application is made, and contact 
                        information for the person or office 
                        within the Federal agency that is 
                        responsible for reviewing applications 
                        and making awards under the SBIR 
                        program or the STTR program;
                  [(A)] (B) contains for each [second phase] 
                Phase II 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] Phase I or 
                        [second phase] Phase II SBIR or STTR 
                        awards, to further the research and 
                        development conducted under the award; 
                        and

           *       *       *       *       *       *       *

                  [(B)] (C) includes any narrative information 
                that a small business concern receiving a 
                [second phase] Phase II award voluntarily 
                submits to further describe the outputs and 
                outcomes of its awards;
                  [(C) includes for each applicant for a first 
                phase or second phase award that does not 
                receive such an award--
                          [(i) the name, size, and location, 
                        and an identifying number assigned by 
                        the Administration;
                          [(ii) an abstract of the project; and
                          [(iii) the Federal agency to which 
                        the application was made;]
                  (D) includes, for each awardee--
                          (i) the name, size, location, and any 
                        identifying number assigned to the 
                        awardee by the Administrator;
                          (ii) whether the awardee has venture 
                        capital, hedge fund, or private equity 
                        firm investment, and, if so--
                                  (I) the amount of venture 
                                capital, hedge fund, or private 
                                equity firm investment as of 
                                the date of the award;
                                  (II) the percentage of 
                                ownership of the awardee held 
                                by a venture capital operating 
                                company, hedge fund, or private 
                                equity firm, including whether 
                                the awardee is majority-owned 
                                by multiple venture capital 
                                operating companies, hedge 
                                funds, or private equity firms; 
                                and
                                  (III) the amount of 
                                additional capital that the 
                                awardee has invested in the 
                                SBIR technology, which 
                                information shall be collected 
                                on an annual basis;
                          (iii) the names and locations of any 
                        affiliates of the awardee;
                          (iv) the number of employees of the 
                        awardee;
                          (v) the number of employees of the 
                        affiliates of the awardee; and
                          (vi) the names of, and the percentage 
                        of ownership of the awardee held by--
                                  (I) any individual who is not 
                                a citizen of the United States 
                                or a lawful permanent resident 
                                of the United States; or
                                  (II) any person that is not 
                                an individual and is not 
                                organized under the laws of a 
                                State or the United States;
                  [(D)] (E) includes any other data collected 
                by or available to any Federal agency that such 
                agency considers may be useful for SBIR or STTR 
                program evaluation; [and]
                  [(E)] (F) is available for use solely for 
                program evaluation purposes by the Federal 
                Government or, in accordance with policy 
                directives issued by the Administration, by 
                other authorized persons who are subject to a 
                use and nondisclosure agreement with the 
                Federal Government covering the use of the 
                database[.]; and
                  (G) includes a timely and accurate list of 
                any individual or small business concern that 
                has participated in the SBIR program or STTR 
                program that has been--
                          (i) convicted of a fraud-related 
                        crime involving funding received under 
                        the SBIR program or STTR program; or
                          (ii) found civilly liable for a 
                        fraud-related violation involving 
                        funding received under the SBIR program 
                        or STTR program.
          (3) Updating information for database.--
                  (A) In general.--A small business concern 
                applying for a [second phase] Phase II award 
                under this section shall be required to update 
                information in the database established under 
                this subsection for any prior [second phase] 
                Phase II 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] Phase II 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] 
                Phase II award under this section shall--
                          (i) * * *

           *       *       *       *       *       *       *

                  (C) Government database.--Not later than 60 
                days after the date established by a Federal 
                agency for submitting applications or proposals 
                for a Phase I or Phase II award under the SBIR 
                program or STTR program, the head of the 
                Federal agency shall submit to the 
                Administrator the data required under paragraph 
                (2) with respect to each small business concern 
                that applies or submits a proposal for the 
                Phase I or Phase II award.
  (l) Reporting of Awards Made From Single Proposal, to 
Multiple Award Winners, or to Critical Technology Topics.--
          (1)   * * *
          (2) Multiple awards.--An agency referred to in 
        paragraph (1) shall include in its next annual report 
        required under subsection (g)(8) an accounting of the 
        awards the agency has made for the [first phase] Phase 
        I of an SBIR program during the reporting period to 
        entities that have received more than 15 awards for the 
        [second phase] Phase II of an SBIR program during the 
        preceding 5 fiscal years.

           *       *       *       *       *       *       *

  (m) [Termination.--
          [(1) In general.--Except as provided in paragraph 
        (2), the authorization]  Termination.--The 
        authorization to carry out the Small Business 
        Innovation Research Program established under this 
        section shall terminate on September 30, [2008] 2014.
          [(2) Exception for department of defense.--The 
        Secretary of Defense and the Secretary of each military 
        department are authorized to carry out the Small 
        Business Innovation Research Program of the Department 
        of Defense until September 30, 2010]
  (n) Required Expenditures for STTR by Federal Agencies.--
          (1) Required expenditure amounts.--
                  (A) [In general.--
                          [(i) Federal agencies generally.--
                        Except as provided in clause (ii), with 
                        respect]  In general.--With respect to 
                        each fiscal year through fiscal year 
                        [2009] 2014, 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.
                          [(ii) Department of defense.--The 
                        Secretary of Defense and the Secretary 
                        of each military department shall carry 
                        out clause (i) with respect to each 
                        fiscal year through fiscal year 2010.]

           *       *       *       *       *       *       *

  (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) * * *

           *       *       *       *       *       *       *

          (4)(A) unilaterally receive and evaluate proposals 
        resulting from STTR solicitations; and
          (B) make a final decision on each proposal submitted 
        under the STTR program--
                  (i) not later than 90 days after the date on 
                which the solicitation closes; or
                  (ii) if the Administrator authorizes an 
                extension for a solicitation, not later than 
                180 days after the date on which the 
                solicitation closes;

           *       *       *       *       *       *       *

          [(9) collect such data from awardees as is necessary 
        to assess STTR program outputs and outcomes;]
          (9) collect annually, and maintain in a common format 
        in accordance with the simplified reporting 
        requirements under subsection (v), such information 
        from applicants and awardees as is necessary to assess 
        the STTR program outputs and outcomes, including 
        information necessary to maintain the database 
        described in subsection (k), including--
                  (A) whether an applicant or awardee--
                          (i) has venture capital, hedge fund, 
                        or private equity firm investment or is 
                        majority-owned by multiple venture 
                        capital operating companies, hedge 
                        funds, or private equity firms, and, if 
                        so--
                                  (I) the amount of venture 
                                capital, hedge fund, or private 
                                equity firm investment that the 
                                applicant or awardee has 
                                received as of the date of the 
                                application or award, as 
                                applicable; and
                                  (II) the amount of additional 
                                capital that the applicant or 
                                awardee has invested in the 
                                SBIR technology;
                          (ii) has an investor that--
                                  (I) is an individual who is 
                                not a citizen of the United 
                                States or a lawful permanent 
                                resident of the United States, 
                                and if so, the name of any such 
                                individual; or
                                  (II) is a person that is not 
                                an individual and is not 
                                organized under the laws of a 
                                State or the United States, and 
                                if so the name of any such 
                                person;
                          (iii) is owned by a woman or has a 
                        woman as a principal investigator;
                          (iv) is owned by a socially or 
                        economically disadvantaged individual 
                        or has a socially or economically 
                        disadvantaged individual as a principal 
                        investigator;
                          (v) is a faculty member or a student 
                        of an institution of higher education, 
                        as that term is defined in section 101 
                        of the Higher Education Act of 1965 (20 
                        U.S.C. 1001); or
                          (vi) is located in a State in which 
                        the total value of contracts awarded to 
                        small business concerns under all STTR 
                        programs is less than the total value 
                        of contracts awarded to small business 
                        concerns in a majority of other States, 
                        as determined by the Administrator in 
                        biennial fiscal years, beginning with 
                        fiscal year 2008, based on the most 
                        recent statistics compiled by the 
                        Administrator; and
                  (B) if an awardee receives an award in an 
                amount that is more than the award guidelines 
                under this section, a statement from the agency 
                that justifies the award amount;

           *       *       *       *       *       *       *

          (13) not later than July 31, 1993, develop procedures 
        for assessing the commercial merit and feasibility of 
        STTR proposals, as evidenced by--
                  (A) * * *
                  (B) the existence of [second phase] Phase II 
                funding commitments from private sector or non-
                STTR funding sources;
                  (C) the existence of [third phase] Phase III 
                follow-on commitments for the subject of the 
                research; and

           *       *       *       *       *       *       *

          [(15) collect, and maintain in a common format in 
        accordance with subsection (v), such information from 
        awardees as is necessary to assess the STTR program, 
        including information necessary to maintain the 
        database described in subsection (k); and]
          [(16)] (15) provide for and fully implement the 
        tenets of Executive Order No. 13329 (Encouraging 
        Innovation in Manufacturing)[.]; and
          (16) provide timely notice to the Administrator of 
        any case or controversy before any Federal judicial or 
        administrative tribunal concerning the STTR program of 
        the Federal agency.
  (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) * * *

           *       *       *       *       *       *       *

                          (vi) continued use by a small 
                        business concern, as a directed 
                        bailment, of any property transferred 
                        by a Federal agency to the small 
                        business concern in [the second phase] 
                        Phase II of the STTR program for a 
                        period of not less than 2 years, 
                        beginning on the initial date of the 
                        concern's participation in [the third 
                        phase] Phase III of such program;

           *       *       *       *       *       *       *

                          (ix) 1-year awards for [the first 
                        phase] Phase I of an STTR program, 
                        generally not to exceed [$100,000] 
                        $150,000, and 2-year awards for [the 
                        second phase] Phase II of an STTR 
                        program, generally not to exceed 
                        [$750,000] $1,000,000, (each of which 
                        the Administrator shall adjust for 
                        inflation annually) greater or lesser 
                        amounts to be awarded at the discretion 
                        of the awarding agency, and shorter or 
                        longer periods of time to be approved 
                        at the discretion of the awarding 
                        agency where appropriate for a 
                        particular project;

           *       *       *       *       *       *       *

          (3) Modifications.--Not later than 120 days after the 
        date of enactment of this paragraph, the Administrator 
        shall modify the policy directive issued pursuant to 
        this subsection to clarify that the rights provided for 
        under paragraph (2)(B)(v) apply to all Federal funding 
        awards under this section, including [the first phase 
        (as described in subsection (e)(6)(A))] Phase I, [the 
        second phase (as described in subsection (e)(6)(B))] 
        Phase II, and [the third phase (as described in 
        subsection (e)(6)(C))] Phase III.
  (q) Discretionary Technical Assistance.--
          (1) In general.--Each Federal agency required by this 
        section to conduct an SBIR program or STTR program may 
        enter into an agreement with a vendor selected under 
        paragraph (2) to provide small business concerns 
        engaged in [SBIR projects] SBIR or STTR projects with 
        technical assistance services, such as access to a 
        network of scientists and engineers engaged in a wide 
        range of technologies, or access to technical and 
        business literature available through on-line data 
        bases, for the purpose of assisting such concerns in--

           *       *       *       *       *       *       *

          (2) Vendor selection.--Each agency may select a 
        vendor to assist small business concerns to meet the 
        goals listed in paragraph (1) for a term not to exceed 
        [3 years] 5 years. Such selection shall be competitive 
        and shall utilize merit-based criteria.
          (3) Additional technical assistance.--
                  (A) [First phase]   Phase i.--Each agency 
                referred to in paragraph (1) may provide 
                services described in paragraph (1) to [first 
                phase] Phase I SBIR or STTR award recipients in 
                an amount equal to not more than [$4,000] 
                $5,000, which shall be in addition to the 
                amount of the recipient's award.
                  [(B) Second phase.--Each agency referred to 
                in paragraph (1) may authorize any second phase 
                SBIR award recipient to purchase, with funds 
                available from their SBIR awards, services 
                described in paragraph (1), in an amount equal 
                to not more than $4,000 per year.]
                  (B) Phase ii.--A Federal agency described in 
                paragraph (1) may--
                          (i) provide to the recipient of a 
                        Phase II SBIR or STTR award, through a 
                        vendor selected under paragraph (2), 
                        the services described in paragraph 
                        (1), in an amount equal to not more 
                        than $5,000 per year; or
                          (ii) authorize the recipient of a 
                        Phase II SBIR or STTR award to purchase 
                        the services described in paragraph 
                        (1), in an amount equal to not more 
                        than $5,000 per year, which shall be in 
                        addition to the amount of the 
                        recipient's award.
                  (C) Flexibility.--In carrying out 
                subparagraphs (A) and (B), each Federal agency 
                shall provide the allowable amounts to a 
                recipient that meets the eligibility 
                requirements under the applicable subparagraph, 
                if the recipient requests to seek technical 
                assistance from an individual or entity other 
                than the vendor selected under paragraph (2) by 
                the Federal agency.
                  (D) Limitation.--A Federal agency may not--
                          (i) use the amounts authorized under 
                        subparagraph (A) or (B) unless the 
                        vendor selected under paragraph (2) 
                        provides the technical assistance to 
                        the recipient; or
                          (ii) enter a contract with a vendor 
                        under paragraph (2) under which the 
                        amount provided for technical 
                        assistance is based on total number of 
                        Phase I or Phase II awards.
  (r) [Third Phase]   Phase III Agreements.--
          (1) In general.--In the case of a small business 
        concern that is awarded a funding agreement [for the 
        second phase] for Phase II of an SBIR or STTR program, 
        a Federal agency may enter into a [third phase] Phase 
        III agreement with that business concern for additional 
        work to be performed during or after the [second phase 
        period] Phase II period. The [second phase] Phase II 
        funding agreement with the small business concern may, 
        at the discretion of the agency awarding the agreement, 
        set out the procedures applicable to [third phase] 
        Phase III agreements with that agency or any other 
        agency.
          (2) Definition.--In this subsection, the term 
        ``[third phase] Phase III agreement'' means a follow-
        on, non-SBIR or non-STTR funded contract as described 
        in paragraph (4)(C) or paragraph (6)(C) of subsection 
        (e).

           *       *       *       *       *       *       *

          (4) Phase iii awards.--To the greatest extent 
        practicable, Federal agencies and Federal prime 
        contractors shall issue Phase III awards relating to 
        technology, including sole source awards, to the SBIR 
        and STTR award recipients that developed the 
        technology.

           *       *       *       *       *       *       *

  (u) Coordination of Technology Development Programs.--
          (1) * * *
          (2) Coordination requirements.--Each Federal agency 
        that is subject to subsection (f) and that has 
        established a technology development program may, in 
        each fiscal year, review for funding under that 
        technology development program--
                  (A) * * *
                  (B) any proposal for [the first phase] Phase 
                I of the SBIR program, if the proposal, though 
                meritorious, is not funded through the SBIR 
                program for that fiscal year due to funding 
                restraints, from a small business concern 
                located in--
                          (i) * * *

           *       *       *       *       *       *       *

  (v) [Simplified Reporting Requirements.--The Administrator] 
Reducing Paperwork and Compliance Burden.--
          (1) Standardization of reporting requirements.--The 
        Administrator shall work with the Federal agencies 
        required by this section to have an SBIR or STTR 
        program to standardize reporting requirements for the 
        collection of data from SBIR or STTR applicants and 
        awardees, including data for inclusion in the database 
        under subsection (k), taking into consideration the 
        unique needs of each agency, and to the extent 
        possible, permitting the updating of previously 
        reported information by electronic means. Such 
        requirements shall be designed to minimize the burden 
        on small businesses.
                  (A) * * *
          (2) Simplification of application and award 
        process.--Not later than one year after the date of 
        enactment of this paragraph, and after a period of 
        public comment, the Administrator shall issue 
        regulations or guidelines, taking into consideration 
        the unique needs of each Federal agency, to ensure that 
        each Federal agency required to carry out an SBIR 
        program or STTR program simplifies and standardizes the 
        program proposal, selection, contracting, compliance, 
        and audit procedures for the SBIR program or STTR 
        program of the Federal agency (including procedures 
        relating to overhead rates for applicants and 
        documentation requirements) to reduce the paperwork and 
        regulatory compliance burden on small business concerns 
        applying to and participating in the SBIR program or 
        STTR program.

           *       *       *       *       *       *       *

  (y) Commercialization [Pilot]   Readiness Program.--
          (1) In general.--The Secretary of Defense and the 
        Secretary of each military department is authorized to 
        create and administer a ``Commercialization [Pilot] 
        Readiness Program'' to accelerate the transition of 
        technologies, products, and services developed under 
        the Small Business Innovation Research Program or Small 
        Business Technology Transfer Program to Phase III, 
        including the acquisition process. The authority to 
        create and administer a Commercialization Readiness 
        Program under this subsection may not be construed to 
        eliminate or replace any other SBIR program or STTR 
        program that enhances the insertion or transition of 
        SBIR or STTR technologies, including any such program 
        in effect on the date of enactment of the National 
        Defense Authorization Act for Fiscal Year 2006 (Public 
        Law 109-163; 119 Stat. 3136).
          (2) Identification of research programs for 
        accelerated transition to acquisition process.--In 
        carrying out the Commercialization [Pilot] Readiness 
        Program, the Secretary of Defense and the Secretary of 
        each military department shall identify research 
        programs of the Small Business Innovation Research 
        Program or Small Business Technology Transfer Program 
        that have the potential for rapid transitioning to 
        Phase III and into the acquisition process.

           *       *       *       *       *       *       *

          [(4) Funding.--For payment of expenses incurred to 
        administer the Commercialization Pilot Program under 
        this subsection, the Secretary of Defense and each 
        Secretary of a military department is authorized to use 
        not more than an amount equal to 1 percent of the funds 
        available to the Department of Defense or the military 
        department pursuant to the 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 to make Phase III 
                awards.]
          (4) Insertion incentives.--For any contract with a 
        value of not less than $100,000,000, the Secretary of 
        Defense is authorized to--
                  (A) establish goals for the transition of 
                Phase III technologies in subcontracting plans;
                  (B) require a prime contractor on such a 
                contract to report the number and dollar amount 
                of contracts entered into by that prime 
                contractor for Phase III SBIR or STTR projects; 
                and
                  (C) take action to ensure that, if a prime 
                contractor on such a contract, after 
                consultation with the Secretary, certifies that 
                an appropriate Phase III technology is not 
                available to be incorporated into a project of 
                the prime contractor, such project shall be 
                excluded from any determination of whether 
                goals under subparagraph (A) have been met.
          (5) Goal for sbir and sttr technology insertion.--The 
        Secretary of Defense shall--
                  (A) set a goal to increase the number of 
                Phase II SBIR contracts and the number of Phase 
                II STTR contracts awarded by that Secretary 
                that lead to technology transition into 
                programs of record or fielded systems;
                  (B) use incentives in effect on the date of 
                enactment of the Creating Jobs Through Small 
                Business Innovation Act of 2011, or create new 
                incentives, to encourage agency program 
                managers and prime contractors to meet the goal 
                under subparagraph (A); and
                  (C) include in the annual report under this 
                subsection--
                          (i) the percentage of Phase II SBIR 
                        and STTR contracts awarded by the 
                        Secretary that led to technology 
                        transition into programs of record or 
                        fielded systems;
                          (ii) information on the status of 
                        each project that received funding 
                        through the Commercialization Readiness 
                        Program and efforts to transition those 
                        projects into programs of record or 
                        fielded systems; and
                          (iii) a description of each incentive 
                        that has been used by the Secretary 
                        under subparagraph (B) and the 
                        effectiveness of that incentive with 
                        respect to meeting the goal under 
                        subparagraph (A).
          [(5)] (6) Evaluative report.--At the end of each 
        fiscal year, the Secretary of Defense shall submit to 
        the Committee on Armed Services and the Committee on 
        Small Business and Entrepreneurship of the Senate and 
        [the Committee on Armed Services and the Committee on 
        Small Business of the House of Representatives] the 
        Committee on Armed Services, the Committee on Small 
        Business, and the Committee on Science, Space, and 
        Technology of the House of Representatives an 
        evaluative report regarding activities under the 
        Commercialization [Pilot] Readiness Program. The report 
        [shall include] shall include, in addition to the 
        information described in paragraph (5)(C)--
                  (A) an accounting of the funds used in the 
                Commercialization [Pilot] Readiness Program;
                  (B) a detailed description of the 
                Commercialization [Pilot] Readiness Program, 
                including incentives and activities undertaken 
                by acquisition program managers, program 
                executive officers, and prime contractors; and
                  (C) a detailed compilation of results 
                achieved by the Commercialization [Pilot] 
                Readiness Program, including the number of 
                small business concerns assisted and the number 
                of projects commercialized.
          [(6) Sunset.--The pilot program under this subsection 
        shall terminate at the end of fiscal year 2010.]

 [Effective on the first day of the fourth full fiscal year following 
 the date of enactment, section 310(b)(3)(B) of H.R. 1425 provides for 
  amendments to section 9(y) of the Small Business Act by inserting a 
  paragraph (4) after paragraph (3) and redesignating paragraphs (4), 
(5), and (6) as paragraphs (5), (6), and (7), respectively, to read as 
                               follows:]

          (4) Funding.--
                  (A) In general.--The Secretary of Defense and 
                each Secretary of a military department may use 
                not more than an amount equal to 1 percent of 
                the funds available to the Department of 
                Defense or the military department pursuant to 
                the Small Business Innovation Research Program 
                for payment of expenses incurred to administer 
                the Commercialization Pilot Program under this 
                subsection.
                  (B) Limitations.--The funds described in 
                subparagraph (A)--
                          (i) shall not be subject to the 
                        limitations on the use of funds in 
                        subsection (f)(2); and
                          (ii) shall not be used to make Phase 
                        III awards.
          [(4)] (5) Insertion incentives.--For any contract 
        with a value of not less than $100,000,000, the 
        Secretary of Defense is authorized to--
                  (A) * * *

           *       *       *       *       *       *       *

          [(5)] (6) Goal for sbir and sttr technology 
        insertion.--The Secretary of Defense shall--
                  (A) * * *

           *       *       *       *       *       *       *

          [(6)] (7) Evaluative report.--At the end of each 
        fiscal year, the Secretary of Defense shall submit to 
        the Committee on Armed Services and the Committee on 
        Small Business and Entrepreneurship of the Senate and 
        the Committee on Armed Services, the Committee on Small 
        Business, and the Committee on Science, Space, and 
        Technology of the House of Representatives an 
        evaluative report regarding activities under the 
        Commercialization Readiness Program. The report shall 
        include, in addition to the information [described in 
        paragraph (5)(C)] described in paragraph (6)(C)--
                  (A) * * *

           *       *       *       *       *       *       *

  (aa) Limitation on Size of Awards.--
          (1) Limitation.--No Federal agency may issue an award 
        under the SBIR program or the STTR program if the size 
        of the award exceeds the award guidelines established 
        under this section by more than 50 percent.
          (2) Maintenance of information.--Participating 
        agencies shall maintain information on awards exceeding 
        the guidelines established under this section, 
        including--
                  (A) the amount of each award;
                  (B) a justification for exceeding the award 
                amount;
                  (C) the identity and location of each award 
                recipient; and
                  (D) whether an award recipient has received 
                any venture capital, hedge fund, or private 
                equity firm investment and, if so, whether the 
                recipient is majority-owned by multiple venture 
                capital operating companies, hedge funds, or 
                private equity firms.
          (3) Reports.--The Administrator shall include the 
        information described in paragraph (2) in the annual 
        report of the Administrator to Congress.
          (4) Rule of construction.--Nothing in this subsection 
        shall be construed to prevent a Federal agency from 
        supplementing an award under the SBIR program or the 
        STTR program using funds of the Federal agency that are 
        not part of the SBIR program or the STTR program of the 
        Federal agency.
  (bb) Subsequent Phase II Awards.--
          (1) Agency flexibility.--A small business concern 
        that received a Phase I award from a Federal agency 
        under this section shall be eligible to receive a 
        subsequent Phase II award from another Federal agency, 
        if the head of each relevant Federal agency or the 
        relevant component of the Federal agency makes a 
        written determination that the topics of the relevant 
        awards are the same and both agencies report the awards 
        to the Administrator for inclusion in the public 
        database under subsection (k).
          (2) SBIR and sttr program flexibility.--A small 
        business concern that received a Phase I award under 
        this section under the SBIR program or the STTR program 
        may receive a subsequent Phase II award in either the 
        SBIR program or the STTR program and the participating 
        agency or agencies shall report the awards to the 
        Administrator for inclusion in the public database 
        under subsection (k).
  (cc) Phase I Required.--Under this section, a Federal agency 
shall provide to a small business concern an award under Phase 
II of an SBIR program with respect to a project only if such 
agency finds that the small business concern has been provided 
an award under Phase I 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 a Phase I award.
  (dd) Participation of Small Business Concerns Majority-Owned 
by Venture Capital Operating Companies, Hedge Funds, or Private 
Equity Firms in the SBIR Program.--
          (1) Authority.--Upon a written determination 
        described in paragraph (2) provided to the 
        Administrator, the Committee on Small Business and 
        Entrepreneurship of the Senate, and the Committee on 
        Small Business and the Committee on Science, Space, and 
        Technology of the House of Representatives not later 
        than 30 days before the date on which an award is 
        made--
                  (A) the Director of the National Institutes 
                of Health, the Secretary of Energy, the 
                Administrator of the National Aeronautics and 
                Space Administration, and the Director of the 
                National Science Foundation may award not more 
                than 45 percent of the funds allocated for the 
                SBIR program of the Federal agency to small 
                business concerns that are owned in majority 
                part by multiple venture capital operating 
                companies, hedge funds, or private equity firms 
                through competitive, merit-based procedures 
                that are open to all eligible small business 
                concerns; and
                  (B) the head of a Federal agency other than a 
                Federal agency described in subparagraph (A) 
                that participates in the SBIR program may award 
                not more than 35 percent of the funds allocated 
                for the SBIR program of the Federal agency to 
                small business concerns that are owned in 
                majority part by multiple venture capital 
                operating companies, hedge funds, or private 
                equity firms through competitive, merit-based 
                procedures that are open to all eligible small 
                business concerns.
          (2) Determination.--A written determination described 
        in this paragraph is a written determination by the 
        head of a Federal agency that explains how the use of 
        the authority under paragraph (1) will--
                  (A) induce additional venture capital, hedge 
                fund, or private equity firm funding of small 
                business innovations;
                  (B) substantially contribute to the mission 
                of the Federal agency;
                  (C) demonstrate a need for public research; 
                and
                  (D) otherwise fulfill the capital needs of 
                small business concerns for additional 
                financing for the SBIR project.
          (3) Registration.--A small business concern that is 
        majority-owned by multiple venture capital operating 
        companies, hedge funds, or private equity firms and 
        qualified for participation in the program authorized 
        under paragraph (1) shall--
                  (A) register with the Administrator on the 
                date that the small business concern submits an 
                application for an award under the SBIR 
                program; and
                  (B) indicate in any SBIR proposal that the 
                small business concern is registered under 
                subparagraph (A) as majority-owned by multiple 
                venture capital operating companies, hedge 
                funds, or private equity firms.
          (4) Compliance.--
                  (A) In general.--The head of a Federal agency 
                that makes an award under this subsection 
                during a fiscal year shall collect and submit 
                to the Administrator data relating to the 
                number and dollar amount of Phase I awards, 
                Phase II awards, and any other category of 
                awards by the Federal agency under the SBIR 
                program during that fiscal year.
                  (B) Annual reporting.--The Administrator 
                shall include as part of each annual report by 
                the Administration under subsection (b)(7) any 
                data submitted under subparagraph (A) and a 
                discussion of the compliance of each Federal 
                agency that makes an award under this 
                subsection during the fiscal year with the 
                maximum percentages under paragraph (1).
          (5) Enforcement.--If a Federal agency awards more 
        than the percent of the funds allocated for the SBIR 
        program of the Federal agency authorized under 
        paragraph (1) for a purpose described in paragraph (1), 
        the head of the Federal agency shall transfer an amount 
        equal to the amount awarded in excess of the amount 
        authorized under paragraph (1) to the funds for general 
        SBIR programs from the non-SBIR and non-STTR research 
        and development funds of the Federal agency not later 
        than 180 days after the date on which the Federal 
        agency made the award that caused the total awarded 
        under paragraph (1) to be more than the amount 
        authorized under paragraph (1) for a purpose described 
        in paragraph (1).
          (6) Final decisions on applications under the sbir 
        program.--
                  (A) Definition.--In this paragraph, the term 
                ``covered small business concern'' means a 
                small business concern that--
                          (i) was not majority-owned by 
                        multiple venture capital operating 
                        companies, hedge funds, or private 
                        equity firms on the date on which the 
                        small business concern submitted an 
                        application in response to a 
                        solicitation under the SBIR programs; 
                        and
                          (ii) on the date of the award under 
                        the SBIR program is majority-owned by 
                        multiple venture capital operating 
                        companies, hedge funds, or private 
                        equity firms.
                  (B) In general.--If a Federal agency does not 
                make an award under a solicitation under the 
                SBIR program before the date that is 9 months 
                after the date on which the period for 
                submitting applications under the solicitation 
                ends--
                          (i) a covered small business concern 
                        is eligible to receive the award, 
                        without regard to whether the covered 
                        small business concern meets the 
                        requirements for receiving an award 
                        under the SBIR program for a small 
                        business concern that is majority-owned 
                        by multiple venture capital operating 
                        companies, hedge funds, or private 
                        equity firms, if the covered small 
                        business concern meets all other 
                        requirements for such an award; and
                          (ii) the head of the Federal agency 
                        shall transfer an amount equal to any 
                        amount awarded to a covered small 
                        business concern under the solicitation 
                        to the funds for general SBIR programs 
                        from the non-SBIR and non-STTR research 
                        and development funds of the Federal 
                        agency, not later than 90 days after 
                        the date on which the Federal agency 
                        makes the award.
          (7) Evaluation criteria.--A Federal agency may not 
        use investment of venture capital or investment from 
        hedge funds or private equity firms as a criterion for 
        the award of contracts under the SBIR program or STTR 
        program.
  (ee) Venture Capital Operating Companies, Hedge Funds, and 
Private Equity Firms.--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, hedge fund, 
        or private equity firm (or with any other business that 
        the venture capital operating company, hedge fund, or 
        private equity firm has financed) if--
                  (A) the venture capital operating company, 
                hedge fund, or private equity firm does not own 
                50 percent or more of the business concern; and
                  (B) employees of the venture capital 
                operating company, hedge fund, or private 
                equity firm 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, hedge funds, or private 
                equity firms;
                  (B) there is no single venture capital 
                operating company, hedge fund, or private 
                equity firm that owns 50 percent or more of the 
                business concern; and
                  (C) there is no single venture capital 
                operating company, hedge fund, or private 
                equity firm the employees of which constitute a 
                majority of the board of directors of the 
                business concern.
          (4) If a venture capital operating company, hedge 
        fund, or private equity firm controlled by a business 
        with more than 500 employees (in this paragraph 
        referred to as a ``VCOC, hedge fund, or private equity 
        firm under large business control'') has an ownership 
        interest in a small business concern that is owned in 
        majority part by venture capital operating companies, 
        hedge funds, or private equity firms, the small 
        business concern is eligible to receive an award under 
        the SBIR or STTR program only if--
                  (A) not more than two VCOCs, hedge funds, or 
                private equity firms under large business 
                control have an ownership interest in the small 
                business concern; and
                  (B) the VCOCs, hedge funds, or private equity 
                firms under large business control do not 
                collectively own more than 20 percent of the 
                small business concern.
  (ff) Collaborating With Federal Laboratories and Research and 
Development Centers.--
          (1) Authorization.--Subject to the limitations under 
        this section, the head of each participating Federal 
        agency may make SBIR and STTR awards to any eligible 
        small business concern that--
                  (A) intends to enter into an agreement with a 
                Federal laboratory or federally funded research 
                and development center for portions of the 
                activities to be performed under that award; or
                  (B) has entered into a cooperative research 
                and development agreement (as defined in 
                section 12(d) of the Stevenson-Wydler 
                Technology Innovation Act of 1980 (15 U.S.C. 
                3710a(d))) with a Federal laboratory.
          (2) Prohibition.--No Federal agency shall--
                  (A) condition an SBIR or STTR award upon 
                entering into agreement with any Federal 
                laboratory or any federally funded laboratory 
                or research and development center for any 
                portion of the activities to be performed under 
                that award;
                  (B) approve an agreement between a small 
                business concern receiving a SBIR or STTR award 
                and a Federal laboratory or federally funded 
                laboratory or research and development center, 
                if the small business concern performs a lesser 
                portion of the activities to be performed under 
                that award than required by this section and by 
                the SBIR Policy Directive and the STTR Policy 
                Directive of the Administrator; or
                  (C) approve an agreement that violates any 
                provision, including any data rights 
                protections provision, of this section or the 
                SBIR and the STTR Policy Directives.
          (3) Implementation.--Not later than 180 days after 
        the date of enactment of this subsection, the 
        Administrator shall modify the SBIR Policy Directive 
        and the STTR Policy Directive issued under this section 
        to ensure that small business concerns--
                  (A) have the flexibility to use the resources 
                of the Federal laboratories and federally 
                funded research and development centers; and
                  (B) are not mandated to enter into agreement 
                with any Federal laboratory or any federally 
                funded laboratory or research and development 
                center as a condition of an award.
          (4) Advance payment.--If a small business concern 
        receiving an award under this section enters into an 
        agreement with a Federal laboratory or federally funded 
        research and development center for portions of the 
        activities to be performed under that award, the 
        Federal laboratory or federally funded research and 
        development center may not require advance payment from 
        the small business concern in an amount greater than 
        the amount necessary to pay for 30 days of such 
        activities.
  (gg) Additional SBIR and STTR Awards.--
          (1) Express authority for awarding a sequential phase 
        ii award.--A small business concern that receives a 
        Phase II SBIR award or a Phase II STTR award for a 
        project remains eligible to receive one additional 
        Phase II SBIR award or Phase II STTR award for 
        continued work on that project.
          (2) Preventing duplicative awards.--The head of a 
        Federal agency shall verify that any activity to be 
        performed with respect to a project with a Phase I or 
        Phase II SBIR or STTR award has not been funded under 
        the SBIR program or STTR program of another Federal 
        agency.
  (hh) Pilot Program.--
          (1) Authorization.--The head of each covered Federal 
        agency may allocate not more than 10 percent of the 
        funds allocated to the SBIR program and the STTR 
        program of the covered Federal agency--
                  (A) for awards for technology development, 
                testing, evaluation, and commercialization 
                assistance for SBIR and STTR Phase II 
                technologies; or
                  (B) to support the progress of research, 
                research and development, and commercialization 
                conducted under the SBIR or STTR programs to 
                Phase III.
          (2) Application by federal agency.--
                  (A) In general.--A covered Federal agency may 
                not establish a pilot program unless the 
                covered Federal agency makes a written 
                application to the Administrator, not later 
                than 90 days before the first day of the fiscal 
                year in which the pilot program is to be 
                established, that describes a compelling reason 
                that additional investment in SBIR or STTR 
                technologies is necessary, including unusually 
                high regulatory, systems integration, or other 
                costs relating to development or manufacturing 
                of identifiable, highly promising small 
                business technologies or a class of such 
                technologies expected to substantially advance 
                the mission of the agency.
                  (B) Determination.--The Administrator shall--
                          (i) make a determination regarding an 
                        application submitted under 
                        subparagraph (A) not later than 30 days 
                        before the first day of the fiscal year 
                        for which the application is submitted;
                          (ii) publish the determination in the 
                        Federal Register; and
                          (iii) make a copy of the 
                        determination and any related materials 
                        available to the Committee on Small 
                        Business and Entrepreneurship of the 
                        Senate and the Committee on Small 
                        Business and the Committee on Science, 
                        Space, and Technology of the House of 
                        Representatives.
          (3) Maximum amount of award.--The head of a covered 
        Federal agency may not make an award under a pilot 
        program in excess of 3 times the dollar amounts 
        generally established for Phase II awards under 
        subsection (j)(2)(D) or (p)(2)(B)(ix).
          (4) Registration.--Any applicant that receives an 
        award under a pilot program shall register with the 
        Administrator in a registry that is available to the 
        public.
          (5) Award criteria or consideration.--When making an 
        award under this section, the head of a covered Federal 
        agency shall give consideration to whether the 
        technology to be supported by the award is likely to be 
        manufactured in the United States.
          (6) Report.--The head of each covered Federal agency 
        shall include in the annual report of the covered 
        Federal agency to the Administrator an analysis of the 
        various activities considered for inclusion in the 
        pilot program of the covered Federal agency and a 
        statement of the reasons why each activity considered 
        was included or not included, as the case may be.
          (7) Termination.--The authority to establish a pilot 
        program under this section expires at the end of fiscal 
        year 2014.
          (8) Definitions.--In this subsection--
                  (A) the term ``covered Federal agency''--
                          (i) means a Federal agency 
                        participating in the SBIR program or 
                        the STTR program; and
                          (ii) does not include the Department 
                        of Defense; and
                  (B) the term ``pilot program'' means the 
                program established under paragraph (1).
  (ii) NIH Peer Review Process.--Notwithstanding subsections 
(g)(4)(B) and (o)(4)(B), the Director of the National 
Institutes of Health may make an award under the SBIR program 
or the STTR program of the National Institutes of Health only 
if the application for the award has undergone technical and 
scientific peer review under section 492 of the Public Health 
Service Act (42 U.S.C. 289a).
  (jj) NSF Peer Review Process.--Notwithstanding subsections 
(g)(4)(B) and (o)(4)(B), the Director of the National Science 
Foundation may make an award under the SBIR program or the STTR 
program of the National Science Foundation only if the 
application for the award has undergone the National Science 
Foundation's technical and scientific peer review process and 
met all other applicable peer review procedures and guidelines 
pursuant to the National Science Foundation Act of 1950 (42 
U.S.C. 1861, et seq.) and other applicable Federal law.
  (kk) Phase 0 Proof of Concept Partnership Pilot Program.--
          (1) In general.--The Director of the National 
        Institutes of Health may use $10,000,000 of the funds 
        allocated under subsection (n)(1) for a Proof of 
        Concept Partnership pilot program to accelerate the 
        creation of small businesses and the commercialization 
        of research innovations from qualifying institutions. 
        To implement this program, the Director shall award, 
        through a competitive, merit-based process, grants to 
        qualifying institutions. These grants shall only be 
        used to administer Proof of Concept Partnership awards 
        in conformity with this subsection.
          (2) Definitions.--In this subsection--
                  (A) the term ``Director'' means the Director 
                of the National Institutes of Health;
                  (B) the term ``pilot program'' refers to the 
                Proof of Concept Partnership pilot program; and
                  (C) the terms ``qualifying institution'' and 
                ``institution'' mean a university or other 
                research institution that participates in the 
                National Institutes of Health's STTR program.
          (3) Proof of concept partnerships.--
                  (A) In general.--A Proof of Concept 
                Partnership shall be set up by a qualifying 
                institution to award grants to individual 
                researchers. These grants should provide 
                researchers with the initial investment and the 
                resources to support the proof of concept work 
                and commercialization mentoring needed to 
                translate promising research projects and 
                technologies into a viable company. This work 
                may include technical validations, market 
                research, clarifying intellectual property 
                rights position and strategy and investigating 
                commercial or business opportunities.
                  (B) Award guidelines.--The administrator of a 
                Proof of Concept Partnership program shall 
                award grants in accordance with the following 
                guidelines:
                          (i) The Proof of Concept Partnership 
                        shall use a market-focused project 
                        management oversight process, 
                        including--
                                  (I) a rigorous, diverse 
                                review board comprised of local 
                                experts in translational and 
                                proof of concept research, 
                                including industry, start-up, 
                                venture capital, technical, 
                                financial, and business experts 
                                and university technology 
                                transfer officials;
                                  (II) technology validation 
                                milestones focused on market 
                                feasibility;
                                  (III) simple reporting 
                                effective at redirecting 
                                projects; and
                                  (IV) the willingness to 
                                reallocate funding from failing 
                                projects to those with more 
                                potential.
                          (ii) Not more than $100,000 shall be 
                        awarded towards an individual proposal.
                  (C) Educational resources and guidance.--The 
                administrator of a Proof of Concept Partnership 
                program shall make educational resources and 
                guidance available to researchers attempting to 
                commercialize their innovations.
          (4) Awards.--
                  (A) Size of award.--The Director may make 
                awards to a qualifying institution for up to 
                $1,000,000 per year for up to 3 years.
                  (B) Award criteria.--In determining which 
                qualifying institutions receive pilot program 
                grants, the Director shall consider, in 
                addition to any other criteria the Director 
                determines necessary, the extent to which 
                qualifying institutions--
                          (i) have an established and proven 
                        technology transfer or 
                        commercialization office and have a 
                        plan for engaging that office in the 
                        program implementation;
                          (ii) have demonstrated a commitment 
                        to local and regional economic 
                        development;
                          (iii) are located in diverse 
                        geographies and are of diverse sizes;
                          (iv) can assemble project management 
                        boards comprised of industry, start-up, 
                        venture capital, technical, financial, 
                        and business experts;
                          (v) have an intellectual property 
                        rights strategy or office; and
                          (vi) demonstrate a plan for 
                        sustainability beyond the duration of 
                        the funding award.
          (5) Limitations.--The funds for the pilot program 
        shall not be used--
                  (A) for basic research, but to evaluate the 
                commercial potential of existing discoveries, 
                including--
                          (i) proof of concept research or 
                        prototype development; and
                          (ii) activities that contribute to 
                        determining a project's 
                        commercialization path, to include 
                        technical validations, market research, 
                        clarifying intellectual property 
                        rights, and investigating commercial 
                        and business opportunities; or
                  (B) to fund the acquisition of research 
                equipment or supplies unrelated to 
                commercialization activities.
          (6) Evaluative report.--The Director shall submit to 
        the Committee on Science, Space, and Technology and the 
        Committee on Small Business of the House of 
        Representatives and the Committee on Small Business and 
        Entrepreneurship of the Senate an evaluative report 
        regarding the activities of the pilot program. The 
        report shall include--
                  (A) a detailed description of the 
                institutional and proposal selection process;
                  (B) an accounting of the funds used in the 
                pilot program;
                  (C) a detailed description of the pilot 
                program, including incentives and activities 
                undertaken by review board experts;
                  (D) a detailed compilation of results 
                achieved by the pilot program, including the 
                number of small business concerns included and 
                the number of business packages developed, and 
                the number of projects that progressed into 
                subsequent STTR phases; and
                  (E) an analysis of the program's 
                effectiveness with supporting data.
          (7) Sunset.--The pilot program under this subsection 
        shall terminate at the end of fiscal year 2014.
  (ll) Phase III Reporting.--The annual SBIR or STTR report to 
Congress by the Administration under subsection (b)(7) shall 
include, for each Phase III award made by the Federal agency--
          (1) the name of the agency or component of the agency 
        or the non-Federal source of capital making the Phase 
        III award;
          (2) the name of the small business concern or 
        individual receiving the Phase III award; and
          (3) the dollar amount of the Phase III award.
  (mm) 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 or an STTR program shall enable a small 
        business concern that is an SBIR applicant or an STTR 
        applicant to indicate to the Federal agency whether the 
        Federal agency has the consent of the concern to--
                  (A) identify the concern to appropriate local 
                and State-level economic development 
                organizations as an SBIR applicant or an STTR 
                applicant; and
                  (B) release the contact information of the 
                concern to such organizations.
          (2) Rules.--The Administrator shall establish rules 
        to implement this subsection. The rules shall include a 
        requirement that a Federal agency include in the SBIR 
        and STTR application a provision through which the 
        applicant can indicate consent for purposes of 
        paragraph (1).
  (nn) Assistance for Administrative, Oversight, and Contract 
Processing Costs.--
          (1) In general.--Subject to paragraph (2), for the 3 
        full fiscal years beginning after the date of enactment 
        of this subsection, the Administrator shall allow each 
        Federal agency required to conduct an SBIR program to 
        use not more than 3 percent of the funds allocated to 
        the SBIR program of the Federal agency for--
                  (A) the administration of the SBIR program or 
                the STTR program of the Federal agency;
                  (B) the provision of outreach and technical 
                assistance relating to the SBIR program or STTR 
                program of the Federal agency, including 
                technical assistance site visits and personnel 
                interviews;
                  (C) the implementation of commercialization 
                and outreach initiatives that were not in 
                effect on the date of enactment of this 
                subsection;
                  (D) carrying out the program under subsection 
                (y);
                  (E) activities relating to oversight and 
                congressional reporting, including waste, 
                fraud, and abuse prevention activities;
                  (F) targeted reviews of recipients of awards 
                under the SBIR program or STTR program of the 
                Federal agency that the head of the Federal 
                agency determines are at high risk for fraud, 
                waste, or abuse, to ensure compliance with 
                requirements of the SBIR program or STTR 
                program, respectively;
                  (G) the implementation of oversight and 
                quality control measures, including 
                verification of reports and invoices and cost 
                reviews;
                  (H) carrying out subsection (dd);
                  (I) carrying out subsection (hh);
                  (J) contract processing costs relating to the 
                SBIR program or STTR program of the Federal 
                agency; and
                  (K) funding for additional personnel and 
                assistance with application reviews.
          (2) Performance criteria.--A Federal agency may not 
        use funds as authorized under paragraph (1) until after 
        the effective date of performance criteria, which the 
        Administrator shall establish, to measure any benefits 
        of using funds as authorized under paragraph (1) and to 
        assess continuation of the authority under paragraph 
        (1).
          (3) Rules.--Not later than 180 days after the date of 
        enactment of this subsection, the Administrator shall 
        issue rules to carry out this subsection.
          (4) Coordination with ig.--Each Federal agency shall 
        coordinate the activities funded under subparagraph 
        (E), (F), or (G) of paragraph (1) with their respective 
        Inspectors General, when appropriate, and each Federal 
        agency that allocates more than $50,000,000 to the SBIR 
        program of the Federal agency for a fiscal year may 
        share such funding with its Inspector General when the 
        Inspector General performs such activities.
  (oo) Annual Report on SBIR and STTR Program Goals.--
          (1) Development of metrics.--The head of each Federal 
        agency required to participate in the SBIR program or 
        the STTR program shall develop metrics to evaluate the 
        effectiveness, and the benefit to the people of the 
        United States, of the SBIR program and the STTR program 
        of the Federal agency that--
                  (A) are science-based and statistically 
                driven;
                  (B) reflect the mission of the Federal 
                agency; and
                  (C) include factors relating to the economic 
                impact of the programs.
          (2) Evaluation.--The head of each Federal agency 
        described in paragraph (1) shall conduct an annual 
        evaluation using the metrics developed under paragraph 
        (1) of--
                  (A) the SBIR program and the STTR program of 
                the Federal agency; and
                  (B) the benefits to the people of the United 
                States of the SBIR program and the STTR program 
                of the Federal agency.
          (3) Report.--
                  (A) In general.--The head of each Federal 
                agency described in paragraph (1) shall submit 
                to the appropriate committees of Congress and 
                the Administrator an annual report describing 
                in detail the results of an evaluation 
                conducted under paragraph (2).
                  (B) Public availability of report.--The head 
                of each Federal agency described in paragraph 
                (1) shall make each report submitted under 
                subparagraph (A) available to the public 
                online.
                  (C) Definition.--In this paragraph, the term 
                ``appropriate committees of Congress'' means--
                          (i) the Committee on Small Business 
                        and Entrepreneurship of the Senate; and
                          (ii) the Committee on Small Business 
                        and the Committee on Science, Space, 
                        and Technology of the House of 
                        Representatives.
  (pp) Competitive Selection Procedures for SBIR and STTR 
Programs.--All funds awarded, appropriated, or otherwise made 
available in accordance with subsection (f) or (n) must be 
awarded pursuant to competitive and merit-based selection 
procedures.
  (qq) Limitation on Pilot Programs.--
          (1) In general.--The Administrator may only carry out 
        a covered pilot program if in accordance with 
        paragraphs (2) and (3).
          (2) Existing pilot programs.--With respect to a 
        covered pilot program in operation on the date of 
        enactment of this subsection, such program may only be 
        carried out during the 3-year period beginning on such 
        date of enactment.
          (3) New pilot programs.--With respect to a covered 
        pilot program established after the date of enactment 
        of this subsection, such program--
                  (A) may only be carried out during the 3-year 
                period beginning on the date on which such 
                program is established; and
                  (B) may not continue or be based on, in any 
                manner, a previously established covered pilot 
                program.
          (4) Covered pilot program defined.--In this 
        subsection, the term ``covered pilot program'' means 
        any initiative, project, innovation, or other 
        activity--
                  (A) relating to an SBIR or STTR program; and
                  (B) not specifically authorized by law.
  (rr) Ensuring Equity in SBIR and STTR Awards to Individual 
Companies.--A small business concern, including affiliates of 
the small business concern, may not receive an SBIR or STTR 
award in a fiscal year if, at the time the award is made--
          (1) the small business concern has received an 
        aggregate dollar amount of such awards in such fiscal 
        year that exceeds 50 percent of the aggregate dollar 
        amount of such awards received, in the preceding fiscal 
        year, by the median State with respect to such 
        aggregate amount; or
          (2) the small business concern has received an 
        aggregate number of such awards in such fiscal year 
        that exceeds 50 percent of the aggregate number of such 
        awards received, in the preceding fiscal year, by the 
        median State with respect to such aggregate number.
  (ss) Publication of Certain Information.--In order to 
increase the number of small businesses receiving awards under 
the SBIR or STTR programs of participating agencies, and to 
simplify the application process for such awards, the 
Administrator shall establish and maintain a public Internet 
website on which the Administrator shall publish such 
information relating to notice of and application for awards 
under the SBIR program and STTR program of each participating 
Federal agency as the Administrator determines appropriate.
  (tt) Clean Coal Technology Research Preference.--In making 
awards under this section, a Federal agency shall give priority 
to applications in a manner that increases the number of SBIR 
and STTR award recipients conducting research with respect to 
clean coal technology, including the gasification of coal.
  (uu) Report on Enhancement of Manufacturing Activities.--Not 
later than October 1, 2011, and annually thereafter, the head 
of each Federal agency that makes more than $50,000,000 in 
awards under the SBIR and STTR programs of the agency combined 
shall submit to the Committee on Small Business and 
Entrepreneurship of the Senate and the Committee on Small 
Business and the Committee on Science, Space, and Technology of 
the House of Representatives a report that includes--
          (1) a description of efforts undertaken by the head 
        of the Federal agency to enhance manufacturing 
        activities;
          (2) a comprehensive description of the actions 
        undertaken each year by the head of the Federal agency 
        in carrying out the SBIR or STTR program of the agency 
        in support of Executive Order 13329 (69 Fed. Reg. 9181; 
        relating to encouraging innovation in manufacturing);
          (3) an assessment of the effectiveness of the actions 
        described in paragraph (2) at enhancing the research 
        and development of manufacturing technologies and 
        processes; and
          (4) recommendations that the program managers of the 
        SBIR or STTR program of the agency consider appropriate 
        for additional actions to increase the effectiveness of 
        enhancing manufacturing activities.
  (vv) Authority to ``Fast-Track'' Phase II Awards for 
Promising Phase I Research.--To address the delay between an 
award for Phase I of an SBIR program and the application for 
and extension of an award for Phase II of such program, each 
Federal agency with an SBIR program may develop ``fast-track'' 
programs to eliminate such delay by issuing Phase II SBIR 
awards as soon as practicable, including in appropriate cases 
simultaneously with the issuance of the Phase I SBIR award. The 
Administrator shall encourage the development of such ``fast-
track'' programs.
  (ww) 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 Phase III.
          (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.
  (xx) Acid Mine Drainage Research Preference.--In making 
awards under this section, a Federal agency shall give priority 
to applications in a manner that increases the number of SBIR 
and STTR award recipients conducting research related to 
reducing the environmental impact, including with respect to 
water quality, of acid mine drainage.
  (yy) Hydraulic Fracturing Research Preference.--In making 
awards under this section, a Federal agency shall give priority 
to applications in a manner that increases the number of SBIR 
and STTR award recipients conducting research related to 
reducing the environmental impact, including with respect to 
water quality, of the use of hydraulic fracturing during 
natural gas exploration activities.

           *       *       *       *       *       *       *

                              ----------                              


     SECTION 108 OF THE SMALL BUSINESS REAUTHORIZATION ACT OF 2000

SEC. 108 NATIONAL RESEARCH COUNCIL REPORTS.

  (a) * * *

           *       *       *       *       *       *       *

  (e) Extensions and Enhancements of Authority.--
          (1) In general.--Not later than 6 months after the 
        date of enactment of the Creating Jobs Through Small 
        Business Innovation Act of 2011, the head of each 
        agency described in subsection (a), in consultation 
        with the Small Business Administration, shall 
        cooperatively enter into an agreement with the National 
        Academy of Sciences for the National Research Council 
        to, not later than 4 years after the date of enactment 
        of the Creating Jobs Through Small Business Innovation 
        Act of 2011, and every 4 years thereafter--
                  (A) continue the most recent study under this 
                section relating to the issues described in 
                subparagraphs (A), (B), (C), and (E) of 
                subsection (a)(1);
                  (B) conduct a comprehensive study of how the 
                STTR program has stimulated technological 
                innovation and technology transfer, including--
                          (i) a review of the collaborations 
                        created between small businesses and 
                        research institutions, including an 
                        evaluation of the effectiveness of the 
                        program in stimulating new 
                        collaborations and any obstacles that 
                        may prevent or inhibit the creation of 
                        such collaborations;
                          (ii) an evaluation of the 
                        effectiveness of the program at 
                        transferring technology and 
                        capabilities developed through Federal 
                        funding;
                          (iii) an evaluation of the program's 
                        success at commercializing technologies 
                        compared with other Federal technology 
                        transfer programs and the SBIR program;
                          (iv) to the extent practicable, an 
                        evaluation of the economic benefits 
                        achieved by the STTR program, including 
                        the economic rate of return;
                          (v) an analysis of how Federal 
                        agencies are using small businesses 
                        that have completed Phase II under the 
                        STTR program to fulfill their 
                        procurement needs; and
                          (vi) an analysis of whether the 
                        existing STTR allocation has impacted 
                        the effectiveness of the program in 
                        achieving its goals;
                  (C) make recommendations with respect to the 
                issues described in subparagraph (A), (D), and 
                (E) of subsection (a)(2) and subparagraph (B) 
                of this paragraph; and
                  (D) estimate, to the extent practicable, the 
                number of jobs created by the SBIR program or 
                STTR program of the agency.
          (2) Consultation.--An agreement under paragraph (1) 
        shall require the National Research Council to ensure 
        that there is participation by and consultation with 
        the small business community, the Administration, and 
        other interested parties as described in subsection 
        (b).
          (3) Reporting.--An agreement under paragraph (1) 
        shall require that--
                  (A) not later than 4 years after the date of 
                enactment of the Creating Jobs Through Small 
                Business Innovation Act of 2011, and every 4 
                years thereafter, the National Research Council 
                shall submit to the head of the agency entering 
                into the agreement, the Committee on Small 
                Business and Entrepreneurship of the Senate, 
                and the Committee on Small Business and the 
                Committee on Science, Space, and Technology of 
                the House of Representatives, a report 
                regarding the study conducted under paragraph 
                (1) and containing the recommendations 
                described in paragraph (1); and
                  (B) not later than 2 years after the date of 
                enactment of the Creating Jobs Through Small 
                Business Innovation Act of 2011, the National 
                Research Council shall submit to the head of 
                the agency entering into the agreement, the 
                Committee on Small Business and 
                Entrepreneurship of the Senate, and the 
                Committee on Small Business and the Committee 
                on Science, Space, and Technology of the House 
                of Representatives, a report of preliminary 
                findings and recommendations regarding the 
                study conducted under paragraph (1)(B).

                          XX. Dissenting Views

                              ----------                              


                             I. BACKGROUND

    The version of H.R. 1425, ``Creating Jobs Through Small 
Business Innovation Act of 2011'' reported out of the Small 
Business Committee does not adequately modernize the Small 
Business Innovation Research and Small Business Technology 
Transfer Programs.\1\ The SBIR program was established by 
Congress in 1982 to increase government funding for research 
and development grants to small businesses that had ideas with 
commercial potential. However, rather than providing an 
environment for small businesses to develop their technology, 
the bill reduces the funding available to these firms, 
continues to place competition restrictions on the ability of 
those with the best chance of commercializing, and adds new 
regulatory and paperwork burdens, while failing to provide 
proper metrics of the program to safeguard taxpayer money.
---------------------------------------------------------------------------
    \1\Hereinafter SBIR Program.
---------------------------------------------------------------------------
    Under the SBIR program, federal government departments with 
extramural research budgets of $100 million or more dedicate a 
small percentage of their agency's overall research budget for 
technology development contracts to be awarded to small firms. 
Currently, eleven federal agencies administer SBIR programs.\2\ 
Since the first grants were awarded in FY1983, more than $24 
billion has been awarded to small research companies, funding 
in excess of 100,000 projects from FY1983 to FY2008. During the 
last decade, the Federal government's extramural research 
budgets have grown and so have the number and amount of 
contracts awarded to small firms under the SBIR program. In 
FY2009, SBIR reported 5,809 awards totaling $2.23 billion and 
STTR reported 843 awards totaling $276 million, an all-time 
high. However, the provisions of this bill would reverse this 
upward trend with diverting portions of funding directly to 
Federal agencies and creating additional obstacles that small 
businesses must overcome to access SBIR awards.
---------------------------------------------------------------------------
    \2\Dept. of Agriculture, Dept. of Commerce, Dept. of Defense, Dept. 
of Education, Dept. of Energy, Dept. of Health & Human Services (HHS), 
Dept. of Homeland Security, Dept. of Transportation, Environmental 
Protection Agency, National Aeronautics & Space Administration and 
National Science Foundation.
---------------------------------------------------------------------------

    II. THE NEED TO REAUTHORIZE AND MODERNIZE THE SBIR PROGRAM AND 
          EXAMINATION OF HR 1425, AS REPORTED OUT OF COMMITTEE

    The SBIR program has been reauthorized three times since 
its enactment, with the last full reauthorization expiring in 
September 2008. During both the 110th and 111th Congresses, the 
House passed SBIR reauthorization bills. However, the Senate 
failed to act upon these bills and as a result the programs 
have had to be continually reauthorized with short 3 and 4 
month extensions.
    The bipartisan measures previously passed by the House 
recognized the need to reauthorize this program. However, 
straight reauthorization of this program is not enough and, as 
noted by multiple experts, important changes are necessary to 
modernize the SBIR program to ensure the maximum amount of 
opportunities of commercializing new, innovative technology to 
all small businesses. Participating small firms, federal 
agencies, research organizations, and other interested parties 
have all expressed support for changing the program and 
strongly advocated for providing more opportunities to small 
businesses. Additionally, there have been calls to address 
issues that have arisen since the last reauthorization such as 
the increase in costs of R&D and decreased participation rates 
of certain groups. Yet, the bill ignores a number of 
recommendations made by small businesses, experts, and 
independent agencies like GAO. As a result, the bill at hand 
falls short of modernizing the SBIR program in such a way that 
would benefit the thousands of small businesses that 
participate.
Reducing the Amount of Funds Available for Awards to Small Businesses
    Over the course of this three-year reauthorization, the 
legislation would allow participating agencies to siphon off as 
much as 10 percent of SBIR grant money to run the SBIR program 
at participating agencies and an additional 3 percent for 
administrative, oversight, and contract processing costs. Under 
current law, agencies request funding to pay for the costs 
associated with running the program in their general budget 
request. Under the legislation, it would allow agencies to now 
pay for these expenses using program funding--this will not 
only deprive small businesses of money, it will also create a 
precedent that will allow other programs to use funding to pay 
for administrative costs. In FY2009, over $2.5 billion dollars 
were awarded to small businesses through the SBIR program. 
However, with a total reduction of 13 percent of funds 
available for these grants, there could be a decline of as many 
as 2,166 Phase I awards or 315 Phase II awards.
    Two amendments were introduced at the Committee markup 
which would have addressed these problems. The amendments, 
which were not adopted, would have ensured that SBIR funding 
went towards grants to small businesses rather than back to 
fund participating agencies by eliminating the ability of 
agencies to pull these percentages from their budgets.\3\ These 
measures sought to ensure that small businesses rather than a 
Federal bureaucracy were the recipients of SBIR funds--as only 
then would they be used to develop innovative technology and 
create jobs. Nonetheless, these amendments were not adopted by 
the Committee and as a result Federal agencies, rather than 
small businesses, will be receiving this portion of SBIR funds.
---------------------------------------------------------------------------
    \3\Representative Velazquez Amendment 001; Representative Velazquez 
Amendment 003.
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    The diversion of funds allowed by this bill to cover other 
costs will significantly impede the effectiveness of the 
program to not only create new technologies, but also expand 
job growth in this country. Research has shown that SBIR funds 
thousands of projects and helps over 1,500 new companies get 
off the ground. Those startups develop innovative new products, 
make advances in technology and, most importantly, create new 
jobs. Experts have testified that the average annual rate of 
employment growth in SBIR-funded companies has grown much 
faster than the growth rate of the economy as a whole. 
Additionally, SBIR-funded projects leverage a number of 
activities of the company allowing it to grow through hiring 
new employees in areas related to but broader than the specific 
project. Yet, despite the proof that these awards create jobs, 
the bill seeks to take money from small businesses and give it 
to Federal agencies thereby hampering job growth and 
technological innovation.
    Furthermore, an amendment was presented that would have 
increased the dollar amount for SBIR grants and increase the 
SBIR and STTR set-asides.\4\ The amount of money to research 
and develop a product has drastically increased since the 
inception of the program. This amendment sought to ensure that 
the grants would provide small businesses with a sufficient 
amount of money to move their research to the next phase in the 
development process. Additionally, the amendment would have 
increased the amount of money each agency would have had to set 
aside for the SBIR program. Small businesses representatives 
testified before the Committee in March 2011 and expressed 
their support for this measure as it would ensure that, as 
award amounts increased, the number of grants awarded in the 
program did not decrease. Moreover, small businesses that 
participate in this program have high levels of productivity. 
Companies supported by the SBIR and STTR programs often 
generate some of the most important breakthroughs each year in 
the U.S. For example, about 25 percent of R&D Magazine's Top 
100 Innovations came from SBIR-funded small businesses. 
Likewise, small businesses have proven to be more innovative 
producing 13 times more patents per employee than large firms. 
Thus, despite the proof of the ability of small businesses to 
turn SBIR awards into jobs and innovative technologies, the 
Committee failed to adopt the amendment and as a result fewer 
small businesses will have receive grants to develop their 
technologies.
---------------------------------------------------------------------------
    \4\Representative Chu Amendment 025.
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Restricts Participation Based Solely on Firm's Business Model
    Under the bill reported by the Committee, Congress would 
for the first time dictate to small businesses the manner in 
which it could structure its business. This limits the ability 
of firms to access the majority of SBIR and STTR funds, 
allowing them to compete for only an arbitrary amount of the 
awards. In March, an expert witness testified that there were 
no economic grounds that would justify linking the business 
model of a firm to whether or not it was qualified for the SBIR 
program. According to research, firms with the restricted 
business structures would have a 26% higher probability of 
commercializing their product and can increase the overall 
success rate of the program.\5\
---------------------------------------------------------------------------
    \5\Albert N. Link & Christopher J. Ruhm, Bringing Science to 
Market: Commercializing from NIH SBIR Awards (2009).
---------------------------------------------------------------------------
    Also, testimony presented to the Committee indicated it 
would be difficult to develop a method to determine a fair 
allocation of funds available to these firms. As a result there 
would be a negative impact on the program as restrictions would 
deter all firms from applying. Witnesses stated that businesses 
have this model because they show promising growth and that, in 
itself, the restricted business model is in no way indicative 
of the size of the company. However, the system put into place 
by this bill would allow a business with 222 employees and a 
net worth of $43 million to compete for a majority of SBIR 
grants, while a business that had five employees and a $1 
million net worth would be left to compete for a smaller 
portion due solely to the structuring of the business. 
Therefore, the bill is limiting many small businesses with a 
high likelihood of achieving the goal of commercialization. It 
will also take many small businesses out of contention for SBIR 
awards due solely to their business model.
Increases the Regulatory and Paperwork Burdens
    According to SBA's Office of Advocacy, the regulatory 
burden small firms face is 36 percent greater than their large 
counterparts, creating a staggering competitive 
disadvantage.\6\ For firms with 20 employees or less, the small 
business pays on average $10,585 per employee to comply with 
regulatory requirements.\7\ These increased regulatory burdens 
are causing uncertainty for businesses all around the country. 
As a result groups like the U.S. Chamber of Commerce have 
indicated that these burdens are one of the key issues small 
businesses are facing today as it is the biggest single threat 
to job creation.\8\ However, rather than reducing the paperwork 
and regulatory burdens that small businesses face, the bill 
reported by the Committee creates additional hoops for 
entrepreneurs to jump through if they wish to participate in 
the SBIR program.
---------------------------------------------------------------------------
    \6\U.S. Senate Committee on Small Business and Entrepreneurship, 
Dr. Winslow Sargeant, Chief Counsel for Advocacy, Next Steps for Main 
Street: Reducing the Regulatory and Administrative Burdens on America's 
Small Businesses (Nov. 18, 2010), available at http:// archive.sba.gov/
advo/laws/test10_K1118.html.
    \7\Id.
    \8\See U.S. Chamber of Commerce, Small Business--Key Issues: 
Regulatory Reform, http://www.uschambersmallbusinessnation.com/take-
action/issue/regulatory-reform; see also Thomas J. Donohue, President 
and CEO, U.S. Chamber of Commerce, Addressing the Challenges of a 
Nation at Risk (Nov. 17, 2010).
---------------------------------------------------------------------------
    For example, to even qualify for available awards, small 
businesses with certain financial structures would have to 
register with the Small Business Administration; and even then, 
they would be limited to an arbitrary amount of funding. 
According to one GAO report, all businesses spend nearly 7 
billion hours on information collection required by the 
government with small businesses being disproportionately 
burdened by federal regulatory requirements.\9\ This would 
require small firms to devout further time to filling out 
registration information, detracting their attention away from 
their research. Additionally, agencies would be required to 
write a justification as to why the award should be given to 
those businesses that are registered. The cost of research and 
development has more than tripled in some industries such as 
biotechnology, thus, the grants awarded through SBIR are not 
enough to cover R&D costs. Yet, the legislation penalizes and 
singles out these small businesses with additional regulatory 
burdens imposing more regulatory costs for them to bear merely 
nothing more than securing funding to commercialize their 
products.
---------------------------------------------------------------------------
    \9\GAO Report to the Honorable Sue W. Kelly Chairwoman, Regulatory 
Reform and Paperwork Subcommittee, House Committee on Small Business, 
Federal Paperwork General Purpose Statistics and Research Surveys of 
Businesses, GAO/GGD-99-169 (Sept. 1999).
---------------------------------------------------------------------------
Eliminates Support for Minority and Women-Owned Small Businesses
    One of the stated objectives of the SBIR program is to 
foster and encourage participation by socially and economically 
disadvantaged small business concerns and women-owned business 
concerns in the SBIR program. Yet, the legislation lacks any 
provisions in which to carry out this objective. The one 
measure in place that sought to increase participation by 
requiring agencies to encourage participation by these 
underrepresented groups was stricken from the bill in the 
course of the Committee's markup.\10\
---------------------------------------------------------------------------
    \10\Representative King (Iowa) Amendment 191.
---------------------------------------------------------------------------
    In an effort to correct the deficiencies of this bill and 
provide meaningful assistance in order to foster and encourage 
participation by underrepresented groups, an amendment was 
introduced that would have made funds available to provide 
outreach to groups that have traditionally been 
underrepresented in the SBIR program.\11\ In a March hearing on 
the SBIR program before the Committee, testimony was presented 
that participation of these groups in the SBIR program has 
declined. According to a National Academy of Sciences report, 
the share of DoD Phase I awards to minority-owned firms fell-
below 10% for the first time in 2004 and 2005. One witness 
indicated that this decrease in participation began about the 
same time outreach efforts ceased and that this could be one of 
the reasons that there has been a decline in participation. 
However, despite this evidence, the amendment failed to be 
adopted.
---------------------------------------------------------------------------
    \11\Representatives Cicilline, Chu, Richmond and Clarke Amendment 
011.
---------------------------------------------------------------------------
Fails to Support Veteran-Owned Small Businesses
    Another segment of the population that has traditionally 
been underrepresented in this program, are veteran-owned 
businesses. In FY 2010, only 811 veteran-owned businesses 
received SBIR or STTR awards, equating to less than 1 percent. 
In an effort to increase their participation, an amendment was 
introduced that would have increased the award levels and 
created a program for awardee businesses that were owned and 
operated by veterans.\12\ Currently, the U.S. has over 22 
million veterans, with an average unemployment rate for all 
veterans under 8 percent but with an 11 percent unemployment 
rate for veterans coming home from the wars in Iraq and 
Afghanistan. With over 1,500 companies created annually, SBIR 
awards have been proven to create jobs. In order to combat 
unemployment in this important segment of the population, money 
should be directed towards the men and women that have 
tirelessly fought for our country. Though this amendment sought 
to invest in their businesses and provide opportunities for job 
creation in this segment of the population that is much needed, 
the Committee failed to adopt the provision and, as a result, 
veterans who seek to produce their innovative ideas will be 
underrepresented in the award of SBIR grants.
---------------------------------------------------------------------------
    \12\Representative Owens Amendment 031.
---------------------------------------------------------------------------
Fails to Provide Adequate Technical Assistance to Potential 
        Participants
    In previous legislation, measures were implemented to 
provide funding specifically to conduct technical assistance to 
potential and current SBIR participants. For example, the 
Federal and State Technology (FAST) Program provided grants to 
states so that they could promote participation in states that 
do not have a high volume of SBIR awards, and in low-income 
areas of all states. There are multiple states whose businesses 
receive hundreds of awards annually (e.g., California and 
Massachusetts), while there are those that receive less than 
ten (e.g., Iowa, Mississippi, and South Carolina). One business 
that testified before the Committee had received almost 400 
awards--that is more awards than Idaho, Mississippi, Wyoming, 
North Dakota, and South Dakota combined.
    In an effort to provide services that had previously been 
available under the FAST program, an amendment was introduced 
that would have provided funding to States so that they could 
provide outreach, financial assistance, and technical support, 
much like the activities described by witnesses, to small 
businesses interested in participating.\13\ Witnesses before 
this Committee indicated that providing funds so that states 
could conduct their own outreach could be used to increase the 
participation of underrepresented demographics. In attempt to 
generate proposals, one individual indicated that several 
states have implemented programs that link scientists and 
engineers with potential SBIR projects in their field. 
Furthermore, a witness cited one organization in Massachusetts 
that would review SBIR proposals for applicants and suggest 
changes that would enhance their application so as to make it 
more likely that they would receive a grant. In Pennsylvania, 
one organization assisted 338 distinct companies, 70 of which 
have won over $18 million in federal SBIR awards, and the 
partnership has a SBIR win rate that is 33% higher than the 
national average. Yet, despite the clear discrepancy in awards, 
the success stories of state programs, and calls from small 
businesses to renew efforts to encourage and support small 
businesses in all fifty states to apply for SBIR awards, the 
Committee failed to adopt this important provision. As a 
result, the states with low participation rates will be unable 
to provide technical assistance to potential SBIR applicants.
---------------------------------------------------------------------------
    \13\Representative Cicilline Amendment 009.
---------------------------------------------------------------------------
    Additionally, a measure was introduced that would have 
provided grants to minority institutions so that they could 
provide outreach services to underrepresented groups.\14\ 
Testimony before the Committee indicated that there should be 
avenues available to potential applicants in these groups that 
educate them about the program and help them with the basics of 
submitting a proposal and would open the doors to potential 
partnerships with universities. The testimony provided examples 
of universities that have offices set up to help researchers 
navigate their way through intellectual property, FDA, funding 
and legal issues so that their discoveries could be transferred 
to a commercialized product. In some instances research has 
shown that university involvement increased the probability of 
commercialization by 12 points.\15\ This measure would have 
allowed minority institutions to provide technical assistance 
in order to increase the participation of minority-owned 
businesses in the SBIR program. However, despite the evidence 
presented about the success of these types of efforts and the 
proof of necessity to increase outreach to these particular 
groups, the Committee failed to adopt these measures.
---------------------------------------------------------------------------
    \14\Representative Chu Amendment 026.
    \15\Albert N. Link & Christopher J. Ruhm, Bringing Science to 
Market: Commercializing from NIH SBIR Awards (2009).
---------------------------------------------------------------------------
Legislation Lacks Evaluation Measure of the SBIR Program and Puts 
        Taxpayer Dollars at Risk
    Under the SBIR program, each agency runs their own program 
in a manner that best suits the nature of their research and 
the mission of the agency. With this approach, there has been 
few efforts to measure the relative success rate of one agency 
versus another and maximize outcomes. To correct this problem, 
an amendment was presented to allow for a more efficient 
evaluation of the programs by requiring SBA, rather than each 
participating agency, to develop a standardized set of outcome-
based performance metrics to be used by SBA to evaluate the 
program.\16\
---------------------------------------------------------------------------
    \16\Representative Schrader Amendment 015.
---------------------------------------------------------------------------
    Though each program is different, there are factors that 
can be measured similar to all agencies including level of 
sales, developmental funding, licensing arrangements, completed 
marketing efforts, and job creation. Therefore, a standardized 
set of metrics would have allowed for a side-by-side comparison 
of common factors at participating agencies. Metrics in other 
areas of the government have been found to create more 
efficient programs and save taxpayer dollars. For example, the 
DoD created metrics for the Joint Strike Fighter program and as 
a result the agency paid an estimated $29 million less in fees 
in the 2 years since the policy changed than it might have when 
applying the former criteria.\17\ Additionally, research has 
shown that efficient performance in the government has 
increased in part because agencies are developing better 
performance measures and providing better information.\18\ 
However, though GAO, an independent third party, has long 
advocated for a uniform set of metrics, the Committee failed to 
adopt this amendment, further impeding Congress's ability to 
gauge the success of SBIR at each agency.
---------------------------------------------------------------------------
    \17\Gene L. Dodaro, Comptroller General of the United States, 
Testimony Before the Committee on Homeland Security and Governmental 
Affairs, U.S. Senate, Opportunities to Reduce Potential Duplication in 
Government Programs, Save Tax Dollars, and Enhance Revenue GAO-11-635 
(May 25, 2011).
    \18\See generally Jay Kiedrowski, Obama and Performance 
Measurement: What to Do With the Performance Assessment Rating Tool 
(Sept. 8, 2009).
---------------------------------------------------------------------------
Need to Reduce Fraud, Waste, and Abuse in the Program
    The original bill considered before the Committee failed to 
include sufficient safeguards to reduce fraud, waste, and abuse 
that occur in the SBIR program. According a 2009 report, GAO 
found numerous instances of duplicative funding for similar 
research. Under federal law, it is illegal to receive 
concurrent SBIR awards from different agencies; however, this 
did not prevent a number of companies from receiving awards for 
the same proposals two, three, and even five times before 
agencies became aware of the duplication. An IG report for NASA 
indicated that the agency had paid out more than $28.6 million 
in potential instances of duplicate awards and duplicate 
deliverables.\19\ Also, so-called ``Mill Riding,'' where some 
firms ``game'' the system the SBIR program by winning numerous 
awards but then fail to commercialize, has become a problem. 
Thus, reducing these instances of waste and fraud in the 
program is important so that goal of commercializing products 
is achieved.
---------------------------------------------------------------------------
    \19\NASA, Office of the Inspector General, Review of NASA's 
Management of Its Small Business Innovation Research Program (Jan. 12, 
2011).
---------------------------------------------------------------------------
    Furthermore, according to the Federal Procurement Database 
System last year at least 60 companies received over 20 SBIR 
and STTR Phase I and Phase II awards. Out of these companies, 3 
SBIR recipients each received over 100 grants accounting for 3 
percent of all awards. The awards received by these companies 
are more Phase I and II grants than received by each of the 
following states: Alaska, Arkansas, Delaware, District of 
Columbia, Georgia, Hawaii, Idaho, Indiana, Iowa, Kansas, 
Kentucky, Louisiana, Maine, Minnesota, Mississippi, Missouri, 
Montana, Nebraska, Nevada, North Carolina, North Dakota, 
Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, 
Tennessee, Utah, Vermont, West Virginia, Wisconsin, and 
Wyoming. Furthermore, awards received by companies in two 
states--California and Massachusetts-- accounted for more than 
30% of SBIR grants government-wide.
    To correct these deficiencies in the program, an amendment 
was offered and passed in the Committee that prohibits a firm 
from receiving an SBIR award if the business has already 
received awards or dollar amount totaling more than 50% greater 
than that received by the median state.\20\ Thus, this 
amendment will ensure that there is a fair distribution of 
awards in each and every state and that grant recipients are 
not concentrated in just a few areas of the country.
---------------------------------------------------------------------------
    \20\Representative Velazquez Amendment 013.
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                            III. CONCLUSION

    While the SBIR and STTR programs are important tools in 
helping rebuild our economy, the ability of participants to 
contribute to the recovery efforts is severely limited by the 
bill reported out of Committee. Participant businesses are the 
driving force behind job creation in the technological sector 
as awards allow businesses to expand and grow. Yet, the bill 
diverts money away from funds for awards to cover the cost of 
expenses for running the program, as opposed to innovative 
businesses. As a result, the legislation limits the ability of 
these small businesses to generate jobs through the creation of 
new products and new industries. It also limits critical 
outreach components which are necessary to boost participation 
in the program. The bill makes the money that is available for 
awards harder for small businesses to access by adding 
additional regulatory hurdles and paperwork burdens--thereby 
making the program more cumbersome and discouraging many 
innovative companies from even applying.

                                   Nydia M. Velazquez.

                                  
