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111th Congress Rept. 111-190
HOUSE OF REPRESENTATIVES
1st Session Part 1
======================================================================
ENHANCING SMALL BUSINESS RESEARCH AND INNOVATION ACT OF 2009
_______
June 26, 2009.--Ordered to be printed
_______
Ms. Velazquez, from the Committee on Small Business, submitted the
following
R E P O R T
[To accompany H.R. 2965]
[Including cost estimate of the Congressional Budget Office]
The Committee on Small Business, to whom was referred the
bill (H.R. 2965) to amend the Small Business Act with respect
to the Small Business Innovation Research Program and the Small
Business Technology Transfer Program, and for other purposes,
having considered the same, report favorably thereon with an
amendment and recommend that the bill as amended do pass.
CONTENTS
Page
I. Purpose of the Bill and Summary.................................11
II. Background and Need for Legislation............................13
III. Hearings.......................................................18
IV. Committee Consideration........................................18
V. Committee Votes................................................18
VI. Section-by-Section Analysis of H.R. 2965.......................22
VII. Congressional Budget Office Cost Estimate......................30
VIII. Committee Estimate of Costs....................................30
IX. Oversight Findings.............................................31
X. Statement of Constitutional Authority..........................31
XI. Compliance With Public Law 104-4...............................31
XII. Congressional Accountability Act...............................31
XIII. Federal Advisory Committee Statement...........................31
XIV. Statement of No Earmarks.......................................31
XV. Performance Goals and Objectives...............................31
XVI. Changes in Existing Law Made by the Bill, as Reported..........31
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Enhancing Small
Business Research and Innovation Act of 2009''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--PROGRAM EXTENSION AND VENTURE CAPITAL OPERATING COMPANY
INVOLVEMENT
Sec. 101. Extension of termination dates.
Sec. 102. Ensuring that innovative small businesses with substantial
investment from venture capital operating companies are able to
participate in the SBIR and STTR programs.
TITLE II--COMMERCIALIZATION ACTIVITIES AND RESEARCH TOPICS DESERVING
SPECIAL CONSIDERATION
Sec. 201. Focus on commercialization.
Sec. 202. Inclusion of energy-related research topics and rare disease-
related research topics as deserving ``special consideration'' as SBIR
research topics.
Sec. 203. Nanotechnology-related research topics.
Sec. 204. Clarifying the definition of ``Phase Three''.
Sec. 205. Agency research goals.
Sec. 206. Commercialization programs.
TITLE III--RURAL DEVELOPMENT AND OUTREACH
Sec. 301. Outreach and support activities.
Sec. 302. Rural preference.
Sec. 303. Obtaining SBIR applicant's consent to release contact
information to economic development organizations.
Sec. 304. Increased partnerships between SBIR awardees and prime
contractors, venture capital investment companies, and larger
businesses.
TITLE IV--SBIR AND STTR ENHANCEMENT
Sec. 401. Increased number of research topic solicitations annually and
shortened period for final decisions on applications.
Sec. 402. Agencies should fund vital R&D projects with the potential
for commercialization.
Sec. 403. Federal agency engagement with SBIR awardees that have been
awarded multiple Phase One awards but have not been awarded Phase Two
awards.
Sec. 404. Funding for administrative, oversight, and contract
processing costs.
Sec. 405. Comptroller general audit of how Federal agencies calculate
extramural research budgets.
Sec. 406. Agency databases to support program evaluation.
Sec. 407. Agency databases to support technology utilization.
Sec. 408. Interagency Policy Committee.
Sec. 409. National Research Council SBIR Study.
Sec. 410. Express authority to ``fast-track'' Phase Two awards for
promising Phase One research.
Sec. 411. Increased SBIR and STTR award levels.
Sec. 412. Express authority for an agency to award sequential Phase Two
awards for SBIR-funded projects.
Sec. 413. First phase required.
Sec. 414. Involvement of Chief Counsel for Advocacy.
TITLE I--PROGRAM EXTENSION AND VENTURE CAPITAL OPERATING COMPANY
INVOLVEMENT
SEC. 101. EXTENSION OF TERMINATION DATES.
(a) SBIR.--Section 9(m) of the Small Business Act (15 U.S.C. 638(m))
is amended by striking ``2008'' and inserting ``2011''.
(b) STTR.--Section 9(n)(1)(A) of the Small Business Act (15 U.S.C.
638(n)(1)(A)) is amended by striking ``2009'' and inserting ``2011''.
SEC. 102. ENSURING THAT INNOVATIVE SMALL BUSINESSES WITH SUBSTANTIAL
INVESTMENT FROM VENTURE CAPITAL OPERATING COMPANIES
ARE ABLE TO PARTICIPATE IN THE SBIR AND STTR
PROGRAMS.
Section 9 of the Small Business Act (15 U.S.C. 638) is amended by
adding at the end the following:
``(aa) Venture Capital Operating Companies.--Effective only for the
SBIR and STTR programs the following shall apply:
``(1) A business concern that has more than 500 employees
shall not qualify as a small business concern.
``(2) In determining whether a small business concern is
independently owned and operated under section 3(a)(1) or meets
the small business size standards instituted under section
3(a)(2), the Administrator shall not consider a business
concern to be affiliated with a venture capital operating
company (or with any other business that the venture capital
operating company has financed) if--
``(A) the venture capital operating company does not
own 50 percent or more of the business concern; and
``(B) employees of the venture capital operating
company do not constitute a majority of the board of
directors of the business concern.
``(3) A business concern shall be deemed to be `independently
owned and operated' if--
``(A) it is owned in majority part by one or more
natural persons or venture capital operating companies;
``(B) there is no single venture capital operating
company that owns 50 percent or more of the business
concern; and
``(C) there is no single venture capital operating
company the employees of which constitute a majority of
the board of directors of the business concern.
``(4) If a venture capital operating company controlled by a
business with more than 500 employees (in this paragraph
referred to as a `VCOC under large business control') has an
ownership interest in a small business concern that is owned in
majority part by venture capital operating companies, the small
business concern is eligible to receive an award under the SBIR
or STTR program only if--
``(A) not more than two VCOCs under large business
control have an ownership interest in the small
business concern; and
``(B) the VCOCs under large business control do not
collectively own more than 20 percent of the small
business concern.
``(5) The term `venture capital operating company' means a
business concern--
``(A) that--
``(i) is a Venture Capital Operating Company,
as that term is defined in regulations
promulgated by the Secretary of Labor; or
``(ii) is an entity that--
``(I) is registered under the
Investment Company Act of 1940 (15
U.S.C. 80a-51 et seq.); or
``(II) is an investment company, as
defined in section 3(c)(1) of such Act
(15 U.S.C. 80a-3(c)(1)), which is not
registered under such Act because it is
beneficially owned by less than 100
persons; and
``(B) that is itself organized or incorporated and
domiciled in the United States, or is controlled by a
business concern that is incorporated and domiciled in
the United States.''.
TITLE II--COMMERCIALIZATION ACTIVITIES AND RESEARCH TOPICS DESERVING
SPECIAL CONSIDERATION
SEC. 201. FOCUS ON COMMERCIALIZATION.
Section 9(a) of the Small Business Act (15 U.S.C. 638(a)) is amended
by adding at the end the following: ``It is further the policy of
Congress that the programs established in this section should focus on
promoting research and development of projects governed by commercial
business plans, which have significant potential to produce products or
services for the marketplace or for acquisition by Federal agencies.''.
SEC. 202. INCLUSION OF ENERGY-RELATED RESEARCH TOPICS AND RARE DISEASE-
RELATED RESEARCH TOPICS AS DESERVING ``SPECIAL
CONSIDERATION'' AS SBIR RESEARCH TOPICS.
Section 9(g)(3) of the Small Business Act (15 U.S.C. 638(g)(3)) is
amended--
(1) in the matter preceding subparagraph (A) by inserting
after ``critical technologies'' the following: ``or pressing
research priorities'';
(2) in subparagraph (A) by striking ``or'' at the end; and
(3) by adding at the end the following:
``(C) the National Academy of Sciences, in the final
report issued by the `America's Energy Future:
Technology Opportunities, Risks, and Tradeoffs'
project, and in subsequent reports issued by the
National Academy of Sciences on sustainability, energy,
and alternative fuels;
``(D) the National Institutes of Health, in the
annual report on the rare diseases research activities
of the National Institutes of Health for fiscal year
2005, and in subsequent reports issued by the National
Institutes of Health on rare diseases research
activities; or
``(E) the National Academy of Sciences, in the final
report issued by the `Transit Research and Development:
Federal Role in the National Program' project and the
`Transportation Research, Development and Technology
Strategic Plan (2006-2010)' issued by the United States
Department of Transportation Research and Innovative
Technology Administration, and in subsequent reports
issued by the National Academy of Sciences and United
States Department of Transportation on transportation
and infrastructure;''.
SEC. 203. NANOTECHNOLOGY-RELATED RESEARCH TOPICS.
(a) SBIR.--Section 9(g)(3) of the Small Business Act (15 U.S.C.
638(g)(3)), as amended, is further amended--
(1) in subparagraph (D) by striking ``or'' at the end;
(2) in subparagraph (E) by adding ``or'' at the end; and
(3) by adding at the end the following:
``(F) the national nanotechnology strategic plan
required under section 2(c)(4) of the 21st Century
Nanotechnology Research and Development Act (15 U.S.C.
7501(c)(4)) and in subsequent reports issued by the
National Science and Technology Council Committee on
Technology, focusing on areas of nanotechnology
identified in such plan;''.
(b) STTR.--Section 9(o)(3) of the Small Business Act (15 U.S.C.
638(o)(3)) is amended--
(1) in subparagraph (A) by striking ``or'' at the end;
(2) in subparagraph (B) by adding ``or'' at the end; and
(3) by adding at the end the following:
``(C) by the national nanotechnology strategic plan
required under section 2(c)(4) of the 21st Century
Nanotechnology Research and Development Act (15 U.S.C.
7501(c)(4)) and in subsequent reports issued by the
National Science and Technology Council Committee on
Technology, focusing on areas of nanotechnology
identified in such plan;''.
SEC. 204. CLARIFYING THE DEFINITION OF ``PHASE THREE''.
Section 9(e) of the Small Business Act (15 U.S.C. 638(e)) is
amended--
(1) in paragraph (4)(C) in the matter preceding clause (i) by
inserting after ``a third phase'' the following: ``, which
shall consist of work that derives from, extends, or logically
concludes efforts performed under prior SBIR funding agreements
(which may be referred to as `Phase III')'';
(2) in paragraph (8) by striking ``and'' at the end;
(3) in paragraph (9) by striking the period at the end and
inserting ``; and''; and
(4) by adding at the end the following:
``(10) the term `commercialization' means the process of
developing marketable products or services and producing and
delivering products or services for sale (whether by the
originating party or by others) to government or commercial
markets.''.
SEC. 205. AGENCY RESEARCH GOALS.
Section 9 of the Small Business Act (15 U.S.C. 638), as amended, is
further amended by striking subsection (h) and inserting the following:
``(h) Agency Research Goals.--
``(1) In general.--In addition to the requirements of
subsection (f), each Federal agency that is required by this
section to have an SBIR program and that awards annually
$5,000,000,000 or more in procurement contracts shall,
effective for fiscal year 2010 and each fiscal year thereafter,
establish annual goals for commercialization of projects funded
by SBIR awards.
``(2) Specific goals.--The goals required by paragraph (1)
shall include specific goals for each of the following:
``(A) The percentage of SBIR projects that receive
funding for the third phase (as defined in subsection
(e)(4)(C)).
``(B) The percentage of SBIR projects that are
successfully integrated into a program of record.
``(C) The amount of Federal dollars received by SBIR
projects through Federal contracts, not including
dollars received through the SBIR program.
``(3) Submission to committees.--For each fiscal year for
which goals are required by paragraph (1), the agency shall
submit to the Committee on Small Business and the Committee on
Science and Technology of the House of Representatives and the
Committee on Small Business and Entrepreneurship of the
Senate--
``(A) not later than 60 days after the beginning of
the fiscal year, the goals; and
``(B) not later than 90 days after the end of the
fiscal year, data on the extent to which the goals were
met and a description of the methodology used to
collect such data.''.
SEC. 206. COMMERCIALIZATION PROGRAMS.
Section 9 of the Small Business Act (15 U.S.C. 638) as amended, is
further amended, by adding at the end the following:
``(bb) Commercialization Programs.--
``(1) In general.--Each agency required by this section to
conduct an SBIR program shall establish a commercialization
program that supports the progress of SBIR awardees to the
third phase. The commercialization program may include
activities such as partnership databases, partnership
conferences, multiple second phases, mentoring between prime
contractors and SBIR awardees, multiple second phases with
matching private investment requirements, jumbo awards, SBIR
helpdesks, and transition assistance programs. The agency shall
include in its annual report an analysis of the various
activities considered for inclusion in the commercialization
program and a statement of the reasons why each activity
considered was included or not included, as the case may be.
``(2) Funding for commercialization programs.--
``(A) In general.--From amounts made available to
carry out this paragraph, the Administrator may, on
petition by agencies required by this section to
conduct an SBIR program, transfer funds to such
agencies to support the commercialization programs of
such agencies.
``(B) Petitions.--The Administrator shall establish
rules for making transfers under subparagraph (A). The
initial set of rules shall be promulgated not later
than 90 days after the date of the enactment of this
paragraph.
``(C) Authorization of appropriations.--There is
authorized to be appropriated to the Administrator to
carry out this paragraph $27,500,000 for fiscal year
2010 and each fiscal year thereafter.
``(3) Funding limitation.--For payment of expenses incurred
to administer the commercialization programs described in
paragraphs (1) and (2), the head of an agency may use not more
than an amount equal to 1 percent of the funds set aside for
the agency's Small Business Innovation Research program. Such
funds--
``(A) shall not be subject to the limitations on the
use of funds in subsection (f)(2); and
``(B) shall not be used for the purpose of funding
costs associated with salaries and expenses of
employees of the Federal Government.''.
TITLE III--RURAL DEVELOPMENT AND OUTREACH
SEC. 301. OUTREACH AND SUPPORT ACTIVITIES.
Section 9 of the Small Business Act (15 U.S.C. 638), as amended, is
further amended by inserting after subsection (r) the following:
``(s) Outreach and Support Activities.--
``(1) In general.--Subject to the other provisions of this
subsection, the Administrator shall make grants on a
competitive basis to organizations, to be used by the
organizations to do one or both of the following:
``(A) To conduct outreach efforts to increase
participation in the programs under this section.
``(B) To provide application support and
entrepreneurial and business skills support to
prospective participants in the programs under this
section.
``(2) Authorization of appropriations.--There is authorized
to be appropriated to the Administrator $10,000,000 to carry
out paragraph (1) for each of fiscal years 2010 and 2011.
``(3) Amount of assistance.--For each of subparagraphs (A)
and (B) of paragraph (1), the amount of assistance provided to
an organization under that subparagraph in any fiscal year--
``(A) shall be equal to the total amount of matching
funds from non-Federal sources provided by the
organization; and
``(B) shall not exceed $250,000.
``(4) Direction.--An organization receiving funds under
paragraph (1) shall, in using those funds, direct its
activities at one or both of the following:
``(A) Small business concerns located in geographic
areas that are underrepresented in the programs under
this section.
``(B) Small business concerns owned and controlled by
women, small business concerns owned and controlled by
service-disabled veterans, and small business concerns
owned and controlled by minorities.
``(5) Advisory board.--
``(A) Establishment.--Not later than 90 days after
the date of the enactment of this subsection, the
Administrator shall establish an advisory board for the
activities carried out under this subsection.
``(B) Non-applicability of faca.--The Federal
Advisory Committee Act (5 U.S.C. App.) shall not apply
to the advisory board.
``(C) Members.--The members of the advisory board
shall include the following:
``(i) The Administrator (or the
Administrator's designee).
``(ii) For each Federal agency required by
this section to conduct an SBIR program, the
head of the agency (or the designee of the head
of the agency).
``(iii) Representatives of small business
concerns that are current or former recipients
of SBIR awards, or representatives of
organizations of such concerns.
``(iv) Representatives of service providers
of SBIR outreach and assistance, or
representatives of organizations of such
service providers.
``(D) Duties.--The advisory board shall have the
following duties:
``(i) To develop guidelines for awards under
paragraph (1), including guidelines relating to
award sizes, proposal requirements, measures
for monitoring awardee performance, and
measures for determining the overall value of
the activities carried out by the awardees.
``(ii) To identify opportunities for
coordinated outreach, technical assistance, and
commercialization activities among Federal
agencies, the recipients of the awards under
paragraph (1), and applicants and recipients of
SBIR awards, including opportunities such as--
``(I) podcasting or webcasting for
conferences, training workshops, and
other events;
``(II) shared online resources to
match prospective applicants with the
network of paragraph (1) recipients;
and
``(III) venture capital conferences
tied to technologies and sectors that
cross agencies.
``(iii) To review and recommend revisions to
activities under paragraph (1).
``(iv) To submit to the Committee on Small
Business and Entrepreneurship of the Senate and
the Committee on Small Business and the
Committee on Science and Technology of the
House of Representatives an annual report on
the activities carried out under paragraph (1)
and the effectiveness and impact of those
activities.
``(6) Selection criteria.--In awarding grants under this
subsection, the Administrator shall use selection criteria
developed by the advisory board established under paragraph
(5). The criteria shall include--
``(A) criteria designed to give preference to
applicants who propose to carry out activities that
will reach either an underperforming geographic area or
an underrepresented population group (as measured by
the number of SBIR applicants);
``(B) criteria designed to give preference to
applicants who propose to carry out activities that
complement, and are integrated into, the existing
public-private innovation support system for the
targeted region or population;
``(C) criteria designed to give preference to
applicants who propose to measure the effectiveness of
the proposed activities; and
``(D) criteria designed to give preference to
applicants who include a Small Business Development
Center program that is accredited for its technology
services.
``(7) Peer review.--In awarding grants under this subsection,
the Administrator shall use a peer review process. Reviewers
shall include--
``(A) SBIR program managers for agencies required by
this section to conduct SBIR programs; and
``(B) private individuals and organizations that are
knowledgeable about SBIR, the innovation process,
technology commercialization, and State and regional
technology-based economic development programs.
``(8) Per-state limitations.--
``(A) In general.--To be eligible to receive a grant
under this subsection, the applicant must have the
written endorsement of the Governor of the State where
the targeted regions or populations are located (if the
regions or populations are located in more than one
State, the applicant must have the written endorsement
of the Governor of each such State). Such an
endorsement must indicate that the Governor will ensure
that the activities to be carried out under the grant
will be integrated with the balance of the State's
portfolio of investments to help small business
concerns commercialize technology.
``(B) Limitation.--Each fiscal year, a Governor may
have in effect not more than one written endorsement
for a grant under paragraph (1)(A), and not more than
one written endorsement for a grant under paragraph
(1)(B).
``(9) Specific requirements for awards.--In making awards
under paragraph (1) the Administrator shall ensure that each
award shall be for a period of 2 fiscal years. The
Administrator shall establish rules and performance goals for
the disbursement of funds for the second fiscal year, and funds
shall not be disbursed to a recipient for such a fiscal year
until after the advisory board established under this
subsection has determined that the recipient is in compliance
with the rules and performance goals.''.
SEC. 302. RURAL PREFERENCE.
Section 9 of the Small Business Act (15 U.S.C. 638), as amended, is
further amended by adding at the end the following:
``(cc) Rural Preference.--In making awards under this section,
Federal agencies shall give priority to applications so as to increase
the number of SBIR and STTR award recipients from rural areas.''.
SEC. 303. OBTAINING SBIR APPLICANT'S CONSENT TO RELEASE CONTACT
INFORMATION TO ECONOMIC DEVELOPMENT ORGANIZATIONS.
Section 9 of the Small Business Act (15 U.S.C. 638), as amended, is
further amended by adding at the end the following:
``(dd) Consent To Release Contact Information to Organizations.--
``(1) Enabling concern to give consent.--Each Federal agency
required by this section to conduct an SBIR program shall
enable a small business concern that is an SBIR applicant to
indicate to the agency whether the agency has its consent to--
``(A) identify the concern to appropriate local and
State-level economic development organizations as an
SBIR applicant; and
``(B) release the concern's contact information to
such organizations.
``(2) Rules.--The Administrator shall establish rules to
implement this subsection. The rules shall include a
requirement that the agency include in its SBIR application
forms a provision through which the applicant can indicate
consent for purposes of paragraph (1).''.
SEC. 304. INCREASED PARTNERSHIPS BETWEEN SBIR AWARDEES AND PRIME
CONTRACTORS, VENTURE CAPITAL INVESTMENT COMPANIES,
AND LARGER BUSINESSES.
Section 9 of the Small Business Act (15 U.S.C. 638), as amended, is
further amended by adding at the end the following:
``(ee) Increased Partnerships.--
``(1) In general.--Each agency required by this section to
conduct an SBIR program shall establish initiatives by which
the agency encourages partnerships between SBIR awardees and
prime contractors, venture capital investment companies,
business incubators, and larger businesses, for the purpose of
facilitating the progress of the SBIR awardees to the third
phase.
``(2) Definition.--In this subsection, the term `business
incubator' means an entity that provides coordinated and
specialized services to entrepreneurial businesses which meet
selected criteria during the businesses' startup phases,
including providing services such as shared office space and
office services, access to equipment, access to
telecommunications and technology services, flexible leases,
specialized management assistance, access to financing,
mentoring and training services, or other coordinated business
or technical support services designed to provide business
development assistance to entrepreneurial businesses during
these businesses' startup phases.''.
TITLE IV--SBIR AND STTR ENHANCEMENT
SEC. 401. INCREASED NUMBER OF RESEARCH TOPIC SOLICITATIONS ANNUALLY AND
SHORTENED PERIOD FOR FINAL DECISIONS ON
APPLICATIONS.
(a) Increased Number of Research Topic Solicitations Annually.--
Section 9(g)(2) of the Small Business Act (15 U.S.C. 638(g)(2)) is
amended by inserting before the semicolon at the end the following: ``,
but not less often than twice per year''.
(b) Shortened Period for Final Decisions on Applications.--Section
9(g)(4) of the Small Business Act (15 U.S.C. 638(g)(4)) is amended by
inserting before the semicolon at the end the following: ``, but a
final decision on each proposal shall be rendered not later than 90
days after the date on which the solicitation closes unless the
Administrator determines, on a case by case basis, that a decision may
be extended from 90 days to 180 days''.
SEC. 402. AGENCIES SHOULD FUND VITAL R&D PROJECTS WITH THE POTENTIAL
FOR COMMERCIALIZATION.
Section 9 of the Small Business Act (15 U.S.C. 638), as amended, is
further amended by adding at the end the following:
``(ff) Multiple First Phase SBIR Awards Report.--The Administrator
shall, on an annual basis, submit to the Committee on Small Business
and the Committee on Science and Technology of the House of
Representatives and the Committee on Small Business and
Entrepreneurship of the Senate a list identifying each small business
concern that, for the period covered by the preceding 5 fiscal years,
received 15 or more first phase SBIR awards and no second phase SBIR
awards.''.
SEC. 403. FEDERAL AGENCY ENGAGEMENT WITH SBIR AWARDEES THAT HAVE BEEN
AWARDED MULTIPLE PHASE ONE AWARDS BUT HAVE NOT BEEN
AWARDED PHASE TWO AWARDS.
Section 9 of the Small Business Act (15 U.S.C. 638), as amended, is
further amended by adding at the end the following:
``(gg) Requirements Relating to Federal Agency Engagement With
Certain First Phase SBIR Awardees.--Each Federal agency required by
this section to conduct an SBIR program shall engage with SBIR awardees
that have been awarded multiple first phase SBIR awards but have not
been awarded any second phase SBIR awards and shall develop performance
measures with respect to awardee progression in the SBIR program.''.
SEC. 404. FUNDING FOR ADMINISTRATIVE, OVERSIGHT, AND CONTRACT
PROCESSING COSTS.
Section 9 of the Small Business Act (15 U.S.C. 638), as amended, is
further amended by adding at the end the following:
``(hh) Assistance for Administrative, Oversight, and Contract
Processing Costs.--
``(1) In general.--From amounts made available to carry out
this subsection, the Administrator may, on petition by Federal
agencies required by this section to conduct an SBIR program,
transfer funds to such agencies to assist with the
administrative, oversight, and contract processing costs
relating to such program.
``(2) Petitions.--The Administrator shall establish rules for
making transfers under paragraph (1). The initial set of rules
shall be promulgated not later than 180 days after the date of
the enactment of this subsection.
``(3) Limit on transfer.--A Federal agency may not receive
under this subsection in a fiscal year an amount greater than 3
percent of the SBIR budget of such agency for such fiscal year.
``(4) Authorization of appropriations.--There is authorized
to be appropriated to the Administrator to carry out this
subsection $27,500,000 for each of fiscal years 2010 and
2011.''.
SEC. 405. COMPTROLLER GENERAL AUDIT OF HOW FEDERAL AGENCIES CALCULATE
EXTRAMURAL RESEARCH BUDGETS.
The Comptroller General of the United States shall carry out a
detailed audit of how Federal agencies calculate extramural research
budgets for purposes of calculating the size of the agencies' Small
Business Innovation Research Program and Small Business Technology
Transfer Program budgets. Not later than 1 year after the date of the
enactment of this Act, the Comptroller General shall submit to the
Committee on Small Business and the Committee on Science and Technology
of the House of Representatives and the Committee on Small Business and
Entrepreneurship of the Senate a report on the results of the audit.
SEC. 406. AGENCY DATABASES TO SUPPORT PROGRAM EVALUATION.
Section 9(k) of the Small Business Act (15 U.S.C. 638(k)) is
amended--
(1) in paragraph (2)(A)--
(A) by striking ``and'' at the end of clause (ii);
(B) by inserting ``and'' at the end of clause (iii);
and
(C) by adding at the end the following new clause:
``(iv) information on the ownership structure
of award recipients, both at the time of
receipt of the award and upon completion of the
award period;'';
(2) by amending paragraph (3) to read as follows:
``(3) Updating information for database.--
``(A) In general.--A Federal agency shall not make a
Phase I or Phase II payment to a small business concern
under this section unless the small business concern
has provided all information required under this
subsection and available at the time with respect to
the award under which the payment is made, and with
respect to any other award under this section
previously received by the small business concern or a
predecessor in interest to the small business concern.
``(B) Apportionment.--In complying with this
paragraph, a small business concern may apportion sales
or additional investment information relating to more
than one second phase award among those awards, if it
notes the apportionment for each award.
``(C) Annual updates upon termination.--A small
business concern receiving an award under this section
shall--
``(i) in the case of a second phase award,
update information in the databases required
under paragraphs (2) and (6) concerning that
award at the termination of the award period;
``(ii) in the case of award recipients not
described in clause (iii), be requested to
voluntarily update such information annually
thereafter for a period of 5 years; and
``(iii) in the case of a small business
concern applying for a subsequent first phase
or second phase award, be required to update
such information annually thereafter for a
period of 5 years.''; and
(3) by adding at the end the following new paragraph:
``(6) Agency program evaluation databases.--Each Federal
agency required to establish an SBIR or STTR program under this
section shall develop and maintain, for the purpose of
evaluating such programs, a database containing information
required to be contained in the database under paragraph (2).
Each such database shall be designed to be accessible to other
agencies that are required to maintain a database under this
paragraph. Each such database shall be developed and operated
in a manner to ensure that each such database is relevant to
and contributes to the agency's oversight and evaluation of the
SBIR and STTR programs. Paragraphs (4) and (5) apply to each
database under this paragraph.''.
SEC. 407. AGENCY DATABASES TO SUPPORT TECHNOLOGY UTILIZATION.
Section 9(k) of the Small Business Act (15 U.S.C. 638(k)), as
amended, is further amended by adding at the end the following new
paragraph:
``(7) Agency databases to support technology utilization.--
Each Federal agency with an SBIR or STTR program shall create
and maintain a technology utilization database, which shall be
available to the public and shall contain data supplied by the
award recipients specifically to help them attract customers
for the products and services generated under the SBIR or STTR
project, and to attract additional investors and business
partners. Each database created under this paragraph shall
include information on the other databases created under this
paragraph by other Federal agencies. Participation in a
database under this paragraph shall be voluntary, except that
such participation is required of all award recipients who
received supplemental payments from SBIR and STTR program funds
above their initial Phase II award. Each database created under
this paragraph shall be developed and operated in a manner to
ensure that each such database is relevant to and contributes
to the agency's oversight and evaluation of the SBIR and STTR
programs.''.
SEC. 408. INTERAGENCY POLICY COMMITTEE.
(a) Establishment.--The Director of the Office of Science and
Technology Policy shall establish an Interagency SBIR/STTR Policy
Committee comprised of one representative from each Federal agency with
an SBIR program and the Office of Management and Budget.
(b) Cochairs.--The Director of the Office of Science and Technology
Policy and the Director of the National Institute of Standards and
Technology shall jointly chair the Interagency SBIR/STTR Policy
Committee.
(c) Duties.--The Interagency SBIR/STTR Policy Committee shall review
the following issues and make policy recommendations on ways to improve
program effectiveness and efficiency:
(1) The public and government databases described in section
9(k) (1) and (2) of the Small Business Act (15 U.S.C. 638(k)
(1) and (2)).
(2) Federal agency flexibility in establishing Phase I and II
award sizes, and appropriate criteria to exercise such
flexibility.
(3) Commercialization assistance best practices in Federal
agencies with significant potential to be employed by other
agencies, and the appropriate steps to achieve that leverage,
as well as proposals for new initiatives to address funding
gaps business concerns face after Phase II but before
commercialization.
(4) Development and incorporation of a standard evaluation
framework to enable systematic assessment of SBIR and STTR,
including through improved tracking of awards and outcomes and
development of performance measures for individual agency
programs.
(d) Reports.--The Interagency SBIR/STTR Policy Committee shall
transmit to the Committee on Science and Technology and the Committee
on Small Business of the House of Representatives, and to the Committee
on Small Business and Entrepreneurship of the Senate--
(1) a report on its review and recommendations under
subsections (c)(1) and (c)(4) not later than 1 year after the
date of enactment of this Act;
(2) a report on its review and recommendations under
subsection (c)(2) not later than 18 months after the date of
enactment of this Act; and
(3) a report on its review and recommendations under
subsection (c)(3) not later than 2 years after the date of
enactment of this Act.
SEC. 409. NATIONAL RESEARCH COUNCIL SBIR STUDY.
Section 108(d) of the Small Business Reauthorization Act of 2000 (15
U.S.C. 638 note), enacted into law by reference under section 1(a)(9)
of the Consolidated Appropriations Act, 2001 (Public Law 106-554), is
amended--
(1) by striking ``of the Senate'' and all that follows
through ``not later than 3'' and inserting ``of the Senate, not
later than 3''; and
(2) by striking ``; and'' and all that follows through
``update of such report''.
SEC. 410. EXPRESS AUTHORITY TO ``FAST-TRACK'' PHASE TWO AWARDS FOR
PROMISING PHASE ONE RESEARCH.
Section 9 of the Small Business Act (15 U.S.C. 638), as amended, is
further amended by adding at the end the following:
``(ii) Authority To `Fast-Track' Phase Two Awards for Promising Phase
One Research.--To address the delay between an award for the first
phase of an SBIR program and the application for and extension of an
award for the second phase of such program, each Federal agency with an
SBIR program may develop `fast-track' programs to eliminate such delay
by issuing second phase SBIR awards as soon as practicable, including
in appropriate cases simultaneously with the issuance of the first
phase SBIR award. The Administrator shall encourage the development of
such `fast-track' programs.''.
SEC. 411. INCREASED SBIR AND STTR AWARD LEVELS.
(a) SBIR Award Level and Annual Adjustments.--Section 9(j) of the
Small Business Act (15 U.S.C. 638(j)) is amended by adding at the end
the following:
``(4) Further Additional Modifications.--Not later than 180 days
after the date of enactment of this paragraph and notwithstanding
paragraph (2)(D), the Administrator shall modify the policy directives
issued pursuant to this subsection to provide for an increase to
$250,000 in the amount of funds which an agency may award in the first
phase of an SBIR program, and to $2,000,000 in the second phase of an
SBIR program, and a mandatory annual adjustment of such amounts to
reflect economic adjustments and programmatic considerations.''.
(b) STTR Award Level and Annual Adjustments.--Section 9(p)(2)(B)(ix)
of the Small Business Act (15 U.S.C. 638(p)(2)(B)(ix)) is amended--
(1) by striking ``$100,000'' and ``$750,000'' and inserting
``$250,000'' and ``$2,000,000'', respectively; and
(2) by striking ``greater or lesser amounts'' and inserting
``with a mandatory annual adjustment of such amounts to reflect
economic adjustments and programmatic considerations, and with
lesser amounts''.
(c) Limitation on Certain Awards.--Section 9 of the Small Business
Act (15 U.S.C. 638), as amended, is further amended by adding at the
end the following:
``(jj) Limitation on Phase I and II Awards.--No Federal agency shall
issue an award under the SBIR program or the STTR program if the size
of the award exceeds the amounts established under subsections (j)(4)
and (p)(2)(B)(ix).''.
SEC. 412. EXPRESS AUTHORITY FOR AN AGENCY TO AWARD SEQUENTIAL PHASE TWO
AWARDS FOR SBIR-FUNDED PROJECTS.
Section 9 of the Small Business Act (15 U.S.C. 638), as amended, is
further amended by adding at the end the following:
``(kk) Requirements Relating to Additional Second Phase SBIR
Awards.--
``(1) In general.--A small business concern that receives a
second phase SBIR award for a project remains eligible to
receive additional second phase SBIR awards for such project.
``(2) Technical or weapons systems.--Agencies are expressly
authorized to provide additional second phase SBIR awards for
testing and evaluation assistance for the insertion of SBIR
technologies into technical or weapons systems.''.
SEC. 413. FIRST PHASE REQUIRED.
Section 9 of the Small Business Act (15 U.S.C. 638), as amended, is
further amended by adding at the end the following:
``(ll) First Phase Required.--Under this section, a Federal agency
shall provide to a small business concern an award for the second phase
of an SBIR program with respect to a project only if such agency finds
that the small business concern has been provided an award for the
first phase of an SBIR program with respect to such project or has
completed the determinations described in subsection (e)(4)(A) with
respect to such project despite not having been provided an award for
the first phase.''.
SEC. 414. INVOLVEMENT OF CHIEF COUNSEL FOR ADVOCACY.
Section 9 of the Small Business Act (15 U.S.C. 638), as amended, is
further amended by adding at the end the following:
``(mm) Involvement of Chief Counsel for Advocacy.--The Chief Counsel
for Advocacy, as described in section 201 of Public Law 94-305 (15
U.S.C. 634a), and any individual reporting to the Chief Counsel for
Advocacy, without regard to whether such individual was hired under
section 204 of Public Law 94-305 (15 U.S.C. 634d), may not provide to
the Administrator, to any individual who reports directly or indirectly
to the Administrator, or to any Federal agency any advice, guidance,
oversight, or review with respect to the programs authorized under this
section.''.
I. Purpose of the Bill and Summary
The Enhancing Small Business Research and Innovation Act of
2009 extends through fiscal year 2011 the Federal government's
largest small business research and development programs. The
legislation modernizes the Small Business Innovation Research
(SBIR) and Small Business Technology Transfer (STTR) programs,
changing the legislative guidelines and policies in order to
update the program in response to the unique challenges facing
small research companies and the changing research priorities
of Federal agencies.
The Act is aimed at three broad goals. First, the bill
seeks to encourage greater participation in SBIR. An increase
in the number of small businesses applying for SBIR is critical
to the on going success of the program. Second, the bill
permits small companies that are majority-owned by qualifying
venture capital firms to participate in the SBIR program. A
2003 ruling by the Small Business Administration (SBA) has made
small firms with large 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 venture capital firms and
participating in the Federal government's largest R&D program
for small research firms. Third, the bill seeks to encourage
and support 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.
Additionally, the bill seeks to codify in statute 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. Along with granting to Federal
agencies a great degree of autonomy, the bill also requires
Federal agencies to establish more concrete goals and
objectives with respect to their SBIR programs and directs the
agencies to provide Congress with more regular reports.
ENCOURAGING GREATER PARTICIPATION IN SBIR AND STTR
The Act includes a number of provisions designed to
encourage more small firms to apply for SBIR and STTR awards.
The bill more than doubles the size of SBIR and STTR awards for
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.
The legislation establishes a federal grant program to
reach out to small firms located in underrepresented areas, and
that are owned by service-disabled veterans, women, and
minorities. Under the grant program established by the bill,
the SBA Administrator is instructed to make competitive grants
to organizations to conduct outreach efforts to increase
participation in the SBIR program and provide application
support and entrepreneurial and business skills support for
current and prospective participants in the SBIR program. To be
eligible for these awards, an organization must have the
written endorsement of the Governor of the State where the
targeted regions or populations are based. Awards made under
grant program established by the bill cannot exceed $250,000
per year and require matching funds from sources other than the
Federal government.
permitting small companies that are more than 50%-owned by qualifying
venture capital firms to participate in sbir
The Act includes provisions that establish clear guidelines
governing the participation of small businesses with
substantial investment from venture capital operating companies
in the SBIR program. The provisions will allow a small company
that is majority-owned by qualifying venture capital firms\1\
to participate in the SBIR program, so long as the small
business concerns do not (1) have a single venture capital
company owning a majority of the concern or (2) have a venture
capital company controlling a majority of the concern's board
of director's seats. Safeguards--including limits on corporate-
backed entities have been incorporated to prevent large
companies from using the SBIR program at the expense of smaller
researchers.
---------------------------------------------------------------------------
\1\Small companies majority-owned by a single venture capital firm
are not be eligible to participate in the SBIR program under the Act.
---------------------------------------------------------------------------
ADVANCING COMMERCIALIZATION OF SBIR-FUNDED RESEARCH AND DEVELOPMENT
PROJECTS
To support the successful commercialization of SBIR-funded
research, the Act permits an agency to grant multiple Phase Two
awards and requires agencies to establish initiatives designed
to encourage partnerships between SBIR awardees and prime
contractors, venture capital investment companies and larger
businesses. The legislation also allows an agency to issue a
Phase Two award to a qualifying applicant, even if the
applicant's research proposal had not been awarded a Phase One
grant.
The Act defines ``Phase Three'' of the SBIR program and
requires agencies to establish commercialization programs that
support the progress of SBIR awardees towards ``Phase Three''
of the SBIR program. The commercialization programs may include
activities such as partnerships databases, partnership
conferences, mentoring initiatives between prime contractors
and SBIR awardees, SBIR helpdesks and transition assistance
programs. The legislation authorizes appropriations to the SBA
funds equal to approximately 1% of the SBIR set-aside. The SBA
will allocate these funds to agencies to support the
commercialization programs that they are required to implement.
RETAINS PROGRAMMATIC FLEXIBILITY
The Committee's legislation makes these meaningful changes
to the SBIR without reducing the programmatic flexibility that
is a central feature of the SBIR program as it is currently
administered.
II. 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 were underrepresented in federal R&D
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, however, SBIR
has been intended to stimulate technological innovation related
to each participating agency's goals and mission, use small
businesses for federal R&D needs and increase private sector
commercialization of innovations derived from federal R&D
expenditures. To meet these objectives, the Act required that
Federal departments with an extramural research budget of $100
million or more to set aside a small percentage of their
agency's overall research budget and award technology
development contracts to small firms. The percentage of R&D
activities to be conducted by small firms has increased since
the Act was originally passed and now stands at 2.5 percent.
Currently, eleven agencies have research budgets large
enough to require participation in the SBIR program. In 2006,
Federal agencies awarded more than $2 billion to small research
firms through the SBIR program. In 2007, 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 FY2006, over $20 billion in awards
have been made for more than 90,000 projects.
A key element of the SBIR program is that it establishes a
three-phase development system for participants. During Phase
One, 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 Two awards (lasting one to two years) to
perform the principal R&D. Generally, Phase One and Phase Two
awards may not exceed $100,000 and $750,000, respectively. A
third phase of the program, aimed at the commercialization of a
product or process developed in the earlier phases, is intended
to be funded by the private sector.
Since SBIR's inception 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 federal agencies have also
provided assessments of their agency's SBIR program.
INDEPENDENT EVALUATIONS OF THE SBIR PROGRAM
The Small Business Innovation Development Act directed the
GAO to assess the implementation of the Act. GAO has issued at
least nine reports documenting its findings. A 1987 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 organization's R&D
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
more recent report by GAO in June 2005 found that the effort
appears to be achieving its goal of ``enhanced'' participation
of small business in the R&D enterprise.
As part of the reauthorization of the SBIR program in 2000,
Congress directed the National Research Council (NRC) of the
National Academies 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'' and to make recommendations with respect to the SBIR
program. After more than 3 years of research and analysis, the
NRC study released its assessment of the SBIR program as
administered by the five federal agencies that together make up
some 96 percent of SBIR program expenditures in July 2007.\2\
---------------------------------------------------------------------------
\2\The agencies examined by the NRC study, in order of program
size, are the Department of Defense, the National Institutes of Health,
the National Aeronautics and Space Administration, the Department of
Energy, and the National Science Foundation.
---------------------------------------------------------------------------
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 concludes that the SBIR program
is: (1) stimulating technological innovations, (2) increasing
private sector commercialization of innovations, (3) using
small business to meet federal research and development needs
and (4) providing widely distributed support for innovation
activity.
2009 NRC REPORT ON VENTURE CAPITAL FUNDING IN THE NATIONAL INSTITUTES
OF HEALTH (NIH)
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 their
promising technologies and by venture investors for their
commercial potential.\3\
---------------------------------------------------------------------------
\3\Venture Funding and the NIH SBIR Program, National Research
Council of the National Academies of Science, May 2009.
---------------------------------------------------------------------------
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--this means the percentage excluded is likely
higher.\4\ This is due to the fact that venture capital
investment 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 that the report states.
---------------------------------------------------------------------------
\4\Ibid.
---------------------------------------------------------------------------
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 innovative 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.\5\
---------------------------------------------------------------------------
\5\Ibid.
---------------------------------------------------------------------------
The NRC states that by selecting out some of the most
commercially promising innovative small firms, the SBA
directive appears to limit opportunities to exploit the
nation's substantial investments in research at NIH. This is
contrary to one of the four key goals of the SBIR program,
which is 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.\6\
---------------------------------------------------------------------------
\6\Ibid.
---------------------------------------------------------------------------
The Need to Reauthorize and Modernize the SBIR Program
The SBIR program has been reauthorized three times since
its enactment, first in 1986 and subsequently in 1992 and 2000.
The latest authorization was set to expire on September 30,
2008 but was temporarily extended by the SBA through March 20,
2009, and again extended by a continuing resolution passed by
the House and Senate. Under the current extension, SBIR will
expire on July 31, 2009. The STTR program was last reauthorized
in 2001 and is scheduled to sunset on September 30, 2009.
The positive evaluations of the SBIR program issued by
independent research organizations and testimony presented to
the Committee on Small Business during the 110th Congress and
111th Congress in support of SBIR and STTR create the basis of
support for H.R. 2965. Small firms, federal agencies, patient
organizations, economic development organizations and academics
have testified in strong support of reauthorization of the SBIR
and STTR programs.
During the eight years that have elapsed since Congress
last passed legislation extending and modernizing the SBIR
program, our country's R&D priorities and the role of small
innovative companies in the U.S. economy have changed. The
manner in which the participating federal agencies administer
their SBIR programs has also changed over the last eight 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 in order to make the following important changes
to SBIR program.
EXPAND COMMERCIALIZATION OPPORTUNITIES FOR SBIR AND STTR R&D 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 to the desired specifications.
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, partnership assistance and/or
additional funding. Although these initiatives are only a few
years old, early anecdotal data from these agencies suggest
that the programs are increasing commercialization of SBIR-
funded research and development projects.
PERMIT VENTURE-BACKED FIRMS TO PARTICIPATE IN THE SBIR PROGRAM
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 ``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 (or did, in fact
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. Since 2003,
NIH reports that SBIR applications have been decreasing and
awards to new applicants are also decreasing. In FY 2006, only
about one-forth of the awardees were new to the program--the
lowest proportion in a decade. 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.
Legislation is needed so that small firms with significant
venture capital 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
venture capital company owns a majority of the small firm or
(2) a single venture capital company controls a majority of the
concern's board of director's seats.
INCREASE OUTREACH TO RURAL AREAS AND UNDERSERVED POPULATIONS
Effective outreach to small firms owned and controlled by
women, veterans and minorities and to businesses located in
areas that are underrepresented in the SBIR and STTR programs
is a continuing challenge for the programs. Some state economic
development offices run effective application support and
entrepreneurial and business skills support for current and
prospective participants in the programs while other states
offer no such support. Federal agencies report that, despite
their outreach efforts, they struggle to receive applications
from underrepresented populations.
The SBIR reauthorization legislation that Congress passed
during the 106th Congress included the authorization for
funding of a ``Federal and State Technology Partnership
Program'' (FAST). FAST was designed to promote awards in states
that do not have a high volume of SBIR awards, and in low-
income areas of all states. Before authorization for the
program expired in 2005, between 2002 and 2005 the SBA was able
to make grants to organizations to support the development of
SBIR proposals.
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. Authorizing agencies to
separately fund operating expenses may enhance SBIR program
utilization, management and evaluation. 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 administration
of the program. Proposals have also called for databases to
collect relevant information on project outcomes and milestones
to provide greater transparency to the programs for both the
government and the private sector.
INCREASE AWARD SIZE AND SIMPLIFY APPLICATION PROCESS
The SBIR application process should be reviewed to ensure
that it is not overly burdensome and that firms receive a
timely decision. Witnesses have also 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 the
awards has been eroded by inflation. Simplifying the
application process and increasing the award levels would,
according to witness testimony, increase the competition for
SBIR awards and ultimately result in a more effective program.
A related issue is a potential cap on the dollar amount that an
SBIR agency can award a grantee. Under SBA's existing policy
directive, the agencies are able to grant awards that exceed
the guidance provided in legislation. Representatives of
Federal agencies that administer the SBIR program have
testified that an inflexible cap on SBIR awards dollar amounts
would undermine programs that have successfully helped small
firms commercialize SBIR-funded research and development.
III. Hearings
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
program. 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.
IV. Committee Consideration
The Committee on Small Business met in open session on June
25, 2009 and ordered H.R. 2965 reported, as amended, to the
House by a recorded vote of 22 yeas to zero nays at 10:55am.
Four amendments were offered during the markup. Ms. Velazquez
offered an amendment, which was adopted by voice vote, to
require the interagency policy committee established in the
legislation to develop an evaluation framework for the SBIR and
STTR programs. Mr. Akin offered an amendment, which was adopted
by voice vote, which would prevent the SBA's Office of Advocacy
from intervening in matters concerning the SBIR and STTR
programs. Mr. King offered two amendments. His first amendment,
which was rejected by voice vote, would have eliminated
minorities and women from the focus of the legislation's
outreach program. His second amendment would have prohibited
SBIR and STTR funds from being directed to certain
organizations. This amendment was rejected by a recorded vote
of 9 yeas to 13 nays at 10:49 am.
V. Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. As
noted in the comprehensive description of the markup above, two
recorded votes were conducted. During committee consideration
of the legislation, an amendment numbered King #2 was offered
by Mr. King. This amendment was NOT AGREED to by a recorded
vote of 9 yeas to 13 nays at 10:49 am. A motion by Ms.
Velazquez to report the bill, as amended, to the House with a
favorable recommendation was AGREED to by a vote of 22 yeas to
zero nays at 10:55 am.
VI. Section-by-Section Analysis of H.R. 2965
Sec. 1. Short title
This provision sets a short title for the Act as ``The
Enhancing Small Business Research and Innovation Act of 2009.''
Title 1. Program Extension and Venture Capital Investment
Sec. 101. Authorization period
The Small Business Act is amended to extend through FY2011
the SBIR and STTR programs of the SBA. The Committee believes
that a two-year authorization period is appropriate given the
rapid changes in technological evolution and the constantly
evolving needs on small firms. A biennial authorization
provides for necessary congressional oversight and program
evaluation. The Committee believes that programs as valuable as
SBIR and STTR should be given regular oversight from Congress,
which is most appropriately conducted through the legislative
reauthorization process.
The last SBIR reauthorization bill that Congress passed was
in 2001 and extended the SBIR program for eight years. The
length of this authorization did not require Congress to focus
its attention on this important research and development
program and allowed years to pass between formal Congressional
inquiries into the SBIR program's implementation and
effectiveness.
It should be noted that Congress is able to reauthorize the
Department of Defense (DoD), with a budget of nearly a trillion
dollars (equal to more than 7 percent of GDP), each year. For
comparison, the SBIR and STTR program's cost is estimated at
less than $70 million per year. If an agency as complicated as
DoD, with varied and complex programs, can be reauthorized
annually, it would seem reasonable that SBIR and STTR could be
reauthorized biannually.
The argument that the SBIR and STTR programs should be
reauthorized for a longer period to give the programs stability
is weak. Lengthy reauthorization periods serve little purpose
other than to evade oversight and ultimately reduce the public
policy nexus for government initiatives. In addition, a program
like SBIR--which is technology-focused--needs to be continually
updated to reflect the changing economic realities more
frequently.
Finally, the Committee notes that SBIR and STTR funding
awards are made annually, just as federal contracts are made
annually. The funding for future awards--much like future
contracts--is dependent on the agencies budget being funded
from Congress. Such an annual requirement has not deterred
small firms from seeking work with the government and has not
deterred small firms from applying to the SBIR and STTR
programs.
Sec. 102. Venture capital investment standards
This provision permits small businesses with investment
from venture capital companies to participate in the SBIR and
STTR program. It reverses a policy that resulted from a 2003
SBA administrative ruling. This ruling, by an administrative
law judge of the SBA's Office of Hearing and Appeals, placed a
restriction on venture capital investment in SBIR awardees. The
Committee notes that this ruling could have been overturned by
regulation in the last six years, but the SBA has failed to
revisit this issue fully. As a result, the Committee has
incorporated this section into H.R. 2965.
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 two years and
independent research. The NRC has 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.\7\ 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.
---------------------------------------------------------------------------
\7\For a broader discussion of the May 2009 NRC report please see
Section II of this Committee Report.
---------------------------------------------------------------------------
The Committee understands that many research companies, in
particular those that are small, do not possess positive
revenue streams. This limits the impact on small businesses'
cash flow and increases their ability to carry out their
research activities. Such realities make access to venture
capital even more critical, as such investment often does not
require immediate repayment. The Committee also recognizes that
Congress has placed significant weight on small SBIR firms'
ability to secure non-federal private funding. This emphasis is
clearly apparent in section 9(e)(4)(B)(ii) and 9(e)(4)(C)(i) of
the Small Business Act and suggests that reopening sources of
external financing such as venture capital is aligned with
Congress' original intent in establishing the SBIR program.
To accomplish this, the section specifies that portfolio
companies of venture capital companies are not affiliated with
the venture capital company itself or other portfolio companies
of the same venture capital company for the purposes of the
SBIR and STTR program. This treatment for affiliation is
sensible for the venture capital industry as employees of one
portfolio company do not regularly provide uncompensated
services for, nor are they regularly dually employed by, other
portfolio companies. In fact, it is not uncommon for portfolio
companies of the same venture capital company to be in the same
industry sector as other portfolio companies and even compete
with one another. As a result, the Committee believes that
small business concerns with venture capital investment should
not have employees from other portfolio companies of the same
venture capital company counted as its own employees.
In addition, this provision deems a small business concern
with venture capital investment to be independently owned and
operated. The nature of venture capital is to provide
investment capital and not day-to-day management and control of
a business. Venture capital investors seek financial profits--
not outright operational control. The Committee finds no
evidence that venture capital companies are investing in small
business concerns solely to access SBIR funds. Rather it finds
that they are seeking to benefit as an investor in the
underlying research, which has the effect of contributing to
the success of the small business. Often a venture capital
company divests itself within seven years of its initial
investment. As a result, the Committee believes that treating
SBIR-eligible small business concerns with venture capital
investment as independently owned and operated is appropriate.
In both dealing with the affiliation standard and the
independently owned and operated standard, the legislation is
limited to small business concerns that: 1) do have a single
venture capital company owning a majority of the concern and 2)
do not have a venture capital company controlling a majority of
the concern's board of director's seats. This ensures that
while a majority of a small business concern may be owned by
venture capital companies, no single venture capital company
can own a majority or control its operations via the board of
directors.
The legislation defines venture capital company for the
purposes of this Act, including requiring that such entity have
less than 500 employees and be domiciled in the United States.
It also prevents the venture capital operating company from
being controlled by a business that is not a small business
concern. The Committee does not believe a cap of any size is
appropriate and that such a restraint would create massive
administrative problems within SBIR agencies and does not
recognize the recent evolution of capital markets. Such
constraints serve only to impair the underpinnings of a market-
based economy and would impair the free flow of capital to
small businesses. Such federal government intervention in the
capital markets and such regulation of financial transactions
is inconsistent with the needs of small firms participating in
the SBIR program.
Finally, the legislation clarifies the role that corporate-
owned venture capital companies can play when investing in SBIR
eligible companies. Under current law, corporate-owned venture
capital companies can invest in SBIR eligible companies, so
long as they do constitute a majority ownership share of the
small business concern. This section specifies that an SBIR
company can only have investment from two such corporate-owned
venture capital companies and that together they can only own
up to 20 percent of the SBIR eligible concern.
TITLE II. COMMERCIALIZATION AND RESEARCH PRIORITIES
Sec. 201. Focus on Commercialization
The Committee intends this section to place emphasis on
applied research in the SBIR and the STTR programs. Taxpayer
funds used for these initiatives are meant to go toward
research that can be readily commercialized, not basic research
which is the purview of the universities and the recipient of
the lion's share (97.5 percent) of federal extramural research
budgets. The provision amends section 9 to modify the purpose
and policy of the SBIR and STTR programs as follows:
``It is further the policy of Congress that the programs
established in this section should focus on promoting research
and development of projects governed by commercial business
plans, which have significant potential to produce products or
services for the marketplace or for acquisition by Federal
agencies.''
Sec. 202. Rare Disease and Energy-related Research Focus and Priorities
In issuing research SBIR solicitations, this section
requires agencies to give special consideration to topics
contained in the report of the National Institutes of Health,
in the annual report on the rare diseases research activities
of the National Institutes of Health for fiscal year 2005, and
in subsequent reports issued by the National Institutes of
Health on rare diseases research activities. In addition, this
section requires agencies to give special consideration to
topics contained in the report of the National Academy of
Sciences, in the final report issued by the `America's Energy
Future: Technology Opportunities, Risks, and Tradeoffs'
project, and in subsequent reports issued by the National
Academy of Sciences on sustainability, energy, and alternative
fuels.
The intention of this section is to expand the number of
research activities into rare-disease research and energy-
related research. The Committee expects federal agencies to
increase SBIR solicitations in these areas and increase awards
for meritorious proposals responding to such solicitations.
Sec. 203. Nanotechnology Research Focus and Priority
In issuing research SBIR and STTR solicitations, this
section requires agencies to give special consideration to
topics contained in the national nanotechnology strategic plan
required under section 2(c)(4) of the 21st Century
Nanotechnology Research and Development Act (15 U.S.C.
7501(c)(4)) and in subsequent reports issued by the National
Science and Technology Council Committee on Technology,
focusing on areas of nanotechnology identified in such plan.
The Committee intends that such designation will increase
the likelihood of federal SBIR agencies issuing research
solicitations in this area.
Sec. 204. Definition of Phase Three
This section revises the definition of ``Phase Three'' of
the SBIR program so that it is clear that such work shall be
directed toward commercial applications and derives from
research and development completed in earlier phases.
The purpose of the provision is to identify metrics that
Federal agencies can use to measure how many of the Phase Two
projects they fund have successfully reached Phase Three of the
SBIR program. The Committee expects that a definition of
``Phase Three'' of the SBIR program will provide a basis for
agencies to set goals for successful commercialization of SBIR-
funded research.
Sec. 205. Agency research goals
This provision requires that agencies must establish annual
goals associated with (1) the percentage of SBIR projects that
receive Phase Three funds, (2) the percentage of SBIR projects
that are integrated into a program of record and (3) the amount
of non-SBIR federal dollars received by SBIR projects through
Federal contracts. The Committee expects that each Federal
agency that awards annually $5,000,000,000 or more in
procurement contracts shall submit to Congress annual goals for
commercialization and data on the extent to which the goals
were met. The Committee expects that the report that agencies
make to Congress will include a description of the methodology
used to collect the data.
Sec. 206. SBIR commercialization program
This section requires that agencies establish efforts
designed to support SBIR-funded research projects in their
transition to Phase Three. This provision also authorizes an
annual appropriation to the SBA of $27,500,000 for such
purposes of carrying out this program.
The Committee intends that Federal agencies will develop
commercialization programs, and in doing so, will consider
initiatives such as partnership databases, partnership
conferences, multiple Phase Twos, mentoring between Primes and
SBIR, multiple Phase Two with matching private investment
requirements, jumbo awards, SBIR Helpdesks, and Transition
Assistance Programs. The Committee intends for the agencies to
petition the SBA in order to receive funds to pay for the
administration of programs designed to help SBIR-funded
research projects transition to Phase Three.
The Committee expects that, not later that 90 days after
the date of enactment of this section, the Administrator of the
SBA will develop and establish rules for making transfer to
agencies that have developed or are developing SBIR
commercialization programs.
TITLE III. OUTREACH AND PARTNERSHIPS
Sec. 301. Outreach and support activities
The provisions will establish an annual competitive grant
program where organizations in all fifty states may submit
proposals to conduct SBIR outreach efforts and/or application
support and business skills development efforts directed at
small businesses in underrepresented states and regions, women-
, service-disabled veterans- and minority-owned small
businesses. The provisions are intended to increase the number
of small firms applying for awards, increase the number of
small companies owned and controlled by women and minorities
that apply for SBIR awards, and encourage economic development
organizations to develop effective programs to increase the
size of the SBIR economy in their State.
The Committee expects that, not later than 90 days after
the date of enactment of this subsection, the SBA Administrator
will establish an Advisory Board for this program. The Board
will develop guidelines for the administration of the program
that are consistent with the statutory direction provided in
this section. The Committee expects that the Advisory Board
will serve as stewards of the program and will submit an annual
report to Congress on the effectiveness and impact of the
program.
Sec. 302. Rural preference
This section requires agencies to give a preference to SBIR
and STTR award applications submitted by small businesses
located in rural areas. The Committee notes that the language
is written to give a priority for applications, not awards, and
it meant generally to give an emphasis--not a binding
requirement--to agencies for rural applicants. In addition, the
Committee recognizes that there are several statutory
definitions of ``rural.'' The Committee's intent is that the
SBA, when implementing this provision, select a narrower
definition of the term ``rural.'' This would focus the
initiative on those areas most in need of assistance while, in
turn, would not likely have a significant effect on the number
of SBIR and STTR applications or award determinations.
Further, it is not the Committee's intent that this
provision is used by agencies to exclude meritorious research
proposals from non-rural areas. The Committee expects the SBA
to issue a rulemaking for notice and comment in this area and
solicit a broad range of feedback from the SBIR and STTR
community before implementing this provision.
Sec. 303. Privacy and applicants consent required
The section directs Federal agencies to enable SBIR
applicants to permit the Federal agency to identify the
applicant to appropriate local and state-level economic
development organizations and release the concern's contact
information to such organizations. The Committee expects that
Federal agencies will make necessary changes to the SBIR
applications forms in order to comply with the requirements of
this section. The Committee also expects that Federal agencies
will respond to the data requests from appropriate local and
State-level economic organizations and provide the data in a
timely manner.
Sec. 304. Partnering
This section directs each agency to establish initiatives
to encourage partnerships between SBIR awardees and prime
contractors, venture capital investment companies, business
incubators, and larger businesses in order to facilitate the
progression of SBIR awardees to Phase Three. The SBA
Administrator shall establish by regulation protections so that
small firms retain a substantial benefit from any joint venture
that results from this section. In addition, the Administrator
shall establish by regulation joint venture size standards and
affiliations requirements for this section
TITLE IV. SBIR AND STTR ENHANCEMENT
Sec. 401. Research solicitations
The intension of the section is to ensure that each agency
issues at least two rounds of SBIR research solicitations each
year. A single, annual solicitation forces many small firms to
wait a year or more to have their SBIR application(s)
evaluated. The Committee is concerned that the length of this
delay can discourage potential applicants. The Committee also
intends that agencies include acquisition personnel and
executives in the development of the SBIR topics to ensure that
SBIR topics are truly addressing future procurement needs.
The section also directs Federal agencies to render a final
decision on each proposal 90 days after the date a solicitation
closes. A clear timeline will allow applicants to better
forecast and prepare for receipt of potential SBIR awards.
Recognizing that the agencies will not be able to meet with
this directive in all cases, the section provides the agencies
with the authority to extend the 90-day deadline to a 180-day
deadline on a case-by-case basis.
Sec. 402. Phase One reporting requirements
This section requires the SBA to submit to Congress the
firms that have received 15 or more Phase One awards and zero
Phase Two awards in the previous five-year period. Given the
statutory emphasis on commercialization, the intention of the
provision is to ensure that the Congress have access to data
about SBIR awardees that have received a large number of Phase
One grants and have not received a Phase Two award.
Sec. 403. Phase One performance measures
This provision requires each agency to engage with SBIR
awardees that have been awarded multiple Phase One awards but
no Phase Two awards, and to develop performance metrics to
measure awardee progress in the SBIR program.
The Committee expects that the Administrator of the SBA
shall ``develop quality metrics that can assist agencies in
developing standards to limit the perceived effect of so-called
`SBIR Mills'.''\8\ The Committee further expects that the SBA
will incorporate these metrics into the SBIR policy directives.
---------------------------------------------------------------------------
\8\From the statement of Administrator Steven C. Preston delivered
to the House Committee on Small Business on March 13, 2008.
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Sec. 404. SBIR Agency Administration and Oversight
This section authorizes funding at SBA for administrative,
oversight, and contract-processing costs related to SBIR. This
authority allows the SBIR program offices in each of the
Federal SBIR/STTR agencies to withdraw funds from this account
at SBA that is equal up to 3 percent of their respective
agencies total SBIR set-aside. The Committee intends that these
funds are used to strengthen management of the SBIR and STTR
programs, increase the progress of companies in these
initiatives, enhance oversight, and result in more SBIR/STTR
funded research being incorporated into agency procurement
actions.
Sec. 405. Extramural Budget
This provision is intended improve accountability of the
way Federal agencies determine what is ``extramural'' and what
is ``intramural''. The Committee is not aware of the existence
of independent audits that confirm that the agencies are
performing these calculations correctly. A GAO report analyzing
this issue will provide more transparency to these
calculations.
Sec. 406. Outcomes database
This section requires SBIR and STTR small business
participants to provide updated project information for
purposes of updating agency databases which evaluate the
outcome of Phase One and Two awards; and participating agencies
to develop and maintain such databases. This shall include
milestones where appropriate.
The intention of the section is to increase the data that
Federal agencies collect about the small business concerns that
participate in the SBIR and STTR programs and to require that
Federal agencies develop a database for the purpose of program
evaluation.
Sec. 407. Databases to support technology utilization
This provision requires each agency to create and maintain
a technology utilization database, available to the public,
containing data supplied by award recipients. The purpose of
this section is to enhance outreach to attract investors and
potential business partners to the small companies that are
participating in SBIR.
Sec. 408. Interagency policy committee and reports
The purpose of this section is to establish an Interagency
SBIR/STTR Policy Committee that will examine the programmatic
challenges facing all agencies administering SBIR/STTR programs
and develop recommendations on ways to improve program
effectiveness and efficiency. In addition, the Interagency
Policy Committee will make recommendations to the SBA regarding
a process to systematically evaluate the SBIR and STTR program.
This Interagency Policy Committee will act solely in an
advisory capacity to the Congress and the SBA and will not have
any formal authority to implement or enact policy directives
regarding the SBIR and STTR programs. The Committee will report
to Congress twelve months, eighteen months and twenty-fours
months after the date of enactment of this section on its
progress.
Sec. 409. NRC SBIR study
This section removes the authorization established in the
Small Business Reauthorization Act of 2000 that the NRC provide
an updated report on the SBIR program.
Sec. 410. Fast track authority
A funding gap of 6 to 12 months (which is the timeframe
that often separates a Phase One and Phase Two grant) can
derail a small company's ability to continue its research. To
address this issue, the Committee provided authority to
agencies to issue Phase Two awards on a timeline that best
supports the development of promising research and
technologies. The Committee intends agencies to issue Phase Two
SBIR awards to promising Phase One awardees as soon as is
practicable, including in appropriate cases simultaneously with
the issuance of the Phase One award.
Sec. 411. Award size increase and authority to exceed awards levels
Since 1992, the statutory prescriptions for SBIR award
amounts have remained unchanged at $100,000 for a Phase One
award and $750,000 for a Phase Two award. The Section increases
the award levels to $250,000 for Phase One and $2 million for
Phase Two for both the SBIR and STTR programs. The increase,
which is greater than a simple indexing for inflation, is
intended to encourage more small firms to apply for the awards.
The amount designated by the Committee also recognizes the high
costs associated with the development of valuable new
technologies and therapies.
The section is silent on whether or not federal agencies
can exceed the award levels that are prescribed in the
legislation. However, the Committee does not intend such
silence to prevent agencies from exercising their independent
judgment regarding awards in excess of the stated award sizes.
The Committee recognizes that Federal agencies that previously
exceeded the proscribed award levels are funding research at
the level necessary to accomplish the Agencies' goals and
supporting commercialization of promising research. As such,
the Committee does not seek to end this practice of permitting
participating agencies to exceed the proscribed award levels.
Sec. 412. Multiple Phase Two awards
The section permits the issuance of multiple Phase Two
awards, including for purposes related to military technology
and weapons systems. The Committee provides federal agencies
with this explicit authority with the intention that agencies
will issue multiple Phase II awards in order to ensure that a
greater number of SBIR research projects cross the so-called
``valley of death''.
Sec. 413. First Phase required
The Committee intends this section to limit companies'
ability to evade Phase One. An exception is granted, however,
for companies that can demonstrate to agency SBIR proposal
evaluators that the company has completed phase one work. The
Committee believes that this is a reasonable way to balance the
hypothesis testing conducted in Phase One, with the realities
that some small firms may have progressed passed this stage
through other means.
Sec. 414. Involvement of Chief Counsel for Advocacy
This section provides that the Chief Counsel of SBA's
Office of Advocacy or any other reporting to the Chief Counsel
may not provide advice, guidance, oversight, or review to any
agency participating in the SBIR or STTR programs. The
Committee intends such provision to limit any involvement by
the Office of Advocacy in the operation of or policy decisions
pertaining to the SBIR and STTR programs.
VII. Congressional Budget Office Cost Estimate
The legislation is currently under review by CBO and the
Committee expects that an estimate will be completed and as
such made part of the Congressional Record prior to
consideration of the legislation by the House.
VIII. Committee Estimate of Costs
Clause 3(d)(2) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison by the
Committee of the costs that would be incurred in carrying out
H.R. 2965. The legislation is under review by CBO and an
estimate will be made part of the Congressional Record prior to
consideration of the legislation by the House. Based on
estimates provide by CBO for H.R. 5819, as reported by the
Committee on Small Business in the 110th Congress and further
analysis by Committee staff, the Committee estimates that the
bill could cost $142 million over the two year authorization.
The Committee notes two major changes regarding cost between
H.R. 5819 and H.R. 2965. First, H.R. 2965 does not increase the
SBIR and STTR set-aside, which H.R. 5819 did and CBO estimated
cost $29 million over the five-year budget period. Second, H.R.
2965 includes a management program that will reimburse agencies
for their expenses associated with operating the SBIR and STTR
programs. The Committee assumes that this initiative will
generally negate agencies direct expenses of operating the
programs, which CBO estimated at $111 million over the five-
year budget period. As such, the committee estimates the cost
of H.R. 2965 would be $260.5 million over the 2010-2014 period,
subject to appropriation of the specified and necessary
amounts. In addition, based on prior CBO analysis and current
staff review, the Committee does not believe that H.R. 2965
would affect direct spending or revenue.
IX. 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. 2965 are incorporated
into the descriptive portions of this report.
X. Statement of Constitutional Authority
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds the authority for
this legislation in Article I, Section 8, clause 18, of the
Constitution of the United States.
XI. Compliance with Public Law 104-4
H.R. 2965 contains no unfunded mandates.
XII. Congressional Accountability Act
H.R. 2965 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.
XIII. Federal Advisory Committee Statement
This legislation does not establish or authorize the
establishment of any new advisory committees.
XIV. Statement of No Earmarks
Pursuant to clause 9 of rule XXI, H.R. 2965 does not
contain any congressional earmarks, limited tax benefits, or
limited tariff benefits as defined in clause 9(d), 9(e), or
9(f) of Rule XXI.
XV. 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. 2965 includes a number of provisions designed to
modernize and make more effective the SBIR and STTR programs.
XVI. Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
SMALL BUSINESS ACT
* * * * * * *
Sec. 9. (a) Research and development are major factors in the
growth and progress of industry and the national economy. The
expense of carrying on research and development programs is
beyond the means of many small-business concerns, and such
concerns are handicapped in obtaining the benefits of research
and development programs conducted at Government expense. These
small-business concerns are thereby placed at a competitive
disadvantage. This weakens the competitive free enterprise
system and prevents the orderly development of the national
economy. Is is the policy of the Congress that assistance be
given to small-business concerns to enable them to undertake
and to obtain the benefits of research and development in order
to maintain and strengthen the competitive free enterprise
system and the national economy. It is further the policy of
Congress that the programs established in this section should
focus on promoting research and development of projects
governed by commercial business plans, which have significant
potential to produce products or services for the marketplace
or for acquisition by Federal agencies.
* * * * * * *
(e) For the purpose of this section--
(1) * * *
* * * * * * *
(4) the term ``Small Business Innovation Research
Program'' or ``SBIR'' means a program under which a
portion of a Federal agency's research or research and
development effort is reserved for award to small
business concerns through a uniform process having--
(A) * * *
* * * * * * *
(C) where appropriate, a third phase, which
shall consist of work that derives from,
extends, or logically concludes efforts
performed under prior SBIR funding agreements
(which may be referred to as ``Phase III'')--
(i) * * *
* * * * * * *
(8) the term ``research institution'' means a
nonprofit institution, as defined in section 4(5) of
the Stevenson-Wydler Technology Innovation Act of 1980,
and includes federally funded research and development
centers, as identified by the National Scientific
Foundation in accordance with the governmentwide
Federal Acquisition Regulation issued in accordance
with section 35(c)(1) of the Office of Federal
Procurement Policy Act (or any successor regulation
thereto); [and]
(9) the term ``commercial applications'' shall not be
construed to exclude testing and evaluation of
products, services, or technologies for use in
technical or weapons systems, and further, awards for
testing and evaluation of products, services, or
technologies for use in technical or weapons systems
may be made in either the second or the third phase of
the Small Business Innovation Research Program and of
the Small Business Technology Transfer Program, as
defined in this subsection [.]; and
(10) the term ``commercialization'' means the process
of developing marketable products or services and
producing and delivering products or services for sale
(whether by the originating party or by others) to
government or commercial markets.
* * * * * * *
(g) Each Federal agency required by subsection (f) to
establish a small business innovation research program shall,
in accordance with this Act and regulations issued hereunder--
(1) * * *
(2) issue small business innovation research
solicitations in accordance with a schedule determined
cooperatively with the Small Business Administration,
but not less often than twice per year;
(3) unilaterally determine research topics within the
agency's SBIR solicitations, giving special
consideration to broad research topics and to topics
that further 1 or more critical technologies or
pressing research priorities, as identified by--
(A) the National Critical Technologies Panel
(or its successor) in the 1991 report required
under section 603 of the National Science and
Technology Policy, Organization, and Priorities
Act of 1976, and in subsequent reports issued
under that authority; [or]
* * * * * * *
(C) the National Academy of Sciences, in the
final report issued by the ``America's Energy
Future: Technology Opportunities, Risks, and
Tradeoffs'' project, and in subsequent reports
issued by the National Academy of Sciences on
sustainability, energy, and alternative fuels;
(D) the National Institutes of Health, in the
annual report on the rare diseases research
activities of the National Institutes of Health
for fiscal year 2005, and in subsequent reports
issued by the National Institutes of Health on
rare diseases research activities;
(E) the National Academy of Sciences, in the
final report issued by the ``Transit Research
and Development: Federal Role in the National
Program'' project and the ``Transportation
Research, Development and Technology Strategic
Plan (2006-2010)'' issued by the United States
Department of Transportation Research and
Innovative Technology Administration, and in
subsequent reports issued by the National
Academy of Sciences and United States
Department of Transportation on transportation
and infrastructure; or
(F) the national nanotechnology strategic
plan required under section 2(c)(4) of the 21st
Century Nanotechnology Research and Development
Act (15 U.S.C. 7501(c)(4)) and in subsequent
reports issued by the National Science and
Technology Council Committee on Technology,
focusing on areas of nanotechnology identified
in such plan;
(4) unilaterally receive and evaluate proposals
resulting from SBIR proposals, but a final decision on
each proposal shall be rendered not later than 90 days
after the date on which the solicitation closes unless
the Administrator determines, on a case by case basis,
that a decision may be extended from 90 days to 180
days;
* * * * * * *
[(h) In addition to the requirements of subsection (f), each
Federal agency which has a budget for research or research and
development in excess of $20,000,000 for any fiscal year
beginning with fiscal year 1983 or subsequent fiscal year shall
establish goals specifically for funding agreements for
research or research and development to small business
concerns, and no goal established under this subsection shall
be less than the percentage of the agency's research or
research and development budget expended under funding
agreements with small business concerns in the immediately
preceding fiscal year.]
(h) Agency Research Goals.--
(1) In general.--In addition to the requirements of
subsection (f), each Federal agency that is required by
this section to have an SBIR program and that awards
annually $5,000,000,000 or more in procurement
contracts shall, effective for fiscal year 2010 and
each fiscal year thereafter, establish annual goals for
commercialization of projects funded by SBIR awards.
(2) Specific goals.--The goals required by paragraph
(1) shall include specific goals for each of the
following:
(A) The percentage of SBIR projects that
receive funding for the third phase (as defined
in subsection (e)(4)(C)).
(B) The percentage of SBIR projects that are
successfully integrated into a program of
record.
(C) The amount of Federal dollars received by
SBIR projects through Federal contracts, not
including dollars received through the SBIR
program.
(3) Submission to committees.--For each fiscal year
for which goals are required by paragraph (1), the
agency shall submit to the Committee on Small Business
and the Committee on Science and Technology of the
House of Representatives and the Committee on Small
Business and Entrepreneurship of the Senate--
(A) not later than 60 days after the
beginning of the fiscal year, the goals; and
(B) not later than 90 days after the end of
the fiscal year, data on the extent to which
the goals were met and a description of the
methodology used to collect such data.
* * * * * * *
(j)(1) * * *
* * * * * * *
(4) Further Additional Modifications.--Not later than 180
days after the date of enactment of this paragraph and
notwithstanding paragraph (2)(D), the Administrator shall
modify the policy directives issued pursuant to this subsection
to provide for an increase to $250,000 in the amount of funds
which an agency may award in the first phase of an SBIR
program, and to $2,000,000 in the second phase of an SBIR
program, and a mandatory annual adjustment of such amounts to
reflect economic adjustments and programmatic considerations.
(k) Database.--
(1) * * *
(2) Government database.--Not later than 180 days
after the date of the enactment of the Small Business
Innovation Research Program Reauthorization Act of
2000, the Administrator, in consultation with Federal
agencies required to have an SBIR program pursuant to
subsection (f)(1) or an STTR program pursuant to
subsection (n)(1), shall develop and maintain a
database to be used exclusively for SBIR and STTR
program evaluation that--
(A) contains for each second phase award made
by a Federal agency--
(i) * * *
(ii) information collected in
accordance with paragraph (3) on
additional investment from any source,
other than first phase or second phase
SBIR or STTR awards, to further the
research and development conducted
under the award; [and]
(iii) any other information received
in connection with the award that the
Administrator, in conjunction with the
SBIR and STTR program managers of
Federal agencies, considers relevant
and appropriate; and
(iv) information on the ownership
structure of award recipients, both at
the time of receipt of the award and
upon completion of the award period;
* * * * * * *
[(3) Updating information for database.--
[(A) In general.--A small business concern
applying for a second phase award under this
section shall be required to update information
in the database established under this
subsection for any prior second phase award
received by that small business concern. In
complying with this paragraph, a small business
concern may apportion sales or additional
investment information relating to more than
one second phase award among those awards, if
it notes the apportionment for each award.
[(B) Annual updates upon termination.--A
small business concern receiving a second phase
award under this section shall--
[(i) update information in the
database concerning that award at the
termination of the award period; and
[(ii) be requested to voluntarily
update such information annually
thereafter for a period of 5 years.]
(3) Updating information for database.--
(A) In general.--A Federal agency shall not
make a Phase I or Phase II payment to a small
business concern under this section unless the
small business concern has provided all
information required under this subsection and
available at the time with respect to the award
under which the payment is made, and with
respect to any other award under this section
previously received by the small business
concern or a predecessor in interest to the
small business concern.
(B) Apportionment.--In complying with this
paragraph, a small business concern may
apportion sales or additional investment
information relating to more than one second
phase award among those awards, if it notes the
apportionment for each award.
(C) Annual updates upon termination.--A small
business concern receiving an award under this
section shall--
(i) in the case of a second phase
award, update information in the
databases required under paragraphs (2)
and (6) concerning that award at the
termination of the award period;
(ii) in the case of award recipients
not described in clause (iii), be
requested to voluntarily update such
information annually thereafter for a
period of 5 years; and
(iii) in the case of a small business
concern applying for a subsequent first
phase or second phase award, be
required to update such information
annually thereafter for a period of 5
years.
* * * * * * *
(6) Agency program evaluation databases.--Each
Federal agency required to establish an SBIR or STTR
program under this section shall develop and maintain,
for the purpose of evaluating such programs, a database
containing information required to be contained in the
database under paragraph (2). Each such database shall
be designed to be accessible to other agencies that are
required to maintain a database under this paragraph.
Each such database shall be developed and operated in a
manner to ensure that each such database is relevant to
and contributes to the agency's oversight and
evaluation of the SBIR and STTR programs. Paragraphs
(4) and (5) apply to each database under this
paragraph.
(7) Agency databases to support technology
utilization.--Each Federal agency with an SBIR or STTR
program shall create and maintain a technology
utilization database, which shall be available to the
public and shall contain data supplied by the award
recipients specifically to help them attract customers
for the products and services generated under the SBIR
or STTR project, and to attract additional investors
and business partners. Each database created under this
paragraph shall include information on the other
databases created under this paragraph by other Federal
agencies. Participation in a database under this
paragraph shall be voluntary, except that such
participation is required of all award recipients who
received supplemental payments from SBIR and STTR
program funds above their initial Phase II award. Each
database created under this paragraph shall be
developed and operated in a manner to ensure that each
such database is relevant to and contributes to the
agency's oversight and evaluation of the SBIR and STTR
programs.
* * * * * * *
(m) Termination.--The authorization to carry out the Small
Business Innovation Research Program established under this
section shall terminate on September 30, [2008] 2011.
(n) Required Expenditures for STTR by Federal Agencies.--
(1) Required expenditure amounts.--
(A) In general.--With respect to each fiscal
year through fiscal year [2009] 2011, each
Federal agency that has an extramural budget
for research, or research and development, in
excess of $1,000,000,000 for that fiscal year,
shall expend with small business concerns not
less than the percentage of that extramural
budget specified in subparagraph (B),
specifically in connection with STTR programs
that meet the requirements of this section and
any policy directives and regulations issued
under this section.
* * * * * * *
(o) Federal Agency STTR Authority.--Each Federal agency
required to establish an STTR program in accordance with
subsection (n) and regulations issued under this Act, shall--
(1) * * *
* * * * * * *
(3) unilaterally determine research topics within the
agency's STTR solicitations, giving special
consideration to broad research topics and to topics
that further 1 or more critical technologies, as
identified--
(A) by the National Critical Technologies
Panel (or its successor) in reports required
under section 603 of the National Science and
Technology Policy, Organization, and Priorities
Act of 1976; [or]
(B) by the Secretary of Defense, in
accordance with section 2522 of title 10,
United States Code; or
(C) by the national nanotechnology strategic
plan required under section 2(c)(4) of the 21st
Century Nanotechnology Research and Development
Act (15 U.S.C. 7501(c)(4)) and in subsequent
reports issued by the National Science and
Technology Council Committee on Technology,
focusing on areas of nanotechnology identified
in such plan;
* * * * * * *
(p) STTR Policy Directive.--
(1) * * *
(2) Contents.--The policy directive required by
paragraph (1) shall provide for--
(A) * * *
(B) a simplified, standardized funding
process that provides for--
(i) * * *
* * * * * * *
(ix) 1-year awards for the first
phase of an STTR program, generally not
to exceed [$100,000] $250,000, and 2-
year awards for the second phase of an
STTR program, generally not to exceed
[$750,000] $2,000,000, [greater or
lesser amounts] with a mandatory annual
adjustment of such amounts to reflect
economic adjustments and programmatic
considerations, and with lesser amounts
to be awarded at the discretion of the
awarding agency, and shorter or longer
periods of time to be approved at the
discretion of the awarding agency where
appropriate for a particular project;
* * * * * * *
(s) Outreach and Support Activities.--
(1) In general.--Subject to the other provisions of
this subsection, the Administrator shall make grants on
a competitive basis to organizations, to be used by the
organizations to do one or both of the following:
(A) To conduct outreach efforts to increase
participation in the programs under this
section.
(B) To provide application support and
entrepreneurial and business skills support to
prospective participants in the programs under
this section.
(2) Authorization of appropriations.--There is
authorized to be appropriated to the Administrator
$10,000,000 to carry out paragraph (1) for each of
fiscal years 2010 and 2011.
(3) Amount of assistance.--For each of subparagraphs
(A) and (B) of paragraph (1), the amount of assistance
provided to an organization under that subparagraph in
any fiscal year--
(A) shall be equal to the total amount of
matching funds from non-Federal sources
provided by the organization; and
(B) shall not exceed $250,000.
(4) Direction.--An organization receiving funds under
paragraph (1) shall, in using those funds, direct its
activities at one or both of the following:
(A) Small business concerns located in
geographic areas that are underrepresented in
the programs under this section.
(B) Small business concerns owned and
controlled by women, small business concerns
owned and controlled by service-disabled
veterans, and small business concerns owned and
controlled by minorities.
(5) Advisory board.--
(A) Establishment.--Not later than 90 days
after the date of the enactment of this
subsection, the Administrator shall establish
an advisory board for the activities carried
out under this subsection.
(B) Non-applicability of faca.--The Federal
Advisory Committee Act (5 U.S.C. App.) shall
not apply to the advisory board.
(C) Members.--The members of the advisory
board shall include the following:
(i) The Administrator (or the
Administrator's designee).
(ii) For each Federal agency required
by this section to conduct an SBIR
program, the head of the agency (or the
designee of the head of the agency).
(iii) Representatives of small
business concerns that are current or
former recipients of SBIR awards, or
representatives of organizations of
such concerns.
(iv) Representatives of service
providers of SBIR outreach and
assistance, or representatives of
organizations of such service
providers.
(D) Duties.--The advisory board shall have
the following duties:
(i) To develop guidelines for awards
under paragraph (1), including
guidelines relating to award sizes,
proposal requirements, measures for
monitoring awardee performance, and
measures for determining the overall
value of the activities carried out by
the awardees.
(ii) To identify opportunities for
coordinated outreach, technical
assistance, and commercialization
activities among Federal agencies, the
recipients of the awards under
paragraph (1), and applicants and
recipients of SBIR awards, including
opportunities such as--
(I) podcasting or webcasting
for conferences, training
workshops, and other events;
(II) shared online resources
to match prospective applicants
with the network of paragraph
(1) recipients; and
(III) venture capital
conferences tied to
technologies and sectors that
cross agencies.
(iii) To review and recommend
revisions to activities under paragraph
(1).
(iv) To submit to the Committee on
Small Business and Entrepreneurship of
the Senate and the Committee on Small
Business and the Committee on Science
and Technology of the House of
Representatives an annual report on the
activities carried out under paragraph
(1) and the effectiveness and impact of
those activities.
(6) Selection criteria.--In awarding grants under
this subsection, the Administrator shall use selection
criteria developed by the advisory board established
under paragraph (5). The criteria shall include--
(A) criteria designed to give preference to
applicants who propose to carry out activities
that will reach either an underperforming
geographic area or an underrepresented
population group (as measured by the number of
SBIR applicants);
(B) criteria designed to give preference to
applicants who propose to carry out activities
that complement, and are integrated into, the
existing public-private innovation support
system for the targeted region or population;
(C) criteria designed to give preference to
applicants who propose to measure the
effectiveness of the proposed activities; and
(D) criteria designed to give preference to
applicants who include a Small Business
Development Center program that is accredited
for its technology services.
(7) Peer review.--In awarding grants under this
subsection, the Administrator shall use a peer review
process. Reviewers shall include--
(A) SBIR program managers for agencies
required by this section to conduct SBIR
programs; and
(B) private individuals and organizations
that are knowledgeable about SBIR, the
innovation process, technology
commercialization, and State and regional
technology-based economic development programs.
(8) Per-state limitations.--
(A) In general.--To be eligible to receive a
grant under this subsection, the applicant must
have the written endorsement of the Governor of
the State where the targeted regions or
populations are located (if the regions or
populations are located in more than one State,
the applicant must have the written endorsement
of the Governor of each such State). Such an
endorsement must indicate that the Governor
will ensure that the activities to be carried
out under the grant will be integrated with the
balance of the State's portfolio of investments
to help small business concerns commercialize
technology.
(B) Limitation.--Each fiscal year, a Governor
may have in effect not more than one written
endorsement for a grant under paragraph (1)(A),
and not more than one written endorsement for a
grant under paragraph (1)(B).
(9) Specific requirements for awards.--In making
awards under paragraph (1) the Administrator shall
ensure that each award shall be for a period of 2
fiscal years. The Administrator shall establish rules
and performance goals for the disbursement of funds for
the second fiscal year, and funds shall not be
disbursed to a recipient for such a fiscal year until
after the advisory board established under this
subsection has determined that the recipient is in
compliance with the rules and performance goals.
* * * * * * *
(aa) Venture Capital Operating Companies.--Effective only for
the SBIR and STTR programs the following shall apply:
(1) A business concern that has more than 500
employees shall not qualify as a small business
concern.
(2) In determining whether a small business concern
is independently owned and operated under section
3(a)(1) or meets the small business size standards
instituted under section 3(a)(2), the Administrator
shall not consider a business concern to be affiliated
with a venture capital operating company (or with any
other business that the venture capital operating
company has financed) if--
(A) the venture capital operating company
does not own 50 percent or more of the business
concern; and
(B) employees of the venture capital
operating company do not constitute a majority
of the board of directors of the business
concern.
(3) A business concern shall be deemed to be
``independently owned and operated'' if--
(A) it is owned in majority part by one or
more natural persons or venture capital
operating companies;
(B) there is no single venture capital
operating company that owns 50 percent or more
of the business concern; and
(C) there is no single venture capital
operating company the employees of which
constitute a majority of the board of directors
of the business concern.
(4) If a venture capital operating company controlled
by a business with more than 500 employees (in this
paragraph referred to as a ``VCOC under large business
control'') has an ownership interest in a small
business concern that is owned in majority part by
venture capital operating companies, the small business
concern is eligible to receive an award under the SBIR
or STTR program only if--
(A) not more than two VCOCs under large
business control have an ownership interest in
the small business concern; and
(B) the VCOCs under large business control do
not collectively own more than 20 percent of
the small business concern.
(5) The term ``venture capital operating company''
means a business concern--
(A) that--
(i) is a Venture Capital Operating
Company, as that term is defined in
regulations promulgated by the
Secretary of Labor; or
(ii) is an entity that--
(I) is registered under the
Investment Company Act of 1940
(15 U.S.C. 80a-51 et seq.); or
(II) is an investment
company, as defined in section
3(c)(1) of such Act (15 U.S.C.
80a-3(c)(1)), which is not
registered under such Act
because it is beneficially
owned by less than 100 persons;
and
(B) that is itself organized or incorporated
and domiciled in the United States, or is
controlled by a business concern that is
incorporated and domiciled in the United
States.
(bb) Commercialization Programs.--
(1) In general.--Each agency required by this section
to conduct an SBIR program shall establish a
commercialization program that supports the progress of
SBIR awardees to the third phase. The commercialization
program may include activities such as partnership
databases, partnership conferences, multiple second
phases, mentoring between prime contractors and SBIR
awardees, multiple second phases with matching private
investment requirements, jumbo awards, SBIR helpdesks,
and transition assistance programs. The agency shall
include in its annual report an analysis of the various
activities considered for inclusion in the
commercialization program and a statement of the
reasons why each activity considered was included or
not included, as the case may be.
(2) Funding for commercialization programs.--
(A) In general.--From amounts made available
to carry out this paragraph, the Administrator
may, on petition by agencies required by this
section to conduct an SBIR program, transfer
funds to such agencies to support the
commercialization programs of such agencies.
(B) Petitions.--The Administrator shall
establish rules for making transfers under
subparagraph (A). The initial set of rules
shall be promulgated not later than 90 days
after the date of the enactment of this
paragraph.
(C) Authorization of appropriations.--There
is authorized to be appropriated to the
Administrator to carry out this paragraph
$27,500,000 for fiscal year 2010 and each
fiscal year thereafter.
(3) Funding limitation.--For payment of expenses
incurred to administer the commercialization programs
described in paragraphs (1) and (2), the head of an
agency may use not more than an amount equal to 1
percent of the funds set aside for the agency's Small
Business Innovation Research program. Such funds--
(A) shall not be subject to the limitations
on the use of funds in subsection (f)(2); and
(B) shall not be used for the purpose of
funding costs associated with salaries and
expenses of employees of the Federal
Government.
(cc) Rural Preference.--In making awards under this section,
Federal agencies shall give priority to applications so as to
increase the number of SBIR and STTR award recipients from
rural areas.
(dd) Consent To Release Contact Information to
Organizations.--
(1) Enabling concern to give consent.--Each Federal
agency required by this section to conduct an SBIR
program shall enable a small business concern that is
an SBIR applicant to indicate to the agency whether the
agency has its consent to--
(A) identify the concern to appropriate local
and State-level economic development
organizations as an SBIR applicant; and
(B) release the concern's contact information
to such organizations.
(2) Rules.--The Administrator shall establish rules
to implement this subsection. The rules shall include a
requirement that the agency include in its SBIR
application forms a provision through which the
applicant can indicate consent for purposes of
paragraph (1).
(ee) Increased Partnerships.--
(1) In general.--Each agency required by this section
to conduct an SBIR program shall establish initiatives
by which the agency encourages partnerships between
SBIR awardees and prime contractors, venture capital
investment companies, business incubators, and larger
businesses, for the purpose of facilitating the
progress of the SBIR awardees to the third phase.
(2) Definition.--In this subsection, the term
``business incubator'' means an entity that provides
coordinated and specialized services to entrepreneurial
businesses which meet selected criteria during the
businesses' startup phases, including providing
services such as shared office space and office
services, access to equipment, access to
telecommunications and technology services, flexible
leases, specialized management assistance, access to
financing, mentoring and training services, or other
coordinated business or technical support services
designed to provide business development assistance to
entrepreneurial businesses during these businesses'
startup phases.
(ff) Multiple First Phase SBIR Awards Report.--The
Administrator shall, on an annual basis, submit to the
Committee on Small Business and the Committee on Science and
Technology of the House of Representatives and the Committee on
Small Business and Entrepreneurship of the Senate a list
identifying each small business concern that, for the period
covered by the preceding 5 fiscal years, received 15 or more
first phase SBIR awards and no second phase SBIR awards.
(gg) Requirements Relating to Federal Agency Engagement With
Certain First Phase SBIR Awardees.--Each Federal agency
required by this section to conduct an SBIR program shall
engage with SBIR awardees that have been awarded multiple first
phase SBIR awards but have not been awarded any second phase
SBIR awards and shall develop performance measures with respect
to awardee progression in the SBIR program.
(hh) Assistance for Administrative, Oversight, and Contract
Processing Costs.--
(1) In general.--From amounts made available to carry
out this subsection, the Administrator may, on petition
by Federal agencies required by this section to conduct
an SBIR program, transfer funds to such agencies to
assist with the administrative, oversight, and contract
processing costs relating to such program.
(2) Petitions.--The Administrator shall establish
rules for making transfers under paragraph (1). The
initial set of rules shall be promulgated not later
than 180 days after the date of the enactment of this
subsection.
(3) Limit on transfer.--A Federal agency may not
receive under this subsection in a fiscal year an
amount greater than 3 percent of the SBIR budget of
such agency for such fiscal year.
(4) Authorization of appropriations.--There is
authorized to be appropriated to the Administrator to
carry out this subsection $27,500,000 for each of
fiscal years 2010 and 2011.
(ii) Authority To ``Fast-track'' Phase Two Awards for
Promising Phase One Research.--To address the delay between an
award for the first phase of an SBIR program and the
application for and extension of an award for the second phase
of such program, each Federal agency with an SBIR program may
develop ``fast-track'' programs to eliminate such delay by
issuing second phase SBIR awards as soon as practicable,
including in appropriate cases simultaneously with the issuance
of the first phase SBIR award. The Administrator shall
encourage the development of such ``fast-track'' programs.
(jj) Limitation on Phase I and II Awards.--No Federal agency
shall issue an award under the SBIR program or the STTR program
if the size of the award exceeds the amounts established under
subsections (j)(4) and (p)(2)(B)(ix).
(kk) Requirements Relating to Additional Second Phase SBIR
Awards.--
(1) In general.--A small business concern that
receives a second phase SBIR award for a project
remains eligible to receive additional second phase
SBIR awards for such project.
(2) Technical or weapons systems.--Agencies are
expressly authorized to provide additional second phase
SBIR awards for testing and evaluation assistance for
the insertion of SBIR technologies into technical or
weapons systems.
(ll) First Phase Required.--Under this section, a Federal
agency shall provide to a small business concern an award for
the second phase of an SBIR program with respect to a project
only if such agency finds that the small business concern has
been provided an award for the first phase of an SBIR program
with respect to such project or has completed the
determinations described in subsection (e)(4)(A) with respect
to such project despite not having been provided an award for
the first phase.
(mm) Involvement of Chief Counsel for Advocacy.--The Chief
Counsel for Advocacy, as described in section 201 of Public Law
94-305 (15 U.S.C. 634a), and any individual reporting to the
Chief Counsel for Advocacy, without regard to whether such
individual was hired under section 204 of Public Law 94-305 (15
U.S.C. 634d), may not provide to the Administrator, to any
individual who reports directly or indirectly to the
Administrator, or to any Federal agency any advice, guidance,
oversight, or review with respect to the programs authorized
under this section.
* * * * * * *
----------
SECTION 108 OF THE SMALL BUSINESS REAUTHORIZATION ACT OF 2000
SEC. 108. NATIONAL RESEARCH COUNCIL REPORTS.
(a) * * *
* * * * * * *
(d) Report.--The National Research Council shall transmit to
the heads of agencies entering into an agreement under this
section and to the Committee on Science and the Committee on
Small Business of the House of Representatives, and to the
Committee on Small Business [of the Senate--
[(1) not later than 3] of the Senate, not later than
3 years after the date of the enactment of this Act, a
report including the results of the study conducted
under subsection (a)(1) and recommendations made under
subsection (a)(2)[; and
[(2) not later than 6 years after that date of the
enactment, an update of such report].
