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114th Congress }                                       { Rept. 114-705
                        HOUSE OF REPRESENTATIVES
 2d Session    }                                       { Part 1

======================================================================
 
        COMMERCIALIZING ON SMALL BUSINESS INNOVATION ACT OF 2016

                                _______
                                

                 July 25, 2016.--Ordered to be printed

                                _______
                                

    Mr. Chabot, from the Committee on Small Business, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 4783]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Small Business, to whom was referred the 
bill (H.R. 4783) to reauthorize and improve 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.

                              I. Amendment

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

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Commercializing on Small Business 
Innovation Act of 2016''.

SEC. 2. EXTENSION OF TERMINATION DATES.

  (a) SBIR.--Section 9(m) of the Small Business Act (15 U.S.C. 638(m)) 
is amended by striking ``2017'' and inserting ``2022''.
  (b) STTR.--Section 9(n)(1)(A) of the Small Business Act (15 U.S.C. 
638(n)(1)(A)) is amended by striking ``2017'' and inserting ``2022''.
  (c) Administrative Funding.--Section 9(mm)(1) of the Small Business 
Act (15 U.S.C. 638(mm)(1)) is amended by striking ``2017'' and 
inserting ``2022''.

SEC. 3. REQUIRED EXPENDITURE AMOUNTS.

  (a) SBIR.--Section 9(f)(1) of the Small Business Act (15 U.S.C. 
638(f)(1)) is amended--
          (1) in subparagraph (H), by striking the ``and'' at the end;
          (2) in subparagraph (I), by striking ``and each fiscal year 
        thereafter,'' and inserting a semicolon; and
          (3) by inserting after subparagraph (I) the following new 
        subparagraphs:
                  ``(J) not less than 3.46 percent of such budget in 
                fiscal year 2018;
                  ``(K) not less than 3.72 percent of such budget in 
                fiscal year 2019;
                  ``(L) not less than 3.98 percent of such budget in 
                fiscal year 2020;
                  ``(M) not less than 4.24 percent of such budget in 
                fiscal year 2021; and
                  ``(N) not less than 4.50 percent of such budget in 
                fiscal year 2022 and each fiscal year thereafter,''.
  (b) STTR.--Section 9(n)(1)(B) of the Small Business Act (15 U.S.C. 
638(n)(1)(B)) is amended--
          (1) in clause (iv), by striking the ``and'' at the end;
          (2) in clause (v), by striking ``for fiscal year 2016 and 
        each fiscal year thereafter.'' and inserting ``for each of 
        fiscal years 2016 and 2017;'' ; and
          (3) by adding at the end the following new clauses:
                          ``(vi) 0.50 percent for each of fiscal years 
                        2018 and 2019;
                          ``(vii) 0.55 percent for each of fiscal years 
                        2020 and 2021; and
                          ``(viii) 0.60 percent for fiscal year 2022 
                        and each fiscal year thereafter.''.

SEC. 4. REPORTING REQUIREMENTS.

  (a) Annual Report to Congress.--Section 9(b)(7) of the Small Business 
Act (15 U.S.C. 638(b)(7)) is amended by striking ``to report not less 
than annually'' and inserting ``to submit a report not later than 
December 31 of each year''.
  (b) Annual Reports to the Administrator Required to Be Submitted Not 
Later Than March 30 of Each Year.--Section 9 of the Small Business Act 
(15 U.S.C. 638) is amended--
          (1) in subsection (g)(9), by striking ``make an annual 
        report'' and inserting ``not later than March 30 of each year, 
        submit a report'';
          (2) in subsection (i)(1), by striking ``shall report annually 
        to the Small Business Administration'' and inserting ``shall, 
        not later than March 30 of each year, submit a report to the 
        Small Business Administration that includes'';
          (3) in subsection (j)--
                  (A) in paragraph (1)(E), by striking ``simplified, 
                standardized, and timely annual report'' and inserting 
                ``not later than March 30 of each year, a simplified 
                and standardized report''; and
                  (B) in paragraph (3)(C), by striking ``to require 
                agencies to report to the Administration, not less 
                frequently than annually, all instances in which an'' 
                and inserting ``to require each agency, not later than 
                March 30 of each year, to submit a report to the 
                Administration on all instance in which the'';
          (4) in subsection (o)(10), by striking ``submit an annual 
        report'' and inserting ``not later than March 30 of each year, 
        submit a report'';
          (5) in subsection (y)(6)(C), by striking ``submit'' and 
        inserting ``not later than March 30 of each year, submit'';
          (6) in subsection (dd)(4)(A), by striking ``and submit'' and 
        inserting ``and, not later than March 30 of each year, 
        submit'';
          (7) in subsection (gg)(6), by striking ``include in the 
        annual'' and inserting ``include, not later than March 30 of 
        each year, a'';
          (8) in subsection (ii) by inserting ``, not later than March 
        30 of each year,'' after ``shall'';
          (9) in subsection (mm)(6), by inserting ``, not later than 
        June 30 of each year,'' after ``shall'';
          (10) in subsection (nn)(3)(A)--
                  (A) by striking ``an annual'' and inserting ``a'' ; 
                and
                  (B) by inserting ``, not later than March 30 of each 
                year,'' after ``shall''; and
          (11) in subsection (ss), by striking ``October 1, 2013, and 
        annually thereafter,'' and inserting ``March 30 of each 
        year,''.
  (c) Failure to Report Administrative Funds.--Section 9(mm) of the 
Small Business Act (15 U.S.C. 638(mm)) is amended by adding at the end 
the following new paragraph:
          ``(7) Failure to report administrative funds.--
                  ``(A) In general.--Not later than March 30 following 
                each fiscal year for which funds are authorized to be 
                used by a Federal agency under paragraph (1), the 
                Federal agency shall submit a report to the 
                Administrator that identifies how the Federal agency 
                used such funds during such fiscal year.
                  ``(B) Failure to submit a report.--If a Federal 
                agency fails to submit a report required under 
                subparagraph (A), paragraph (1) shall not apply to such 
                Federal agency unless--
                          ``(i) such report is submitted; and
                          ``(ii) such Federal agency submits an 
                        additional report to the Administrator that 
                        identifies how such Federal agency plans to 
                        ensure timely reporting under this 
                        paragraph.''.

SEC. 5. INDEXING AWARDS FOR INFLATION.

  Section 9 of the Small Business Act (15 U.S.C. 638) is amended--
          (1) in subsection (j)(2)--
                  (A) by striking subparagraph (D);
                  (B) by redesignating subparagraphs (E) through (I) as 
                subparagraphs (D) through (H), respectively; and
                  (C) in subparagraph (H), as so redesignated, by 
                striking ``subparagraph (H)'' and inserting 
                ``subparagraph (G)'';
          (2) in subsection (p)(2)(B)--
                  (A) in clause (vii), by adding ``and'' at the end;
                  (B) in clause (viii), by striking ``and'' at the end; 
                and
                  (C) by striking clause (ix);
          (3) in subsection (gg)(3), by striking ``awards under 
        subsection (j)(2)(D) or (p)(2)(B)(ix).'' and inserting ``awards 
        under subsection (tt)(2).''; and
          (4) by adding at the end the following new subsection:
  ``(tt) Awards Under Phase I and Phase II Adjusted for Inflation.--
          ``(1) Phase i awards.--An award for Phase I of an SBIR or 
        STTR program may not exceed $150,000.
          ``(2) Phase ii awards.--An award for Phase II of an SBIR or 
        STTR program may not exceed $1,000,000.
          ``(3) Adjustment for inflation.--The Administrator shall 
        adjust the dollar amounts under paragraphs (1) and (2) for 
        inflation in accordance with section 1908 of title 41, United 
        States Code.''.

SEC. 6. REQUIREMENTS FOR INSERTION INCENTIVES.

  Section 9(y)(5) of the Small Business Act (15 U.S.C. 638(y)(5)) is 
amended by striking ``is authorized to'' and inserting ``shall''.

SEC. 7. CLARIFICATION OF ELIGIBILITY OF CERTAIN SMALL BUSINESSES.

  (a) SBIR.--Section 9(j) of the Small Business Act (15 U.S.C. 638(j)) 
is amended by adding at the end the following new paragraph:
          ``(4) Modification to clarify eligibility of certain small 
        businesses.--Not later than 180 days after the date of the 
        enactment of the Commercializing on Small Business Innovation 
        Act of 2016, the Administrator shall modify the policy 
        directives issued pursuant to this subsection to clarify that 
        the small business concerns described in subparagraphs (B), 
        (C), and (D) of section 3(p)(3) are eligible to receive awards 
        under the SBIR program.''.
  (b) STTR.--Section 9(p) of the Small Business Act (15 U.S.C. 638(p)) 
is amended by adding at the end the following new paragraph:
          ``(4) Modification to clarify eligibility of certain small 
        businesses.--Not later than 180 days after the date of the 
        enactment of the Commercializing on Small Business Innovation 
        Act of 2016, the Administrator shall modify the policy 
        directives issued pursuant to this subsection to clarify that 
        the small business concerns described in subparagraphs (B), 
        (C), and (D) of section 3(p)(3) are eligible to receive awards 
        under the STTR program.''.

SEC. 8. COMMERCIALIZATION ASSISTANCE PILOT PROGRAM.

  Section 9 of the Small Business Act (15 U.S.C. 638), as amended by 
section 5, is further amended by adding at the end the following new 
subsection:
  ``(uu) Commercialization Assistance Pilot Programs.--
          ``(1) Pilot programs implemented.--
                  ``(A) In general.--Except as provided in subparagraph 
                (B), not later than one year after the date of the 
                enactment of Commercializing on Small Business 
                Innovation Act of 2016, a covered agency shall 
                implement a commercialization assistance pilot program 
                to award eligible entities with a second sequential 
                SBIR award.
                  ``(B) Exception.--If the Administrator determines 
                that a covered agency has a program that is 
                sufficiently similar to a commercialization assistance 
                pilot program, such agency shall not be required to 
                implement a commercialization assistance pilot program 
                under subparagraph (A).
                  ``(C) Percent of agency funds.--A covered agency may 
                not use more than 5 percent of its total SBIR budget 
                for awards under the commercialization assistance pilot 
                program.
                  ``(D) Termination.--The commercialization assistance 
                pilot programs shall terminate on September 30, 2022.
          ``(2) Matching requirement.--
                  ``(A) In general.--The Administrator shall require as 
                a condition of any award made to an eligible entity 
                under a commercialization assistance pilot program, 
                that a matching amount (excluding any fees collected 
                from recipients of such assistance) equal to the amount 
                of such award be provided from an eligible third-party 
                investor, before the end of the commercialization 
                assistance pilot program award.
                  ``(B) Ineligible funding.--An eligible entity may not 
                use funding from ineligible sources to meet the 
                matching requirement of subparagraph (A).
          ``(3) Award.--
                  ``(A) Size of award.--An award under this subsection 
                may not exceed the limitations in subsection (aa)(1).
                  ``(B) Timing.--Awards provided under the 
                commercialization assistance pilot program shall be 
                distributed during the Phase II award period of the 
                recipient eligible entity.
          ``(4) Application.--In order to be selected to receive a 
        second sequential SBIR award under a commercialization 
        assistance pilot program, an eligible entity shall submit to 
        the covered agency implementing such pilot program--
                  ``(A) an application at such time, in such manner, 
                and containing such information as the covered agency 
                may require; and
                  ``(B) the source and amount of the matching funding 
                required under paragraph (2).
          ``(5) Use of funds.--The funds awarded under a 
        commercialization assistance pilot program may only be used for 
        research and development activities that build on the eligible 
        entity's Phase II program and catalyze acceleration towards 
        commercialization.
          ``(6) Determination of recipients.--In determining which 
        applicants receive awards under the commercialization 
        assistance pilot program, the head of a covered agency shall 
        consider--
                  ``(A) the extent to which the supplemental funds 
                awarded under the pilot program could aid the applicant 
                commercialize its research;
                  ``(B) whether the proposed plan provides a sound 
                approach for establishing technical feasibility that 
                could lead to commercialization;
                  ``(C) whether the proposed activity reflect changes 
                to the Phase II commercialization plan that further 
                improves the chances of conversion of research in order 
                to provide societal benefits;
                  ``(D) whether the small business concern has 
                progressed satisfactorily in the Phase II activity to 
                justify additional funding;
                  ``(E) the expectations of the third-party funding; 
                and
                  ``(F) the likelihood that the third-party funded 
                activity will lead to commercial and societal benefit.
          ``(7) Evaluation report.--Not later than 3 years after the 
        date of the enactment of Commercializing on Small Business 
        Innovation Act of 2016, the Comptroller General of the United 
        States shall submit to the Committee on Science, Space, and 
        Technology and the Committee on Small Business of the House of 
        Representatives and the Committee on Small Business and 
        Entrepreneurship of the Senate an evaluative report that 
        includes--
                  ``(A) a summary of the activities of the 
                commercialization assistance pilot programs;
                  ``(B) a detailed compilation of results achieved by 
                the commercialization assistance pilot programs, 
                including the number of small business concerns that 
                received awards under the pilot program;
                  ``(C) the rate at which the recipients under the 
                pilot program commercialized their research;
                  ``(D) the growth in employment and revenue of 
                companies that participated in the pilot program;
                  ``(E) a comparison of commercialization success of 
                pilot program participants and recipients of a non-
                matching sequential Phase II award;
                  ``(F) demographic information such as ethnicity and 
                geographic location of participant companies;
                  ``(G) an accounting of the funds used at each 
                participating agency in the pilot program;
                  ``(H) a distribution of third-party funding by 
                source;
                  ``(I) an analysis of the program's effectiveness at 
                each participating agency; and
                  ``(J) recommendations for improvement to the pilot 
                program, in the case that Congress were to make it 
                permanent.
          ``(8) Definitions.--For purposes of this subsection:
                  ``(A) Covered agency.--The term `covered agency' 
                means a Federal agency required to have an SBIR 
                program.
                  ``(B) Eligible entity.--The term `eligible entity' 
                means a small business concern that has received a 
                Phase II award and a Phase II sequential award from the 
                covered agency to which such entity is applying for a 
                second sequential SBIR award.
                  ``(C) Eligible third-party investor.--The term 
                `eligible third-party investors' means a small business 
                concern other than the eligible entity, a venture 
                capital firm, an individual investor, a non-SBIR 
                Federal, State or local government, or any combination 
                thereof.
                  ``(D) Ineligible sources.--The term `ineligible 
                sources' means the following:
                          ``(i) The awardee's internal research and 
                        development funds.
                          ``(ii) Funding in forms other than cash such 
                        as in-kind or other intangible assets.
                          ``(iii) Funding from the owners of the 
                        eligible entity, or the family members or 
                        affiliates of such owners.
                          ``(iv) Funding attained through loans or 
                        other forms of debt obligations.''.

SEC. 9. INCREASED UNDERSERVED POPULATION PARTICIPATION WAIVER REMOVED.

  (a) In General.--Section 9(mm)(2) of the Small Business Act (15 
U.S.C. 638(mm)(2)) is amended to read as follows:
          ``(2) Outreach and technical assistance.--A Federal agency 
        participating in the program under this subsection shall use a 
        portion of the funds authorized for uses under paragraph (1) to 
        carry out the policy directive required under subsection 
        (j)(2)(F) and to increase the participation of States with 
        respect to which a low level of SBIR awards have historically 
        been awarded.''.
  (b) Conforming Amendment.--Section 9(mm)(6) of the Small Business Act 
(15 U.S.C. 638(mm)(6)) is amended by striking ``(A) and any use of the 
waiver authority under paragraph (2)(B)''.

                      II. Purpose and Bill Summary

    The purpose of H.R. 4783, the ``Commercializing on Small 
Business Innovation Act of 2016'' is to amend the Small 
Business Act (the Act)\1\ to improve the Small Business 
Innovation Research (SBIR) and Small Business Technology 
Transfer (STTR) Programs. The objectives of these programs 
include expansion of commercialization of federally funded 
small business research and development (R&D;), stimulation of 
technological innovation in the small business sector, and 
increased use of this community to meet the government's 
diverse research and development needs. H.R. 4783 strengthens 
the program in six ways.
---------------------------------------------------------------------------
    \1\Originally, title II of the Act of July 30, 1953, c. 282, 67 
Stat. 232, was designated as the Small Business Act of 1953. A plethora 
of amendments in subsequent Congresses led to a rewrite in 1958. Pub. 
L. No. 85-536, Sec. 1, 72 Stat. 384 (1958). The Act is codified at 15 
U.S.C. Sec. Sec. 631-657s.
---------------------------------------------------------------------------
    First, given the success of the SBIR/STTR programs, H.R. 
4783 reauthorizes the programs for 5 years beyond the current 
September 30, 2017, expiration date. Second, the legislation, 
without any cost to the taxpayer, allows small businesses to 
compete for more contracts and grants, expanding the program 
from the current 3 percent to 4.5 percent of the participating 
federal agencies extramural research budgets. Third, the bill 
insists on agency accountability, including several hard 
reporting deadlines for participating agencies and for the 
Small Business Administration (SBA) to provide future 
Congresses with better information on a greater grasp of the 
programs' strengths and weaknesses. Fourth, as SBA has failed 
to act on its long standing authority to index awards to 
inflation, the legislation statutorily adopts the formula used 
for all other procurement programs. Fifth, it creates a 
Commercialization Assistance Pilot Program at each 
participating SBIR agency to allow businesses to compete for 
additional funding that would help them overcome the lag time 
between phase II and phase III of the program, while ensuring 
that there is commercialization potential in the research by 
requiring a 1 to 1 match of non-SBIR dollars. Finally, the 
legislation clarifies congressional intent of the previous 
reauthorization to ensure that taxpayers reap the benefits of 
the SBIR and STTR programs by tying them to long term projects 
at the Department of Defense (DoD).

                       III. Need for Legislation

    H.R. 4783 was introduced by Chairman Steve Chabot and 
Ranking Member Nydia Velazquez on March 17, 2017, after 
significant oversight of the SBIR and STTR programs by the 
Committee. Prior to explaining the necessary changes, a brief 
overview of each program will be provided.

                                A. SBIR

    Congressional support for the SBIR initiative was 
predicated upon the belief that while technology-based 
companies under 500 employees\2\ tended to be highly 
innovative, and innovation being essential to the economic 
well-being of the United States, these businesses were 
underrepresented in the award of government R&D; contracts. In 
order to increase participation of such entities in federal R&D; 
efforts, Congress passed the Small Business Innovation 
Development Act (SBIRA) in 1982,\3\ which established the SBIR 
program. The purpose of SBIRA was to increase government 
funding of small businesses that conduct R&D; with a particular 
focus on technology that has high commercial potential.
---------------------------------------------------------------------------
    \2\Criteria for eligibility in the SBIR program include companies 
that are: independently owned and operated; not dominant in the field 
of research proposed; for profit; the employer of 500 or fewer people; 
and at least 51 percent owned by one or more United States citizens or 
lawfully admitted permanent resident aliens. 13 C.F.R. Sec. 121.702.
    \3\Pub. L. No. 97-219, 96 Stat. 217 (1982) (codified at 18 U.S.C. 
Sec. 638).
---------------------------------------------------------------------------
    The objectives of the SBIR program include expansion of 
commercialization of federally funded R&D;, stimulation of 
technological innovation in the small business sector, 
increased use of this community to meet the government's 
diverse R&D; needs, and additional involvement of minority and 
disadvantaged individuals in the process. The program requires 
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 
research and development activities to be conducted by small 
firms originally was set at 1.25 percent but has increased 
incrementally to 3.0 percent where it now stands.
    Currently, eleven agencies have research budgets large 
enough to require participation in the SBIR program: the 
Departments of Agriculture, Commerce, Defense, Education, 
Energy, Health and Human Services, Homeland Security, and 
Transportation; the Environmental Protection Agency; the 
National Aeronautics and Space Administration; and the National 
Science Foundation. Each agency's SBIR activity reflects that 
organization's management style. Individual departments select 
R&D; interests, administer program operations, and control 
financial support. Funding may be disbursed in the form of 
contracts, grants, or cooperative agreements. Separate agencies 
issue solicitations for R&D; at specific times and small 
businesses submit competing proposals to do the work.
    Congress delegated to the SBA the authority for creating 
broad policy and guidelines under which qualifying agencies 
operate their SBIR programs. The SBA monitors and reports to 
Congress on the conduct of the separate departmental SBIR 
activities. While the SBA provides direction and monitors the 
program, it does not provide funding for the awards, select the 
award winners, or distribute the award dollars.
    The SBIR program is designed to award grants via a three-
phase process. In the first phase, awards up to $150,000 are 
provided to evaluate a concept's scientific or technical merit 
and feasibility. The project must be of interest to and 
coincide with the mission of the supporting organization. 
Projects that demonstrate potential after the initial endeavor 
may compete for Phase II awards of up to $1 million to perform 
the principal R&D.; Phase III funding, directed at the 
commercialization of the product or process, is expected to be 
generated in the private sector. Federal dollars, but not SBIR 
funds, may be used if the government perceives that the final 
technology or technique will meet public needs.

                                B. STTR

    STTR is an important small business program that also 
expands funding opportunities in the federal innovation R&D; 
arena. Central to the program is expansion of the public/
private sector partnership to include joint venture 
opportunities for small businesses and the nation's network of 
nonprofit research institutions. Much like SBIR, STTR is a 
highly competitive program that reserves a specific percentage 
of federal R&D; funding for award to small businesses and 
nonprofit research institution partners.
    Often, the risk and expense of conducting serious R&D; 
efforts can be beyond the means of many small businesses, 
especially those who have just initiated their businesses. 
Conversely, nonprofit research laboratories are instrumental in 
developing high-tech innovations. But frequently, innovation is 
confined to the theoretical, not the practical. STTR combines 
the strengths of both entities by introducing entrepreneurial 
skills to high-tech research efforts. The technologies and 
products are then transferred from the laboratory to the 
marketplace.
    Eligibility criteria for businesses in STTR mirror those of 
SBIR; they must be American-owned and independently operated; 
for-profit; and employ no more than 500 workers. The nonprofit 
research institution must also meet certain eligibility 
criteria, such as being located the United States, and meet one 
of the three following definitions: it must be a nonprofit 
college or university; a domestic nonprofit research 
organization; or a federally funded R&D; center.\4\
---------------------------------------------------------------------------
    \4\Examples of each of these could be a major research university 
such as the University of Pittsburgh, a non-profit research 
organization such as the Cystic Fibrosis Foundation, or a federally 
funded R&D; center such as the Los Alamos National Laboratory.
---------------------------------------------------------------------------
    Each year, five federal departments and agencies are 
required by STTR to reserve a portion (currently 0.45 percent) 
of their R&D; funds for award to small business/nonprofit 
research institution partnerships. Those are: the Department of 
Defense (DoD); the Department of Energy (DOE); the Department 
of Health and Human Services; the National Aeronautics and 
Space Administration (NASA); and the National Science 
Foundation (NSF).\5\ As with SBIR, SBA develops broad 
guidelines but the agencies designate R&D; topics, accept 
proposals, and award funds.
---------------------------------------------------------------------------
    \5\Federal agencies with extramural R&D; budgets that exceed $1 
billion are required to participate in the STTR program.
---------------------------------------------------------------------------
    Similar to the SBIR program, agencies make STTR awards 
based on small business/nonprofit research institution 
qualification, degree of innovation, and future market 
potential. Small businesses that receive awards then begin a 
three-phase program. Phase I and II awards are capped at the 
same levels as SBIR. The Phase III (commercialization) portion 
of the project is designed to encourage private sector 
investment or non-STTR or SBIR federal agency funding, which is 
also similar to SBIR.

                       C. REVIEW OF SBIR AND STTR

    In 2007, after more than three years of research and 
analysis, the National Research Council (NRC) of the National 
Academies of Science (NAS) released its assessment of the SBIR 
program as administered by the five federal agencies DoD; 
National Institutes of Health; NASA; DOE; and the NSF) that 
together made up approximately 96 percent of SBIR program 
expenditures at that time. The core finding of the study is 
that the SBIR program is sound in concept and effective in 
practice.\6\ In support of the report's core finding, the NRC 
concluded that the SBIR program is: (1) stimulating 
technological innovations; (2) increasing private sector 
commercialization of research; (3) using small businesses to 
meet federal research and development needs; and (4) providing 
widely distributed support for innovation activity.\7\
---------------------------------------------------------------------------
    \6\NRC, National Academies of Science, An Assessment of the Small 
Business Innovation Research Program 3 (2007).
    \7\Id. at 3-6.
---------------------------------------------------------------------------
    To expand on this research and to provide greater 
information to policymakers in the future, Congress directed\8\ 
the NRC to continue its examination of the SBIR program as well 
as expand its review to include the STTR program. By and large, 
the NRC found that the SBIR program is meeting most of its 
statutory objectives. For instance, the NRC points out that 
SBIR projects at the Department of Defense (DOD) commercialize 
at a substantial rate, with the percentage of Phase II projects 
reporting sales continues to be greater than 45 percent.\9\ The 
NRC also found that the SBIR program at the National Institutes 
of Health is having a positive overall impact and is meeting 
three of the four legislative objectives of the program with 
regard to stimulating technical innovation, using small 
businesses to meet federal R&D; needs and increasing private-
sector commercialization of innovations derived from federal 
R&D.;\10\ Finally, the NRC found that STTR is meeting its 
statutory objective of fostering cooperation between small 
business concerns and research institutions, and does so in 
some respects to an extent that SBIR does not.\11\
---------------------------------------------------------------------------
    \8\Pub. L. No. 112-81, Div. E., 125 Stat. 1850, 1822-62 (2011). The 
short title of Division E is the SBIR/STTR Reauthorization Act of 2011.
    \9\NRC, NAS, SBIR at the Department of Defense 201 (2014).
    \10\NRC, NAS, SBIR/STTR at the National Institutes of Health 234 
(2015).
    \11\NRC, NAS, STTR An Assessment of the Small Business Technology 
Transfer Program 91 (2016).
---------------------------------------------------------------------------
    As a result of Public Law 112-81, the Government 
Accountability Office (GAO) conducted several investigations 
constituting a comprehensive body of work to assess, among 
other things, participating agency management, development, and 
transitioning SBIR/STTR and STTR technologies across their 
science and technology enterprises. By and large, the reports 
pointed to a strong and vibrant program, with a few caveats. 
For example, the GAO found that the SBA's ability to fully 
determine compliance with spending requirements for the SBIR 
and STTR programs is limited because most agencies submitted 
incorrect data; GAO recommended that SBA should update its 
guidance to require that adequate information be provided.\12\
---------------------------------------------------------------------------
    \12\GAO, Small Business Research Programs: Challenges Remain in 
Meeting Spending and Reporting Requirements (GAO15-358) (Ap. 2015).
---------------------------------------------------------------------------
    In the conference report to the National Defense 
Authorization Act for Fiscal Year 2013, the conferees directed 
the GAO to conduct a study to assess the DOD's transition of 
technologies developed by small businesses through the SBIR 
program, including: (1) an analysis of technologies developed 
under the SBIR program and the extent to which such 
technologies were incorporated into major weapon systems or 
major automated information systems; (2) an analysis of 
established or ad hoc procedures to allow program offices to 
monitor, evaluate, and transition small business-developed 
technologies into their programs; and (3) additional actions 
that may be needed to improve DOD and the military services' 
processes for monitoring, evaluating, and transitioning small 
business-developed technologies for use in major weapon systems 
or major automated information systems (including any 
appropriate data collection and measures of effectiveness and 
performance).\13\
---------------------------------------------------------------------------
    \13\H.R. Conf. Rep. No. 112-705, at 942-943 (2012).
---------------------------------------------------------------------------
    GAO released the report\14\ required by the FY 2013 NDAA on 
December 20, 2013. GAO found that some common and branch-
specific transition initiatives, such as the Commercialization 
Readiness Program and the Navy Transition Assistance Program 
help to improve small businesses' abilities to transition their 
products to Phase III.\15\ While some programs are of 
assistance, GAO recommended that DOD must improve tracking and 
reporting of technology transition outcomes for SBIR projects 
in order to improve transition rates. Specifically, the GAO 
suggested that DOD: establish a common definition of technology 
transition for all SBIR projects to support annual reporting 
requirements; develop a plan to meet the new technology 
reporting requirements that will improve the completeness, 
quality, and reliability of SBIR transition data; and report to 
Congress on the Department's plan for meeting the new SBIR 
reporting requirements, including specific steps for improving 
the technology transition data.\16\
---------------------------------------------------------------------------
    \14\GAO, Small Business Innovation Research: DOD's Program Supports 
Weapon Systems, but Lacks Comprehensive Data on Technology Transition 
Outcomes (GAO-14-96) (2013).
    \15\Id. at 6-7.
    \16\Id. at 14-15.
---------------------------------------------------------------------------

                          D. NECESSARY REFORMS

    For the SBIR and STTR programs to remain successful, they 
must present small businesses with a reliable avenue to 
commercialization. Therefore, the legislation removes 
uncertainty about the program by reauthorizing it for an 
additional five years, until September 30, 2022.
    Second, given that the alternative to the SBIR and STTR 
programs within agencies extramural research budgets are often 
sole source contracts and grants, the legislation increases 
opportunities for competition by expanding the portion of an 
agency's extramural R&D; budget subject to the program from the 
current 3 percent to 4.5 percent, phased in over the five 
years. This will result in fifty percent increase in 
opportunities for small R&D; companies.
    There have been multiple year delays in the annual reports 
on the SBIR and STTR programs, in part due to the failure of 
the participating agencies to provide the necessary data to 
SBA. Therefore, the bill ties the ability of participating 
agencies to access administrative funds to their submission of 
the required reports.
    While SBA has long had the authority in the authority to 
adjust the caps on the size of SBIR awards due to 
inflation,\17\ it has refused to use this power. Consequently, 
award sizes remain frozen and become increasingly less useful. 
Therefore, the bill adopts the inflationary formula currently 
used for all of the other SBA procurement programs and applies 
it to SBIR award sizes.
---------------------------------------------------------------------------
    \17\The Act at Sec. 9(j)(2)(D).
---------------------------------------------------------------------------
    Additionally, the Committee heard testimony that the amount 
of time between completing a phase II SBIR award and the award 
of a phase III can be fatal for small businesses. Thus, it 
looked to the success of the National Science Federation's 
Phase IIB program, which incents successful firms to finding 
matching private sector funds in exchange for another round of 
SBIR funding. Thus, the legislation expands this pilot program 
to all participating agencies, with the requirement that it be 
studied.
    Finally, given that the intent of the program is to allow 
taxpayers to reap the benefit of this early stage funding of 
R&D;, prior legislation authorized the use of incentives for 
defense contractors to incorporate program technologies. This 
bill makes the use of incentives mandatory.

                              IV. Hearings

    In the 114th Congress, the Committee held three hearings 
that looked at the issues covered by H.R. 4783. On March 2, 
2016, the Committee held a hearing titled, ``Commercializing on 
Innovation: Reauthorizing the Small Business Innovation 
Research and Small Business Technology Transfer Programs.'' The 
hearing heard from agency program managers on topics relevant 
to reauthorization. Less than a week later, the Subcommittee on 
Contracting and Workforce held a hearing in Lynn, Massachusetts 
to hear from small business participants in the SBIR and STTR 
programs. The hearing, held March 8, 2016, was called 
``Commercializing on Innovation: Reauthorizing the Small 
Business Innovation Research and Small Business Technology 
Transfer Programs Part II.'' Earlier in the year, the 
Subcommittee on Health and Technology met for a hearing titled, 
``Oversight of the Office of Investment and Innovation at the 
SBA'' on January 12, 2016. The hearing examined SBA's 
management of the programs.

                       V. Committee Consideration

    The Committee on Small Business met in open session, with a 
quorum being present, on March 23, 2016 and ordered H.R. 4783 
reported, as amended, to the House by a voice vote at 9:56 a.m. 
During the markup, three amendments were offered. All 
amendments were adopted. Disposition of the amendments is 
addressed below and is based on the order amendments were filed 
with the Clerk of the Committee and not necessarily in the 
order that they were considered at the markup.
    Amendment Number Two was offered by Mr. Knight (R-CA). It 
extended a pilot program allowing agencies to use 3 percent of 
the available SBIR and STTR funds for administrative expenses. 
Currently, the pilot program will lapse on September 30, 2017, 
which the amendment changed to September 30, 2022. The 
amendment passed by voice vote at 9:50 a.m.
    Amendment Number Three was offered by Ms. Velazquez (D-NY). 
This amendment created a Commercialization Assistance Pilot 
Program at each participating SBIR agency. The pilot would 
allow businesses to compete for additional funding that would 
help them overcome between phases II and III of the program, 
while ensuring that there is commercialization potential in the 
research by requiring a 1 to 1 match of non-SBIR dollars. The 
amendment passed by voice vote at 9:47 a.m.
    Amendment Number Four was offered by Ms. Velazquez (D-NY). 
The amendment removes the waiver to conduct outreach to 
underrepresented populations available to agencies that use 
part of their SBIR funds for administrative purposes. The 
amendment also sets deadlines for agencies to report the use of 
SBIR funding for administrative purposes to SBA as well as a 
deadline for when SBA must report this data to the Committee. 
The amendment passed by voice vote at 9:55 a.m.

                          VI. Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the recorded 
votes on the motion to report the legislation and amendments 
thereto. There were no recorded votes on H.R. 4783.

        VII. Section-by-Section Analysis of H.R. 4783 as Amended


Section 1. Short title

    This section provides that the bill may be cited as the 
``Commercializing on Small Business Innovation Act of 2016.''

Section 2. Extension of termination dates

    This section amends section 9(m) of the Act to extend the 
authorization of the SBIR and STTR programs from September 30, 
2017 until September 30, 2022.

Section 3. Required expenditure amounts

    This section alters the amounts reserved for the SBIR and 
STTR programs. For the SBIR program, it does so by amending 
section 9(f)(1) of the Act, and increasing the percentage from 
3 percent to 3.46 percent in FY 2018, 3.72 percent in FY 2019, 
3.98 percent in FY 2020, 4.24 percent in FY 2021, and 4.5 
percent in FY 2022. For the STTR program, it amends section 
9(n)(1)(B) of the Act to increase the percentage from 0.45 
percent to 0.5 percent in FY 2018 and FY 2019, 0.55 percent in 
FY 2020 and FY 2021, and 0.6 percent in FY 2022.

Section 4. Reporting requirements

    This section amends section 9(b)(7) of the Act to require 
the SBA to file its annual report on the SBIR and STTR programs 
to Congress by December 31 of each calendar year. The section 
also requires each of the participating agencies to submit all 
of the required reports and information to the SBA by March 31 
of each year. Further, it amends section 9(mm) of the Act to 
add a new paragraph (7) stating that any agency using a portion 
of the extramural R&D; budget for administrative funds must 
disclose to the SBA the purposes to which it used the 
administrative funds. Finally, it states that any agency 
failing to comply with this reporting requirement may not use 
any funds for administrative purposes.

Section 5. Indexing awards for inflation

    Section 5 amends section 9 of the Act to provide inflation 
adjustments for the SBIR and STTR awards. Currently, a phase I 
award may not exceed $150,000, and a phase II award may not 
exceed $1,000,000. The amendment adds a new subsection (tt) to 
allow that these amounts may be adjusted for inflation in any 
year divisible by five using the formula provided in 41 U.S.C. 
1908.

Section 6. Requirements for insertion incentives

    This section amends section 9(y)(5) of the Act. Currently, 
the Act provides that for contracts worth more than $100 
million, the Department of Defense may provide goals for the 
use of SBIR and STTR technologies in subcontracting plans. This 
section makes the insertion of these goals mandatory.

Section 7. Clarification of eligibility of certain small businesses

    The SBIR reauthorization in the FY 13 NDAA sought to 
restore eligibility for the SBIR and STTR programs after 
decisions made by the Office of Hearings and Appeals at SBA 
created confusion in this area. However, in doing so, it 
overlooked certain programs in the Act, creating an unintended 
disparity contradicting the Committee's longstanding commitment 
to parity. Therefore, this section directs SBA to revise its 
guidance to allow these firms to participate in the SBIR and 
STTR programs.

Section 8. Commercialization assistance pilot program

    This section amends section 9 of the Act to add a new 
subsection (uu). The new subsection creates a pilot program for 
agencies that do not have commercialization pilot programs 
already in place. Agencies are authorized to spend up to 5 
percent of its SBIR budget to provide contracts or grants to 
participants that successfully completed phase II of the 
program. However, to be eligible for a payment under this 
pilot, the small business must have collected a matching amount 
of private sector funds equal to the award under the pilot 
program. While the pilot program will last until 2022, the 
Comptroller General is directed to report on the success of the 
pilot within three years.

Section 9. Increased underserved population participation waiver 
        removed

    This section amends section 9(mm)(2) of the Act. The 
revised paragraph (2) directs that a federal agency 
participating in the SBIR program use a portion of the 
administrative funds for outreach efforts to increase the 
participation of socially and economically disadvantaged small 
businesses, woman-owned small businesses, and small businesses 
in states that are normally underrepresented in the SBIR 
program.

            VIII. Congressional Budget Office Cost Estimate

    At the time H.R. 4783 was reported to the House, the 
Congressional Budget Office had not provided a cost estimate.

                         IX. Unfunded Mandates

    H.R. 4783 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act, Pub. 
L. No. 104-4, and would impose no costs on state, local or 
tribal governments.

  X. New Budget Authority, Entitlement Authority and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House, the Committee provides the following opinion and 
estimate with respect to new budget authority, entitlement 
authority and tax expenditures. While the Committee has not 
received an estimate of new budget authority contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to Sec. 402 of the Congressional Budget 
Act of 1974, the Committee does not believe that there will be 
any additional costs attributable to this legislation. H.R. 
4783 does not direct new spending, but instead reallocates 
funding independently authorized and appropriated.

                         XI. Oversight Findings

    In accordance with clause (2)(b)(1) of rule X of the Rules 
of the House, the oversight findings and recommendations of the 
Committee on Small Business with respect to the subject matter 
contained in H.R. 4783 are incorporated into the descriptive 
portions of this report.

               XII. Statement of Constitutional Authority

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
authority for this legislation in Art. I, Sec. 8, cls. 3 of the 
Constitution of the United States.

                 XIII. Congressional Accountability Act

    H.R. 4783 does not relate to the terms and conditions of 
employment or access to public services or accommodations 
within the meaning of Sec. 102(b)(3) of Pub. L. No. 104-1.

             XIV. Federal Advisory Committee Act Statement

    H.R. 4783 does not establish or authorize the establishment 
of any new advisory committees as that term is defined in the 
Federal Advisory Committee Act, 5 U.S.C. App. 2.

                      XV. Statement Of No Earmarks

    Pursuant to clause 9 of rule XXI, H.R. 4783 does not 
contain any congressional earmarks, limited tax benefits or 
limited tariff benefits as defined in subsections (d), (e) or 
(f) of clause 9 of rule XXI of the Rules of the House.

                 XVI. Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House, the Committee establishes the following performance-
related goals and objectives for this legislation:

          H.R. 4783 includes a number of provisions designed to 
        improve the opportunities for small business concerns 
        to compete for federal research and development 
        contracts and grants pursuant to the Small Business 
        Act, and to improve agency compliance with the Small 
        Business Act.

                     XVII. Changes to Existing Law


         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, and 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. It 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.
  (b) It shall be the duty of the Administration, and it is 
hereby empowered--
          (1) to assist small-business concerns to obtain 
        Government contracts for research and development;
          (2) to assist small-business concerns to obtain the 
        benefits of research and development performed under 
        Government contracts or at Government expense;
          (3) to provide technical assistance to small-business 
        concerns to accomplish the purposes of this section; 
        and
          (4) to develop and maintain a source file and an 
        information program to assure each qualified and 
        interested small business concern the opportunity to 
        participate in Federal agency small business innovation 
        research programs and small business technology 
        transfer programs;
          (5) to coordinate with participating agencies a 
        schedule for release of SBIR and STTR solicitations, 
        and to prepare a master release schedule so as to 
        maximize small business' opportunities to respond to 
        solicitations;
          (6) to independently survey and monitor the operation 
        of SBIR and STTR programs within participating Federal 
        agencies;
          (7) [to report not less than annually] to submit a 
        report not later than December 31 of each year to the 
        Committee on Small Business of the Senate, and to the 
        Committee on Science and the Committee on Small 
        Business of the House of Representatives, on the SBIR 
        and STTR programs of the Federal agencies and the 
        Administration's information and monitoring efforts 
        related to the SBIR and STTR programs, including--
                  (A) the data on output and outcomes collected 
                pursuant to subsections (g)(8) and (o)(9);
                  (B) the number of proposals received from, 
                and the number and total amount of awards to, 
                HUBZone small business concerns and firms with 
                venture capital, hedge fund, or private equity 
                firm investment (including those majority-owned 
                by multiple venture capital operating 
                companies, hedge funds, or private equity 
                firms) under each of the SBIR and STTR 
                programs;
                  (C) a description of the extent to which each 
                Federal agency is increasing outreach and 
                awards to firms owned and controlled by women 
                or by socially or economically disadvantaged 
                individuals under each of the SBIR and STTR 
                programs;
                  (D) general information about the 
                implementation of, and compliance with the 
                allocation of funds required under, subsection 
                (dd) for firms owned in majority part by 
                venture capital operating companies, hedge 
                funds, or private equity firms and 
                participating in the SBIR program;
                  (E) a detailed description of appeals of 
                Phase III awards and notices of noncompliance 
                with the SBIR Policy Directive and the STTR 
                Policy Directive filed by the Administrator 
                with Federal agencies;
                  (F) an accounting of funds, initiatives, and 
                outcomes under the Commercialization Readiness 
                Program; and
                  (G) a descriptionof the extent to which 
                Federal agencies are providing in a timely 
                manner information needed to maintain the 
                database described in subsection (k);
          (8) to provide for and fully implement the tenets of 
        Executive Order No. 13329 (Encouraging Innovation in 
        Manufacturing); and
          (9) to coordinate the implementation of electronic 
        databases at each of the Federal agencies participating 
        in the SBIR program or the STTR program, including the 
        technical ability of the participating agencies to 
        electronically share data.
  (c) The Administration is authorized to consult and cooperate 
with all Government agencies and to make studies and 
recommendations to such agencies, and such agencies are 
authorized and directed to cooperate with the Administration in 
order to carry out and to accomplish the purposes of this 
section.
  (d)(1) The Administrator is authorized to consult with 
representatives of small-business concerns with a view to 
assisting and encouraging such firms to undertake joint 
programs for research and development carried out through such 
corporate or other mechanism as may be most appropriate for the 
purpose. Such joint programs may, among other things, include 
the following purposes:
          (A) to construct, acquire, or establish laboratories 
        and other facilities for the conduct of research;
          (B) to undertake and utilize applied research;
          (C) to collect research information related to a 
        particular industry and disseminate it to participating 
        members;
          (D) to conduct applied research on a protected, 
        proprietary, and contractual basis with member or 
        nonmember firms, Government agencies, and others;
          (E) to prosecute applications for patents and render 
        patent services for participating members; and
          (F) to negotiate and grant licenses under patents 
        held under the point program, and to establish 
        corporations designed to exploit particular patents 
        obtained by it.
  (2) The Administrator may, after consultation with the 
Attorney General and the Chairman of the Federal Trade 
Commission, and with the prior written approval of the Attorney 
General, approve any agreement between small-business firms 
providing for a joint program of research and development, if 
the Administrator finds that the joint program proposed will 
maintain and strengthen the free enterprise system and the 
economy of the Nation. The Administrator or the Attorney 
General may at any time withdraw his approval of the agreement 
and the joint program of research and development covered 
thereby, if he finds that the agreement or the joint program 
carried on under it is no longer in the best interests of the 
competitive free enterprise system and the economy of the 
Nation. A copy of the statement of any such finding and 
approval intended to be within the coverage of this subsection, 
and a copy of any modification or withdrawal of approval, shall 
be published in the Federal Register. The authority conferred 
by this subsection on the Administrator shall not be delegated 
by him.
  (3) No act or omission to act pursuant to and within the 
scope of any joint program for research and development, under 
an agreement approved by the Administrator under this 
subsection, shall be construed to be within the prohibitions of 
the antitrust laws or the Federal Trade Commission Act. Upon 
publication in the Federal Register of the notice of withdrawal 
of his approval of the agreement granted under this subsection, 
either by the Administrator or by the Attorney General, the 
provisions of this subsection shall not apply to any subsequent 
act or omission to act by reason of such agreement or approval.
  (e) For the purpose of this section--
          (1) the term ``extramural budget'' means the sum of 
        the total obligations minus amounts obligated for such 
        activities by employees of the agency in or through 
        Government-owned, Government-operated facilities, 
        except that for the Agency for International 
        Development it shall not include amounts obligated 
        solely for general institutional support of 
        international research centers or for grants to foreign 
        countries, and except that for the Department of Energy 
        it shall not include amounts obligated for atomic 
        energy defense programs for weapons and weapons-related 
        activities or for naval reactor programs;
          (2) the term ``Federal agency'' means an executive 
        agency as defined in section 105 of title 5, United 
        States Code, or a military department as defined in 
        section 102 of such title, except that it does not 
        include any agency within the Intelligence Community 
        (as the term is defined in section 3.4(f) of Executive 
        Order 12333 or its successor orders);
          (3) the term ``funding agreement'' means any 
        contract, grant, or cooperative agreement entered into 
        between any Federal agency and any small business for 
        the performance of experimental, developmental, or 
        research work funded in whole or in part by the Federal 
        Government;
          (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) a first phase for determining, insofar as 
                possible, the scientific and technical merit 
                and feasibility of ideas that appear to have 
                commercial potential, as described in 
                subparagraph (B), submitted pursuant to SBIR 
                program solicitations;
                  (B) a second phase, which shall not include 
                any invitation, pre-screening, or pre-selection 
                process for eligibility for Phase II, that will 
                further develop proposals which meet particular 
                program needs, in which awards shall be made 
                based on the scientific and technical merit and 
                feasibility of the proposals, as evidenced by 
                the first phase, considering, among other 
                things, the proposal's commercial potential, as 
                evidenced by--
                          (i) the small business concern's 
                        record of successfully commercializing 
                        SBIR or other research;
                          (ii) the existence of second phase 
                        funding commitments from private sector 
                        or non-SBIR funding sources;
                          (iii) the existence of third phase, 
                        follow-on commitments for the subject 
                        of the research; and
                          (iv) the presence of other indicators 
                        of the commercial potential of the 
                        idea; and
                  (C) where appropriate, a third phase for work 
                that derives from, extends, or completes 
                efforts made under prior funding agreements 
                under the SBIR program--
                          (i) in which commercial applications 
                        of SBIR-funded research or research and 
                        development are funded by non-Federal 
                        sources of capital or, for products or 
                        services intended for use by the 
                        Federal Government, by follow-on non-
                        SBIR Federal funding awards; or
                          (ii) for which awards from non-SBIR 
                        Federal funding sources are used for 
                        the continuation of research or 
                        research and development that has been 
                        competitively selected using peer 
                        review or merit-based selection 
                        procedures;
          (5) the term ``research'' or ``research and 
        development'' means any activity which is (A) a 
        systematic, intensive study directed toward greater 
        knowledge or understanding of the subject studied; (B) 
        a systematic study directed specifically toward 
        applying new knowledge to meet a recognized need; or 
        (C) a systematic application of knowledge toward the 
        production of useful materials, devices, and systems or 
        methods, including design, development, and improvement 
        of prototypes and new processes to meet specific 
        requirements;
          (6) the term ``Small Business Technology Transfer 
        Program'' or ``STTR'' means a program under which a 
        portion of a Federal agency's extramural research or 
        research and development effort is reserved for award 
        to small business concerns for cooperative research and 
        development through a uniform process having--
                  (A) a first phase, to determine, to the 
                extent possible, the scientific, technical, and 
                commercial merit and feasibility of ideas 
                submitted pursuant to STTR program 
                solicitations;
                  (B) a second phase, which shall not include 
                any invitation, pre-screening, or pre-selection 
                process for eligibility for Phase II, that will 
                further develop proposals that meet particular 
                program needs, in which awards shall be made 
                based on the scientific, technical, and 
                commercial merit and feasibility of the idea, 
                as evidenced by the first phase and by other 
                relevant information; and
                  (C) where appropriate, a third phase for work 
                that derives from, extends, or completes 
                efforts made under prior funding agreements 
                under the STTR program--
                          (i) in which commercial applications 
                        of STTR-funded research or research and 
                        development are funded by non-Federal 
                        sources of capital or, for products or 
                        services intended for use by the 
                        Federal Government, by follow-on non-
                        STTR Federal funding awards; and
                          (ii) for which awards from non-STTR 
                        Federal funding sources are used for 
                        the continuation of research or 
                        research and development that has been 
                        competitively selected using peer 
                        review or scientific review criteria;
          (7) the term ``cooperative research and development'' 
        means research or research and development conducted 
        jointly by a small business concern and a research 
        institution in which not less than 40 percent of the 
        work is performed by the small business concern, and 
        not less than 30 percent of the work is performed by 
        the research institution;
          (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);
          (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 Phase II or Phase III of the 
        Small Business Innovation Research Program and of the 
        Small Business Technology Transfer Program, as defined 
        in this subsection;
          (10) the term ``commercialization'' means--
                  (A) the process of developing products, 
                processes, technologies, or services; and
                  (B) the production and delivery (whether by 
                the originating party or by others) of 
                products, processes, technologies, or services 
                for sale to or use by the Federal Government or 
                commercial markets;
          (11) the term ``Phase I'' means--
                  (A) with respect to the SBIR program, the 
                first phase described in paragraph (4)(A); and
                  (B) with respect to the STTR program, the 
                first phase described in paragraph (6)(A);
          (12) the term ``Phase II'' means--
                  (A) with respect to the SBIR program, the 
                second phase described in paragraph (4)(B); and
                  (B) with respect to the STTR program, the 
                second phase described in paragraph (6)(B); and
          (13) the term ``Phase III'' means--
                  (A) with respect to the SBIR program, the 
                third phase described in paragraph (4)(C); and
                  (B) with respect to the STTR program, the 
                third phase described in paragraph (6)(C).
  (f) Federal Agency Expenditures for the SBIR Program.--
          (1) Required expenditure amounts.--Except as provided 
        in paragraph (2)(B), each Federal agency which has an 
        extramural budget for research or research and 
        development in excess of $100,000,000 for fiscal year 
        1992, or any fiscal year thereafter, shall expend with 
        small business concerns--
                  (A) not less than 1.5 percent of such budget 
                in each of fiscal years 1993 and 1994;
                  (B) not less than 2.0 percent of such budget 
                in each of fiscal years 1995 and 1996;
                  (C) not less than 2.5 percent of such budget 
                in each of fiscal years 1997 through 2011;
                  (D) not less than 2.6 percent of such budget 
                in fiscal year 2012;
                  (E) not less than 2.7 percent of such budget 
                in fiscal year 2013;
                  (F) not less than 2.8 percent of such budget 
                in fiscal year 2014;
                  (G) not less than 2.9 percent of such budget 
                in fiscal year 2015;
                  (H) not less than 3.0 percent of such budget 
                in fiscal year 2016; [and]
                  (I) not less than 3.2 percent of such budget 
                in fiscal year 2017 [and each fiscal year 
                thereafter,];
                  (J) not less than 3.46 percent of such budget 
                in fiscal year 2018;
                  (K) not less than 3.72 percent of such budget 
                in fiscal year 2019;
                  (L) not less than 3.98 percent of such budget 
                in fiscal year 2020;
                  (M) not less than 4.24 percent of such budget 
                in fiscal year 2021; and
                  (N) not less than 4.50 percent of such budget 
                in fiscal year 2022 and each fiscal year 
                thereafter,
        specifically in connection with SBIR programs which 
        meet the requirements of this section, policy 
        directives, and regulations issued under this section.
          (2) Limitations.--A Federal agency shall not--
                  (A) use any of its SBIR budget established 
                pursuant to paragraph (1) for the purpose of 
                funding administrative costs of the program, 
                including costs associated with salaries and 
                expenses; or
                  (B) make available for the purpose of meeting 
                the requirements of paragraph (1) an amount of 
                its extramural budget for basic research which 
                exceeds the percentages specified in paragraph 
                (1).
          (3) Exclusion of certain funding agreements.--Funding 
        agreements with small business concerns for research or 
        research and development which result from competitive 
        or single source selections other than an SBIR program 
        shall not be considered to meet any portion of the 
        percentage requirements of paragraph (1).
          (4) Rule of construction.--Nothing in this subsection 
        may be construed to prohibit a Federal agency from 
        expending with small business concerns an amount of the 
        extramural budget for research or research and 
        development of the agency that exceeds the amount 
        required under paragraph (1).
  (g) Each Federal agency required by subsection (f) to 
establish a small business innovation research program shall, 
in accordance with this Act and regulations issued hereunder--
          (1) unilaterally determine categories of projects to 
        be in its SBIR program;
          (2) issue small business innovation research 
        solicitations in accordance with a schedule determined 
        cooperatively with the Small Business Administration;
          (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, 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
                  (B) the Secretary of Defense, in the 1992 
                report issued in accordance with section 2522 
                of title 10, United States Code, and in 
                subsequent reports issued under that authority;
          (4)(A) unilaterally receive and evaluate proposals 
        resulting from SBIR proposals; and
          (B) make a final decision on each proposal submitted 
        under the SBIR program--
                  (i) not later than 1 year after the date on 
                which the applicable solicitation closes, if 
                with respect to the National Institutes of 
                Health or the National Science Foundation, or 
                90 days after the date on which the applicable 
                solicitation closes, if with respect to any 
                other participating agency; or
                  (ii) if the Administrator authorizes an 
                extension with respect to a solicitation, not 
                later than 90 days after the date that would 
                otherwise be applicable to the agency under 
                clause (i);
          (5) subject to subsection (l), unilaterally select 
        awardees for the SBIR funding agreements and inform 
        each awardee under such an agreement, to the extent 
        possible, of the expenses of the awardee that will be 
        allowable under the funding agreement;
          (6) administer its own SBIR funding agreements (or 
        delegate such administration to another agency);
          (7) make payments to recipients of SBIR funding 
        agreements on the basis of progress toward or 
        completion of the funding agreement requirements and, 
        in all cases, make payment to recipients under such 
        agreements in full, subject to audit, on or before the 
        last day of the 12-month period beginning on the date 
        of completion of such requirements;
          (8) collect annually, and maintain in a common format 
        in accordance with the simplified reporting 
        requirements under subsection (v), such information 
        from awardees as is necessary to assess the SBIR 
        program, including information necessary to maintain 
        the database described in subsection (k), including--
                  (A) whether an awardee--
                          (i) has venture capital, hedge fund, 
                        or private equity firm investment or is 
                        majority-owned by multiple venture 
                        capital operating companies, hedge 
                        funds, or private equity firms and, if 
                        so--
                                  (I) the amount of venture 
                                capital, hedge fund, or private 
                                equity firm investment that the 
                                awardee has received as of the 
                                date of the award; and
                                  (II) the amount of additional 
                                capital that the awardee has 
                                invested in the SBIR 
                                technology;
                          (ii) has an investor that--
                                  (I) is an individual who is 
                                not a citizen of the United 
                                States or a lawful permanent 
                                resident of the United States 
                                and, if so, the name of any 
                                such individual; or
                                  (II) is a person that is not 
                                an individual and is not 
                                organized under the laws of a 
                                State or the United States and, 
                                if so, the name of any such 
                                person;
                          (iii) is owned by a woman or has a 
                        woman as a principal investigator;
                          (iv) is owned by a socially or 
                        economically disadvantaged individual 
                        or has a socially or economically 
                        disadvantaged individual as a principal 
                        investigator;
                          (v) is a faculty member or a student 
                        of an institution of higher education, 
                        as that term is defined in section 101 
                        of the Higher Education Act of 1965 (20 
                        U.S.C. 1001); or
                          (vi) is located in a State described 
                        in subsection (u)(3);
                  (B) a justification statement from the 
                agency, if an awardee receives an award in an 
                amount that is more than the award guidelines 
                under this section; and
                  (C) data with respect to the Federal and 
                State Technology Partnership Program (FAST 
                Program);
          (9) [make an annual report] not later than March 30 
        of each year, submit a report on the SBIR program to 
        the Small Business Administration and the Office of 
        Science and Technology Policy;
          (10) include, as part of its annual performance plan 
        as required by subsections (a) and (b) of section 1115 
        of title 31, United States Code, a section on its SBIR 
        program, and shall submit such section to the Committee 
        on Small Business of the Senate, and the Committee on 
        Science and the Committee on Small Business of the 
        House of Representatives;
          (11) provide for and fully implement the tenets of 
        Executive Order No. 13329 (Encouraging Innovation in 
        Manufacturing); and
          (12) provide timely notice to the Administrator of 
        any case or controversy before any Federal judicial or 
        administrative tribunal concerning the SBIR program of 
        the Federal agency.
  (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.
  (i) Annual Reporting.--
          (1) In general.--Each Federal agency required by this 
        section to have an SBIR program or to establish goals 
        [shall report annually to the Small Business 
        Administration] shall, not later than March 30 of each 
        year, submit a report to the Small Business 
        Administration that includes the number of awards 
        (including awards under subsection (y)) pursuant to 
        grants, contracts, or cooperative agreements over 
        $10,000 in amount and the dollar value of all such 
        awards, identifying SBIR awards and comparing the 
        number and amount of such awards with awards to other 
        than small business concerns.
          (2) Calculation of extramural budget.--
                  (A) Methodology.--Not later than 4 months 
                after the date of the enactment of each 
                appropriations Act for a Federal agency 
                required by this section to have an SBIR 
                program, the Federal agency shall submit to the 
                Administrator a report, which shall include a 
                description of the methodology used for 
                calculating the amount of the extramural budget 
                of that Federal agency.
                  (B) Administrator's analysis.--The 
                Administrator shall include an analysis of the 
                methodology received from each Federal agency 
                referred to in subparagraph (A) in the report 
                required by subsection (b)(7).
  (j)(1) Policy directives.--The Small Business Administration, 
after consultation with the Administrator of the Office of 
Federal Procurement Policy, the Director of the Office of 
Science and Technology Policy, and the Intergovernmental 
Affairs Division of the Office of Management and Budget, shall, 
within one hundred and twenty days of the enactment of the 
Small Business Innovation Development Act of 1982, issue policy 
directives for the general conduct of the SBIR programs within 
the Federal Government, including providing for--
          (A) simplified, standardized, and timely SBIR 
        solicitations;
          (B) a simplified, standardized funding process which 
        provides for (i) the timely receipt and review of 
        proposals; (ii) outside peer review for at least Phase 
        II proposals, if appropriate; (iii) protection of 
        proprietary information provided in proposals; (iv) 
        selection of awardees; (v) retention of rights in data 
        generated in the performance of the contract by the 
        small business concern; (vi) transfer of title to 
        property provided by the agency to the small business 
        concern if such a transfer would be more cost effective 
        than recovery of the property by the agency; (vii) cost 
        sharing; and (viii) cost principles and payment 
        schedules;
          (C) exemptions from the regulations under paragraph 
        (2) if national security or intelligence functions 
        clearly would be jeopardized;
          (D) minimizing regulatory burden associated with 
        participation in the SBIR program for the small 
        business concern which will stimulate the cost-
        effective conduct of Federal research and development 
        and the likelihood of commercialization of the results 
        of research and development conducted under the SBIR 
        program;
          (E) [simplified, standardized, and timely annual 
        report] not later than March 30 of each year, a 
        simplified and standardized report on the SBIR program 
        to the Small Business Administration and the Office of 
        Science and Technology Policy;
          (F) standardized and orderly withdrawal from program 
        participation by an agency having a SBIR program; at 
        the discretion of the Administration, such directives 
        may require a phased withdrawal over a period of time 
        sufficient in duration to minimize any adverse impact 
        on small business concerns; and
          (G) the voluntary participation in a SBIR program by 
        a Federal agency not required to establish such a 
        program pursuant to subsection (f).
          (2) Modifications.--Not later than 90 days after the 
        date of enactment of the Small Business Research and 
        Development Enhancement Act of 1992, the Administrator 
        shall modify the policy directives issued pursuant to 
        this subsection to provide for--
                  (A) retention by a small business concern of 
                the rights to data generated by the concern in 
                the performance of an SBIR award for a period 
                of not less than 4 years;
                  (B) continued use by a small business concern 
                participating in Phase III of the SBIR program, 
                as a directed bailment, of any property 
                transferred by a Federal agency to the small 
                business concern in Phase II of an SBIR program 
                for a period of not less than 2 years, 
                beginning on the initial date of the concern's 
                participation in Phase III of such program;
                  (C) procedures to ensure, to the extent 
                practicable, that an agency which intends to 
                pursue research, development, or production of 
                a technology developed by a small business 
                concern under an SBIR program enters into 
                follow-on, non-SBIR funding agreements with the 
                small business concern for such research, 
                development, or production;
                  [(D) an increase to $150,000 in the amount of 
                funds which an agency may award in Phase I of 
                an SBIR program, and to $1,000,000 in Phase II 
                of an SBIR program, and an adjustment of such 
                amounts every year for inflation;]
                  [(E)] (D) a process for notifying the 
                participating SBIR agencies and potential SBIR 
                participants of the 1991, 1992, and the current 
                critical technologies, as identified--
                          (i) by the National Critical 
                        Technologies Panel (or its successor), 
                        in accordance with section 603 of the 
                        National Science and Technology Policy, 
                        Organization, and Priorities Act of 
                        1976; or
                          (ii) by the Secretary of Defense, in 
                        accordance with section 2522 of title 
                        10, United States Code;
                  [(F)] (E) enhanced outreach efforts to 
                increase the participation of socially and 
                economically disadvantaged small business 
                concerns, as defined in section 8(a)(4), and 
                the participation of small businesses that are 
                51 percent owned and controlled by women in 
                technological innovation and in SBIR programs, 
                including Phase III of such programs, and the 
                collection of data to document such 
                participation;
                  [(G)] (F) technical and programmatic guidance 
                to encourage agencies to develop gap-funding 
                programs to address the delay between an award 
                for Phase I of an SBIR program and the 
                application for and extension of an award for 
                Phase II of such program;
                  [(H)] (G) procedures to ensure that a small 
                business concern that submits a proposal for a 
                funding agreement for Phase I of an SBIR 
                program and that has received more than 15 
                Phase II SBIR awards during the preceding 5 
                fiscal years is able to demonstrate the extent 
                to which it was able to secure Phase III 
                funding to develop concepts resulting from 
                previous Phase II SBIR awards; and
                  [(I)] (H) procedures to ensure that agencies 
                participating in the SBIR program retain the 
                information submitted under [subparagraph (H)] 
                subparagraph (G) at least until the General 
                Accounting Office submits the report required 
                under section 105 of the Small Business 
                Research and Development Enhancement Act of 
                1992.
          (3) Additional modifications.--Not later than 120 
        days after the date of the enactment of the Small 
        Business Innovation Research Program Reauthorization 
        Act of 2000, the Administrator shall modify the policy 
        directives issued pursuant to this subsection--
                  (A) to clarify that the rights provided for 
                under paragraph (2)(A) apply to all Federal 
                funding awards under this section, including 
                Phase I, Phase II, and Phase III;
                  (B) to provide for the requirement of a 
                succinct commercialization plan with each 
                application for a Phase II award that is moving 
                toward commercialization;
                  (C) [to require agencies to report to the 
                Administration, not less frequently than 
                annually, all instances in which an] to require 
                each agency, not later than March 30 of each 
                year, to submit a report to the Administration 
                on all instance in which the agency pursued 
                research, development, or production of a 
                technology developed by a small business 
                concern using an award made under the SBIR 
                program of that agency, and determined that it 
                was not practicable to enter into a follow-on 
                non-SBIR program funding agreement with the 
                small business concern, which report shall 
                include, at a minimum--
                          (i) the reasons why the follow-on 
                        funding agreement with the small 
                        business concern was not practicable;
                          (ii) the identity of the entity with 
                        which the agency contracted to perform 
                        the research, development, or 
                        production; and
                          (iii) a description of the type of 
                        funding agreement under which the 
                        research, development, or production 
                        was obtained; and
                  (D) to implement subsection (v), including 
                establishing standardized procedures for the 
                provision of information pursuant to subsection 
                (k)(3).
          (4) Modification to clarify eligibility of certain 
        small businesses.--Not later than 180 days after the 
        date of the enactment of the Commercializing on Small 
        Business Innovation Act of 2016, the Administrator 
        shall modify the policy directives issued pursuant to 
        this subsection to clarify that the small business 
        concerns described in subparagraphs (B), (C), and (D) 
        of section 3(p)(3) are eligible to receive awards under 
        the SBIR program.
  (k) Database.--
          (1) Public database.--Not later than 180 days after 
        the date of the enactment of the Small Business 
        Innovation Research Program Reauthorization Act of 
        2000, the Administrator shall develop, maintain, and 
        make available to the public a searchable, up-to-date, 
        electronic database that includes--
                  (A) the name, size, location, and an 
                identifying number assigned by the 
                Administrator, of each small business concern 
                that has received a Phase I or Phase II SBIR or 
                STTR award from a Federal agency;
                  (B) a description of each Phase I or Phase II 
                SBIR or STTR award received by that small 
                business concern, including--
                          (i) an abstract of the project funded 
                        by the award, excluding any proprietary 
                        information so identified by the small 
                        business concern;
                          (ii) the Federal agency making the 
                        award; and
                          (iii) the date and amount of the 
                        award;
                  (C) an identification of any business concern 
                or subsidiary established for the commercial 
                application of a product or service for which 
                an SBIR or STTR award is made;
                  (D) information regarding mentors and 
                Mentoring Networks, as required by section 
                35(d);
                  (E) with respect to assistance under the STTR 
                program only--
                          (i) whether the small business 
                        concern or the research institution 
                        initiated their collaboration on each 
                        assisted STTR project;
                          (ii) whether the small business 
                        concern or the research institution 
                        originated any technology relating to 
                        the assisted STTR project;
                          (iii) the length of time it took to 
                        negotiate any licensing agreement 
                        between the small business concern and 
                        the research institution under each 
                        assisted STTR project; and
                          (iv) how the proceeds from 
                        commercialization, marketing, or sale 
                        of technology resulting from each 
                        assisted STTR project were allocated 
                        (by percentage) between the small 
                        business concern and the research 
                        institution; and
                  (F) for each small business concern that has 
                received a Phase I or Phase II SBIR or STTR 
                award from a Federal agency, whether the small 
                business concern--
                          (i) has venture capital, hedge fund, 
                        or private equity firm investment and, 
                        if so, whether the small business 
                        concern is registered as majority-owned 
                        by multiple venture capital operating 
                        companies, hedge funds, or private 
                        equity firms as required under 
                        subsection (dd)(3);
                          (ii) is owned by a woman or has a 
                        woman as a principal investigator;
                          (iii) is owned by a socially or 
                        economically disadvantaged individual 
                        or has a socially or economically 
                        disadvantaged individual as a principal 
                        investigator;
                          (iv) is owned by a faculty member or 
                        a student of an institution of higher 
                        education, as that term is defined in 
                        section 101 of the Higher Education Act 
                        of 1965 (20 U.S.C. 1001); or
                          (v) received assistance under the 
                        Federal and State Technology 
                        Partnership Program (FAST Program).
          (2) Government database.--Not later than 90 days 
        after the date of enactment of the SBIR/STTR 
        Reauthorization Act of 2011, the Administrator, in 
        consultation with Federal agencies required to have an 
        SBIR program pursuant to subsection (f)(1) or an STTR 
        program pursuant to subsection (n)(1), shall develop 
        and maintain a database to be used exclusively for SBIR 
        and STTR program evaluation that--
                  (A) contains for each small business concern 
                that applies for, submits a proposal for, or 
                receives an award under Phase I or Phase II of 
                the SBIR program or the STTR program--
                          (i) the name, size, and location of, 
                        and the identifying number assigned by 
                        the Administration to, the small 
                        business concern;
                          (ii) an abstract of the applicable 
                        project;
                          (iii) the specific aims of the 
                        project;
                          (iv) the number of employees of the 
                        small business concern;
                          (v) the names and titles of the key 
                        individuals that will carry out the 
                        project, the position each key 
                        individual holds in the small business 
                        concern, and contact information for 
                        each key individual;
                          (vi) the percentage of effort each 
                        individual described in clause (v) will 
                        contribute to the project;
                          (vii) whether the small business 
                        concern is majority-owned by multiple 
                        venture capital operating companies, 
                        hedge funds, or private equity firms; 
                        and
                          (viii) the Federal agency to which 
                        the application is made and contact 
                        information for the person or office 
                        within the Federal agency that is 
                        responsible for reviewing applications 
                        and making awards under the SBIR 
                        program or the STTR program;
                  (B) contains for each Phase II award made by 
                a Federal agency--
                          (i) information collected in 
                        accordance with paragraph (3) on 
                        revenue from the sale of new products 
                        or services resulting from the research 
                        conducted under the award;
                          (ii) information collected in 
                        accordance with paragraph (3) on 
                        additional investment from any source, 
                        other than Phase I or Phase II 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;
                  (C) includes any narrative information that a 
                small business concern receiving a Phase II 
                award voluntarily submits to further describe 
                the outputs and outcomes of its awards;
                  (D) includes, for each awardee--
                          (i) the name, size, and location of, 
                        and any identifying number assigned by 
                        the Administrator to, the awardee;
                          (ii) whether the awardee has venture 
                        capital, hedge fund, or private equity 
                        firm investment and, if so--
                                  (I) the amount of venture 
                                capital, hedge fund, or private 
                                equity firm investment as of 
                                the date of the award;
                                  (II) the percentage of 
                                ownership of the awardee held 
                                by a venture capital operating 
                                company, hedge fund, or private 
                                equity firm, including whether 
                                the awardee is majority-owned 
                                by multiple venture capital 
                                operating companies, hedge 
                                funds, or private equity firms; 
                                and
                                  (III) the amount of 
                                additional capital that the 
                                awardee has invested in the 
                                SBIR or STTR technology, which 
                                information shall be collected 
                                on an annual basis;
                          (iii) the names and locations of any 
                        affiliates of the awardee;
                          (iv) the number of employees of the 
                        awardee;
                          (v) the number of employees of the 
                        affiliates of the awardee; and
                          (vi) the names of, and the percentage 
                        of ownership of the awardee held by--
                                  (I) any individual who is not 
                                a citizen of the United States 
                                or a lawful permanent resident 
                                of the United States; or
                                  (II) any person that is not 
                                an individual and is not 
                                organized under the laws of a 
                                State or the United States;
                  (E) includes any other data collected by or 
                available to any Federal agency that such 
                agency considers may be useful for SBIR or STTR 
                program evaluation;
                  (F) is available for use solely for program 
                evaluation purposes by the Federal Government 
                or, in accordance with policy directives issued 
                by the Administration, by other authorized 
                persons who are subject to a use and 
                nondisclosure agreement with the Federal 
                Government covering the use of the database; 
                and
                  (G) includes a timely and accurate list of 
                any individual or small business concern that 
                has participated in the SBIR program or STTR 
                program that has been--
                          (i) convicted of a fraud-related 
                        crime involving funding received under 
                        the SBIR program or STTR program; or
                          (ii) found civilly liable for a 
                        fraud-related violation involving 
                        funding received under the SBIR program 
                        or STTR program.
          (3) Updating information for database.--
                  (A) In general.--A small business concern 
                applying for a Phase II award under this 
                section shall be required to update information 
                in the database established under this 
                subsection for any prior Phase II award 
                received by that small business concern. In 
                complying with this paragraph, a small business 
                concern may apportion sales or additional 
                investment information relating to more than 
                one Phase II award among those awards, if it 
                notes the apportionment for each award.
                  (B) Annual updates upon termination.--A small 
                business concern receiving a Phase II 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.
                  (C) Government database.--Not later than 60 
                days after the date established by a Federal 
                agency for submitting applications or proposals 
                for a Phase I or Phase II award under the SBIR 
                program or STTR program, the head of the 
                Federal agency shall submit to the 
                Administrator the data required under paragraph 
                (2) with respect to each small business concern 
                that applies or submits a proposal for the 
                Phase I or Phase II award.
          (4) Protection of information.--Information provided 
        under paragraph (2) shall be considered privileged and 
        confidential and not subject to disclosure pursuant to 
        section 552 of title 5, United States Code.
          (5) Rule of construction.--Inclusion of information 
        in the database under this subsection shall not be 
        considered to be publication for purposes of subsection 
        (a) or (b) of section 102 of title 35, United States 
        Code.
  (l) Reporting of Awards Made From Single Proposal, to 
Multiple Award Winners, or to Critical Technology Topics.--
          (1) Single proposal.--If a Federal agency required to 
        establish an SBIR program under subsection (f) makes an 
        award with respect to an SBIR solicitation topic or 
        subtopic for which the agency received only 1 proposal, 
        the agency shall provide written justification for 
        making the award in its next quarterly report to the 
        Administration and in the agency's next annual report 
        required under subsection (g)(8).
          (2) Multiple awards.--An agency referred to in 
        paragraph (1) shall include in its next annual report 
        required under subsection (g)(8) an accounting of the 
        awards the agency has made for Phase I of an SBIR 
        program during the reporting period to entities that 
        have received more than 15 awards for the Phase II of 
        an SBIR program during the preceding 5 fiscal years.
          (3) Critical technology awards.--An agency referred 
        to in paragraph (1) shall include in its next annual 
        report required under subsection (g)(8), an accounting 
        of the number of awards it has made to critical 
        technology topics, as defined in subsection (g)(3), 
        including an identification of the specific critical 
        technologies topics, and the percentage by number and 
        dollar amount of the agency's total SBIR awards to such 
        critical technology topics.
  (m) Termination.--The authorization to carry out the Small 
Business Innovation Research Program established under this 
section shall terminate on September 30, [2017] 2022.
  (n) Required Expenditures for STTR by Federal Agencies.--
          (1) Required expenditure amounts.--
                  (A) In general.--With respect to each fiscal 
                year through fiscal year [2017] 2022, each 
                Federal agency that has an extramural budget 
                for research, or research and development, in 
                excess of $1,000,000,000 for that fiscal year, 
                shall expend with small business concerns not 
                less than the percentage of that extramural 
                budget specified in subparagraph (B), 
                specifically in connection with STTR programs 
                that meet the requirements of this section and 
                any policy directives and regulations issued 
                under this section.
                  (B) Expenditure amounts.--The percentage of 
                the extramural budget required to be expended 
                by an agency in accordance with subparagraph 
                (A) shall be--
                          (i) 0.15 percent for each fiscal year 
                        through fiscal year 2003;
                          (ii) 0.3 percent for each of fiscal 
                        years 2004 through 2011;
                          (iii) 0.35 percent for each of fiscal 
                        years 2012 and 2013;
                          (iv) 0.40 percent for each of fiscal 
                        years 2014 and 2015; [and]
                          (v) 0.45 percent [for fiscal year 
                        2016 and each fiscal year thereafter.] 
                        for each of fiscal years 2016 and 2017;
                          (vi) 0.50 percent for each of fiscal 
                        years 2018 and 2019;
                          (vii) 0.55 percent for each of fiscal 
                        years 2020 and 2021; and
                          (viii) 0.60 percent for fiscal year 
                        2022 and each fiscal year thereafter.
          (2) Limitations.--A Federal agency shall not--
                  (A) use any of its STTR budget established 
                pursuant to paragraph (1) for the purpose of 
                funding administrative costs of the program, 
                including costs associated with salaries and 
                expenses, or, in the case of a small business 
                concern or a research institution, costs 
                associated with salaries, expenses, and 
                administrative overhead (other than those 
                direct or indirect costs allowable under 
                guidelines of the Office of Management and 
                Budget and the governmentwide Federal 
                Acquisition Regulation issued in accordance 
                with section 25(c)(1) of the Office of Federal 
                Procurement Policy Act); or
                  (B) make available for the purpose of meeting 
                the requirements of paragraph (1) an amount of 
                its extramural budget for basic research which 
                exceeds the percentage specified in paragraph 
                (1).
          (3) Exclusion of certain funding agreements.--Funding 
        agreements with small business concerns for research or 
        research and development which result from competitive 
        or single source selections other than an STTR program 
        shall not be considered to meet any portion of the 
        percentage requirements of paragraph (1).
  (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) unilaterally determine categories of projects to 
        be included in its STTR program;
          (2) issue STTR solicitations in accordance with a 
        schedule determined cooperatively with the 
        Administration;
          (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;
          (4)(A) unilaterally receive and evaluate proposals 
        resulting from STTR solicitations; and
          (B) make a final decision on each proposal submitted 
        under the STTR program--
                  (i) not later than 1 year after the date on 
                which the applicable solicitation closes, if 
                with respect to the National Institutes of 
                Health or the National Science Foundation, or 
                90 days after the date on which the applicable 
                solicitation closes, if with respect to any 
                other participating agency; or
                  (ii) if the Administrator authorizes an 
                extension for a solicitation, not later than 90 
                days after the date that would be applicable to 
                the agency under clause (i);
          (5) unilaterally select awardees for its STTR funding 
        agreements and inform each awardee under such an 
        agreement, to the extent possible, of the expenses of 
        the awardee that will be allowable under the funding 
        agreement;
          (6) administer its own STTR funding agreements (or 
        delegate such administration to another agency);
          (7) make payments to recipients of STTR funding 
        agreements on the basis of progress toward or 
        completion of the funding agreement requirements and, 
        in all cases, make payment to recipients under such 
        agreements in full, subject to audit, on or before the 
        last day of the 12-month period beginning on the date 
        of the completion of such requirements;
          (8) include, as part of its annual performance plan 
        as required by subsections (a) and (b) of section 1115 
        of title 31, United States Code, a section on its STTR 
        program, and shall submit such section to the Committee 
        on Small Business of the Senate, and the Committee on 
        Science and the Committee on Small Business of the 
        House of Representatives;
          (9) collect annually, and maintain in a common format 
        in accordance with the simplified reporting 
        requirements under subsection (v), such information 
        from applicants and awardees as is necessary to assess 
        the STTR program outputs and outcomes, including 
        information necessary to maintain the database 
        described in subsection (k), including--
                  (A) whether an applicant or awardee--
                          (i) has venture capital, hedge fund, 
                        or private equity firm investment or is 
                        majority-owned by multiple venture 
                        capital operating companies, hedge 
                        funds, or private equity firms and, if 
                        so--
                                  (I) the amount of venture 
                                capital, hedge fund, or private 
                                equity firm investment that the 
                                applicant or awardee has 
                                received as of the date of the 
                                application or award, as 
                                applicable; and
                                  (II) the amount of additional 
                                capital that the applicant or 
                                awardee has invested in the 
                                STTR technology;
                          (ii) has an investor that--
                                  (I) is an individual who is 
                                not a citizen of the United 
                                States or a lawful permanent 
                                resident of the United States 
                                and, if so, the name of any 
                                such individual; or
                                  (II) is a person that is not 
                                an individual and is not 
                                organized under the laws of a 
                                State or the United States and, 
                                if so, the name of any such 
                                person;
                          (iii) is owned by a woman or has a 
                        woman as a principal investigator;
                          (iv) is owned by a socially or 
                        economically disadvantaged individual 
                        or has a socially or economically 
                        disadvantaged individual as a principal 
                        investigator;
                          (v) is a faculty member or a student 
                        of an institution of higher education, 
                        as that term is defined in section 101 
                        of the Higher Education Act of 1965 (20 
                        U.S.C. 1001); or
                          (vi) is located in a State in which 
                        the total value of contracts awarded to 
                        small business concerns under all STTR 
                        programs is less than the total value 
                        of contracts awarded to small business 
                        concerns in a majority of other States, 
                        as determined by the Administrator in 
                        biennial fiscal years, beginning with 
                        fiscal year 2008, based on the most 
                        recent statistics compiled by the 
                        Administrator;
                  (B) if an awardee receives an award in an 
                amount that is more than the award guidelines 
                under this section, a statement from the agency 
                that justifies the award amount; and
                  (C) data with respect to the Federal and 
                State Technology Partnership Program (FAST 
                Program);
          (10) [submit an annual report] not later than March 
        30 of each year, submit a report on the STTR program to 
        the Administration and the Office of Science and 
        Technology Policy;
          (11) adopt the agreement developed by the 
        Administrator under subsection (w) as the agency's 
        model agreement for allocating between small business 
        concerns and research institutions intellectual 
        property rights and rights, if any, to carry out 
        follow-on research, development, or commercialization;
          (12) develop, in consultation with the Office of 
        Federal Procurement Policy and the Office of Government 
        Ethics, procedures to ensure that federally funded 
        research and development centers (as defined in 
        subsection (e)(8)) that participate in STTR 
        agreements--
                  (A) are free from organizational conflicts of 
                interests relative to the STTR program;
                  (B) do not use privileged information gained 
                through work performed for an STTR agency or 
                private access to STTR agency personnel in the 
                development of an STTR proposal; and
                  (C) use outside peer review, as appropriate;
          (13) not later than July 31, 1993, develop procedures 
        for assessing the commercial merit and feasibility of 
        STTR proposals, as evidenced by--
                  (A) the small business concern's record of 
                successfully commercializing STTR or other 
                research;
                  (B) the existence of Phase II funding 
                commitments from private sector or non-STTR 
                funding sources;
                  (C) the existence of Phase III follow-on 
                commitments for the subject of the research; 
                and
                  (D) the presence of other indicators of the 
                commercial potential of the idea;
          (14) implement an outreach program to research 
        institutions and small business concerns for the 
        purpose of enhancing its STTR program, in conjunction 
        with any such outreach done for purposes of the SBIR 
        program;
          (15) provide for and fully implement the tenets of 
        Executive Order No. 13329 (Encouraging Innovation in 
        Manufacturing); and
          (16) provide timely notice to the Administrator of 
        any case or controversy before any Federal judicial or 
        administrative tribunal concerning the STTR program of 
        the Federal agency.
  (p) STTR Policy Directive.--
          (1) Issuance.--The Administrator shall issue a policy 
        directive for the general conduct of the STTR programs 
        within the Federal Government. Such policy directive 
        shall be issued after consultation with--
                  (A) the heads of each of the Federal agencies 
                required by subsection (n) to establish an STTR 
                program;
                  (B) the Under Secretary of Commerce for 
                Intellectual Property and Director of the 
                United States Patent and Trademark Office; and
                  (C) the Director of the Office of Federal 
                Procurement Policy.
          (2) Contents.--The policy directive required by 
        paragraph (1) shall provide for--
                  (A) simplified, standardized, and timely STTR 
                solicitations;
                  (B) a simplified, standardized funding 
                process that provides for--
                          (i) the timely receipt and review of 
                        proposals;
                          (ii) outside peer review, if 
                        appropriate;
                          (iii) protection of proprietary 
                        information provided in proposals;
                          (iv) selection of awardees;
                          (v) retention by a small business 
                        concern of the rights to data generated 
                        by the concern in the performance of an 
                        STTR award for a period of not less 
                        than 4 years;
                          (vi) continued use by a small 
                        business concern, as a directed 
                        bailment, of any property transferred 
                        by a Federal agency to the small 
                        business concern in Phase II of the 
                        STTR program for a period of not less 
                        than 2 years, beginning on the initial 
                        date of the concern's participation in 
                        Phase III of such program;
                          (vii) cost sharing; and
                          (viii) cost principles and payment 
                        schedules; [and]
                          [(ix) 1-year awards for Phase I of an 
                        STTR program, generally not to exceed 
                        $150,000, and 2-year awards for Phase 
                        II of an STTR program, generally not to 
                        exceed $1,000,000, (each of which the 
                        Administrator shall adjust for 
                        inflation annually) greater or lesser 
                        amounts to be awarded at the discretion 
                        of the awarding agency, and shorter or 
                        longer periods of time to be approved 
                        at the discretion of the awarding 
                        agency where appropriate for a 
                        particular project;]
                  (C) minimizing regulatory burdens associated 
                with participation in STTR programs;
                  (D) guidelines for a model agreement, to be 
                used by all agencies, for allocating between 
                small business concerns and research 
                institutions intellectual property rights and 
                rights, if any, to carry out follow-on 
                research, development, or commercialization;
                  (E) procedures to ensure that--
                          (i) a recipient of an STTR award is a 
                        small business concern, as defined in 
                        section 3 and the regulations 
                        promulgated thereunder; and
                          (ii) such small business concern 
                        exercises management and control of the 
                        performance of the STTR funding 
                        agreement pursuant to a business plan 
                        providing for the commercialization of 
                        the technology that is the subject 
                        matter of the award; and
                  (F) procedures to ensure, to the extent 
                practicable, that an agency which intends to 
                pursue research, development, or production of 
                a technology developed by a small business 
                concern under an STTR program enters into 
                follow-on, non-STTR funding agreements with the 
                small business concern for such research, 
                development, or production.
          (3) Modifications.--Not later than 120 days after the 
        date of enactment of this paragraph, the Administrator 
        shall modify the policy directive issued pursuant to 
        this subsection to clarify that the rights provided for 
        under paragraph (2)(B)(v) apply to all Federal funding 
        awards under this section, including Phase I, Phase II, 
        and Phase III.
          (4) Modification to clarify eligibility of certain 
        small businesses.--Not later than 180 days after the 
        date of the enactment of the Commercializing on Small 
        Business Innovation Act of 2016, the Administrator 
        shall modify the policy directives issued pursuant to 
        this subsection to clarify that the small business 
        concerns described in subparagraphs (B), (C), and (D) 
        of section 3(p)(3) are eligible to receive awards under 
        the STTR program.
  (q) Discretionary Technical Assistance.--
          (1) In general.--Each Federal agency required by this 
        section to conduct an SBIR program or STTR program may 
        enter into an agreement with a vendor selected under 
        paragraph (2) to provide small business concerns 
        engaged in SBIR or STTR projects with technical 
        assistance services, such as access to a network of 
        scientists and engineers engaged in a wide range of 
        technologies, or access to technical and business 
        literature available through on-line data bases, for 
        the purpose of assisting such concerns in--
                  (A) making better technical decisions 
                concerning such projects;
                  (B) solving technical problems which arise 
                during the conduct of such projects;
                  (C) minimizing technical risks associated 
                with such projects; and
                  (D) developing and commercializing new 
                commercial products and processes resulting 
                from such projects.
          (2) Vendor selection.--Each agency may select a 
        vendor to assist small business concerns to meet the 
        goals listed in paragraph (1) for a term not to exceed 
        5 years. Such selection shall be competitive and shall 
        utilize merit-based criteria.
          (3) Additional technical assistance.--
                  (A) Phase i.--A Federal agency described in 
                paragraph (1) may--
                          (i) provide to the recipient of a 
                        Phase I SBIR or STTR award, through a 
                        vendor selected under paragraph (2), 
                        the services described in paragraph 
                        (1), in an amount equal to not more 
                        than $5,000 per year; or
                          (ii) authorize the recipient of a 
                        Phase I SBIR or STTR award to purchase 
                        the services described in paragraph 
                        (1), in an amount equal to not more 
                        than $5,000 per year, which shall be in 
                        addition to the amount of the 
                        recipient's award.
                  (B) Phase ii.--A Federal agency described in 
                paragraph (1) may--
                          (i) provide to the recipient of a 
                        Phase II SBIR or STTR award, through a 
                        vendor selected under paragraph (2), 
                        the services described in paragraph 
                        (1), in an amount equal to not more 
                        than $5,000 per year; or
                          (ii) authorize the recipient of a 
                        Phase II SBIR or STTR award to purchase 
                        the services described in paragraph 
                        (1), in an amount equal to not more 
                        than $5,000 per year, which shall be in 
                        addition to the amount of the 
                        recipient's award.
                  (C) Flexibility.--In carrying out 
                subparagraphs (A) and (B), each Federal agency 
                shall provide the allowable amounts to a 
                recipient that meets the eligibility 
                requirements under the applicable subparagraph, 
                if the recipient requests to seek technical 
                assistance from an individual or entity other 
                than the vendor selected under paragraph (2) by 
                the Federal agency.
                  (D) Limitation.--A Federal agency may not--
                          (i) use the amounts authorized under 
                        subparagraph (A) or (B) unless the 
                        vendor selected under paragraph (2) 
                        provides the technical assistance to 
                        the recipient; or
                          (ii) enter a contract with a vendor 
                        under paragraph (2) under which the 
                        amount provided for technical 
                        assistance is based on total number of 
                        Phase I or Phase II awards.
  (r) Phase III Agreements.--
          (1) In general.--In the case of a small business 
        concern that is awarded a funding agreement for Phase 
        II of an SBIR or STTR program, a Federal agency may 
        enter into a Phase III agreement with that business 
        concern for additional work to be performed during or 
        after the Phase II period. The Phase II funding 
        agreement with the small business concern may, at the 
        discretion of the agency awarding the agreement, set 
        out the procedures applicable to Phase III agreements 
        with that agency or any other agency.
          (2) Definition.--In this subsection, the term ``Phase 
        III agreement'' means a follow-on, non-SBIR or non-STTR 
        funded contract as described in paragraph (4)(C) or 
        paragraph (6)(C) of subsection (e).
          (3) Intellectual property rights.--Each funding 
        agreement under an SBIR or STTR program shall include 
        provisions setting forth the respective rights of the 
        United States and the small business concern with 
        respect to intellectual property rights and with 
        respect to any right to carry out follow-on research.
          (4) Phase iii awards.--To the greatest extent 
        practicable, Federal agencies and Federal prime 
        contractors shall issue Phase III awards relating to 
        technology, including sole source awards, to the SBIR 
        and STTR award recipients that developed the 
        technology.
  (s) Competitive Selection Procedures for SBIR and STTR 
Programs.--All funds awarded, appropriated, or otherwise made 
available in accordance with subsection (f) or (n) must be 
awarded pursuant to competitive and merit-based selection 
procedures.
  (t) Inclusion in Strategic Plans.--Program information 
relating to the SBIR and STTR programs shall be included by 
each Federal agency in any update or revision required of the 
Federal agency under section 306(b) of title 5, United States 
Code.
  (u) Coordination of Technology Development Programs.--
          (1) Definition of technology development program.--In 
        this subsection, the term ``technology development 
        program'' means--
                  (A) the Experimental Program to Stimulate 
                Competitive Research of the National Science 
                Foundation, as established under section 113 of 
                the National Science Foundation Authorization 
                Act of 1988 (42 U.S.C. 1862g);
                  (B) the Defense Experimental Program to 
                Stimulate Competitive Research of the 
                Department of Defense;
                  (C) the Experimental Program to Stimulate 
                Competitive Research of the Department of 
                Energy;
                  (D) the Experimental Program to Stimulate 
                Competitive Research of the Environmental 
                Protection Agency;
                  (E) the Experimental Program to Stimulate 
                Competitive Research of the National 
                Aeronautics and Space Administration;
                  (F) the Institutional Development Award 
                Program of the National Institutes of Health; 
                and
                  (G) the National Research Initiative 
                Competitive Grants Program of the Department of 
                Agriculture.
          (2) Coordination requirements.--Each Federal agency 
        that is subject to subsection (f) and that has 
        established a technology development program may, in 
        each fiscal year, review for funding under that 
        technology development program--
                  (A) any proposal to provide outreach and 
                assistance to one or more small business 
                concerns interested in participating in the 
                SBIR program, including any proposal to make a 
                grant or loan to a company to pay a portion or 
                all of the cost of developing an SBIR proposal, 
                from an entity, organization, or individual 
                located in--
                          (i) a State that is eligible to 
                        participate in that program; or
                          (ii) a State described in paragraph 
                        (3); or
                  (B) any proposal for Phase I of the SBIR 
                program, if the proposal, though meritorious, 
                is not funded through the SBIR program for that 
                fiscal year due to funding restraints, from a 
                small business concern located in--
                          (i) a State that is eligible to 
                        participate in a technology development 
                        program; or
                          (ii) a State described in paragraph 
                        (3).
          (3) Additionally eligible state.--A State referred to 
        in subparagraph (A)(ii) or (B)(ii) of paragraph (2) is 
        a State in which the total value of contracts awarded 
        to small business concerns under all SBIR programs is 
        less than the total value of contracts awarded to small 
        business concerns in a majority of other States, as 
        determined by the Administrator in biennial fiscal 
        years, beginning with fiscal year 2000, based on the 
        most recent statistics compiled by the Administrator.
  (v) Reducing Paperwork and Compliance Burden.--
          (1) Standardization of reporting requirements.--The 
        Administrator shall work with the Federal agencies 
        required by this section to have an SBIR or STTR 
        program to standardize reporting requirements for the 
        collection of data from SBIR or STTR applicants and 
        awardees, including data for inclusion in the database 
        under subsection (k), taking into consideration the 
        unique needs of each agency, and to the extent 
        possible, permitting the updating of previously 
        reported information by electronic means. Such 
        requirements shall be designed to minimize the burden 
        on small businesses.
          (2) Simplification of application and award 
        process.--Not later than 1 year after the date of 
        enactment of this paragraph, and after a period of 
        public comment, the Administrator shall issue 
        regulations or guidelines, taking into consideration 
        the unique needs of each Federal agency, to ensure that 
        each Federal agency required to carry out an SBIR 
        program or STTR program simplifies and standardizes the 
        program proposal, selection, contracting, compliance, 
        and audit procedures for the SBIR program or STTR 
        program of the Federal agency (including procedures 
        relating to overhead rates for applicants and 
        documentation requirements) to reduce the paperwork and 
        regulatory compliance burden on small business concerns 
        applying to and participating in the SBIR program or 
        STTR program.
  (w) STTR Model Agreement for Intellectual Property Rights.--
          (1) In general.--The Administrator shall promulgate 
        regulations establishing a single model agreement for 
        use in the STTR program that allocates between small 
        business concerns and research institutions 
        intellectual property rights and rights, if any, to 
        carry out follow-on research, development, or 
        commercialization.
          (2) Opportunity for comment.--In promulgating 
        regulations under paragraph (1), the Administrator 
        shall provide to affected agencies, small business 
        concerns, research institutions, and other interested 
        parties the opportunity to submit written comments.
  (x) Research and Development Focus.--
          (1) Revision and update of criteria and procedures of 
        identification.--In carrying out subsection (g), the 
        Secretary of Defense shall, not less often than once 
        every 4 years, revise and update the criteria and 
        procedures utilized to identify areas of the research 
        and development efforts of the Department of Defense 
        which are suitable for the provision of funds under the 
        Small Business Innovation Research Program and the 
        Small Business Technology Transfer Program.
          (2) Utilization of plans.--The criteria and 
        procedures described in paragraph (1) shall be 
        developed through the use of the most current versions 
        of the following plans:
                  (A) The Joint Warfighting Science and 
                Technology Plan required under section 270 of 
                the National Defense Authorization Act for 
                Fiscal Year 1997 (Public Law 104-201; 10 U.S.C. 
                2501 note).
                  (B) The Defense Technology Area Plan of the 
                Department of Defense.
                  (C) The Basic Research Plan of the Department 
                of Defense.
          (3) Input in identification of areas of effort.--The 
        criteria and procedures described in paragraph (1) 
        shall include input in the identification of areas of 
        research and development efforts described in that 
        paragraph from Department of Defense program managers 
        (PMs) and program executive officers (PEOs).
  (y) Commercialization Readiness Program.--
          (1) In general.--The Secretary of Defense and the 
        Secretary of each military department is authorized to 
        create and administer a ``Commercialization Readiness 
        Program'' to accelerate the transition of technologies, 
        products, and services developed under the Small 
        Business Innovation Research Program or Small Business 
        Technology Transfer Program to Phase III, including the 
        acquisition process. The authority to create and 
        administer a Commercialization Readiness Program under 
        this subsection may not be construed to eliminate or 
        replace any other SBIR program or STTR program that 
        enhances the insertion or transition of SBIR or STTR 
        technologies, including any such program in effect on 
        the date of enactment of the National Defense 
        Authorization Act for Fiscal Year 2006 (Public Law 109-
        163; 119 Stat. 3136).
          (2) Identification of research programs for 
        accelerated transition to acquisition process.--In 
        carrying out the Commercialization Readiness Program, 
        the Secretary of Defense and the Secretary of each 
        military department shall identify research programs of 
        the Small Business Innovation Research Program or Small 
        Business Technology Transfer Program that have the 
        potential for rapid transitioning to Phase III and into 
        the acquisition process.
          (3) Limitation.--No research program may be 
        identified under paragraph (2) unless the Secretary of 
        the military department concerned certifies in writing 
        that the successful transition of the program to Phase 
        III and into the acquisition process is expected to 
        meet high priority military requirements of such 
        military department.
          (4) Funding.--
                  (A) In general.--The Secretary of Defense and 
                each Secretary of a military department may use 
                not more than an amount equal to 1 percent of 
                the funds available to the Department of 
                Defense or the military department pursuant to 
                the Small Business Innovation Research Program 
                for payment of expenses incurred to administer 
                the Commercialization Readiness Program under 
                this subsection.
                  (B) Limitations.--The funds described in 
                subparagraph (A)--
                          (i) shall not be subject to the 
                        limitations on the use of funds in 
                        subsection (f)(2); and
                          (ii) shall not be used to make Phase 
                        III awards.
          (5) Insertion incentives.--For any contract with a 
        value of not less than $100,000,000, the Secretary of 
        Defense [is authorized to] shall--
                  (A) establish goals for the transition of 
                Phase III technologies in subcontracting plans; 
                and
                  (B) require a prime contractor on such a 
                contract to report the number and dollar amount 
                of contracts entered into by that prime 
                contractor for Phase III SBIR or STTR projects.
          (6) Goal for sbir and sttr technology insertion.--The 
        Secretary of Defense shall--
                  (A) set a goal to increase the number of 
                Phase II SBIR contracts and the number of Phase 
                II STTR contracts awarded by the Secretary that 
                lead to technology transition into programs of 
                record or fielded systems;
                  (B) use incentives in effect on the date of 
                enactment of the SBIR/STTR Reauthorization Act 
                of 2011, or create new incentives, to encourage 
                agency program managers and prime contractors 
                to meet the goal under subparagraph (A); and
                  (C) [submit] not later than March 30 of each 
                year, submit to the Administrator for inclusion 
                in the annual report under subsection (b)(7)--
                          (i) the number and percentage of 
                        Phase II SBIR and STTR contracts 
                        awarded by the Secretary that led to 
                        technology transition into programs of 
                        record or fielded systems;
                          (ii) information on the status of 
                        each project that received funding 
                        through the Commercialization Readiness 
                        Program and efforts to transition those 
                        projects into programs of record or 
                        fielded systems; and
                          (iii) a description of each incentive 
                        that has been used by the Secretary 
                        under subparagraph (B) and the 
                        effectiveness of that incentive with 
                        respect to meeting the goal under 
                        subparagraph (A).
  (z) Encouraging Innovation in Energy Efficiency.--
          (1) Federal agency energy-related priority.--In 
        carrying out its duties under this section relating to 
        SBIR and STTR solicitations by Federal departments and 
        agencies, the Administrator shall--
                  (A) ensure that such departments and agencies 
                give high priority to small business concerns 
                that participate in or conduct energy 
                efficiency or renewable energy system research 
                and development projects; and
                  (B) include in the annual report to Congress 
                under subsection (b)(7) a determination of 
                whether the priority described in subparagraph 
                (A) is being carried out.
          (2) Consultation required.--The Administrator shall 
        consult with the heads of other Federal departments and 
        agencies in determining whether priority has been given 
        to small business concerns that participate in or 
        conduct energy efficiency or renewable energy system 
        research and development projects, as required by this 
        subsection.
          (3) Guidelines.--The Administrator shall, as soon as 
        is practicable after the date of enactment of this 
        subsection, issue guidelines and directives to assist 
        Federal agencies in meeting the requirements of this 
        subsection.
          (4) Definitions.--In this subsection--
                  (A) the term ``biomass''--
                          (i) means any organic material that 
                        is available on a renewable or 
                        recurring basis, including--
                                  (I) agricultural crops;
                                  (II) trees grown for energy 
                                production;
                                  (III) wood waste and wood 
                                residues;
                                  (IV) plants (including 
                                aquatic plants and grasses);
                                  (V) residues;
                                  (VI) fibers;
                                  (VII) animal wastes and other 
                                waste materials; and
                                  (VIII) fats, oils, and 
                                greases (including recycled 
                                fats, oils, and greases); and
                          (ii) does not include--
                                  (I) paper that is commonly 
                                recycled; or
                                  (II) unsegregated solid 
                                waste;
                  (B) the term ``energy efficiency project'' 
                means the installation or upgrading of 
                equipment that results in a significant 
                reduction in energy usage; and
                  (C) the term ``renewable energy system'' 
                means a system of energy derived from--
                          (i) a wind, solar, biomass (including 
                        biodiesel), or geothermal source; or
                          (ii) hydrogen derived from biomass or 
                        water using an energy source described 
                        in clause (i).
  (aa) Limitation on Size of Awards.--
          (1) Limitation.--No Federal agency may issue an award 
        under the SBIR program or the STTR program if the size 
        of the award exceeds the award guidelines established 
        under this section by more than 50 percent.
          (2) Maintenance of information.--Participating 
        agencies shall maintain information on awards exceeding 
        the guidelines established under this section, 
        including--
                  (A) the amount of each award;
                  (B) a justification for exceeding the 
                guidelines for each award;
                  (C) the identity and location of each award 
                recipient; and
                  (D) whether an award recipient has received 
                any venture capital, hedge fund, or private 
                equity firm investment and, if so, whether the 
                recipient is majority-owned by multiple venture 
                capital operating companies, hedge funds, or 
                private equity firms.
          (3) Reports.--The Administrator shall include the 
        information described in paragraph (2) in the annual 
        report of the Administrator to Congress.
          (4) Waiver for specific topic.--Upon the receipt of 
        an application from a Federal agency, the Administrator 
        may grant a waiver from the requirement under paragraph 
        (1) with respect to a specific topic (but not for the 
        agency as a whole) for a fiscal year if the 
        Administrator determines, based on the information 
        contained in the application from the agency, that--
                  (A) the requirement under paragraph (1) will 
                interfere with the ability of the agency to 
                fulfill its research mission through the SBIR 
                program or the STTR program; and
                  (B) the agency will minimize, to the maximum 
                extent possible, the number of awards that do 
                not satisfy the requirement under paragraph (1) 
                to preserve the nature and intent of the SBIR 
                program and the STTR program.
          (5) Rule of construction.--Nothing in this subsection 
        shall be construed to prevent a Federal agency from 
        supplementing an award under the SBIR program or the 
        STTR program using funds of the Federal agency that are 
        not part of the SBIR program or the STTR program of the 
        Federal agency.
  (bb) Subsequent Phase II Awards.--
          (1) Agency flexibility.--A small business concern 
        that received a Phase I award from a Federal agency 
        under this section shall be eligible to receive a 
        subsequent Phase II award from another Federal agency, 
        if the head of each relevant Federal agency or the 
        relevant component of the Federal agency makes a 
        written determination that the topics of the relevant 
        awards are the same and both agencies report the awards 
        to the Administrator for inclusion in the public 
        database under subsection (k).
          (2) SBIR and sttr program flexibility.--A small 
        business concern that received a Phase I award under 
        this section under the SBIR program or the STTR program 
        may receive a subsequent Phase II award in either the 
        SBIR program or the STTR program and the participating 
        agency or agencies shall report the awards to the 
        Administrator for inclusion in the public database 
        under subsection (k).
          (3) Preventing duplicative awards.--The head of a 
        Federal agency shall verify that any activity to be 
        performed with respect to a project with a Phase I or 
        Phase II SBIR or STTR award has not been funded under 
        the SBIR program or STTR program of another Federal 
        agency.
  (cc) Phase Flexibility.--During fiscal years 2012 through 
2017, the National Institutes of Health, the Department of 
Defense, and the Department of Education may each provide to a 
small business concern an award under Phase II of the SBIR 
program with respect to a project, without regard to whether 
the small business concern was provided an award under Phase I 
of an SBIR program with respect to such project, if the head of 
the applicable agency determines that the small business 
concern has completed the determinations described in 
subsection (e)(4)(A) with respect to such project despite not 
having been provided a Phase I award.
  (dd) Participation of Small Business Concerns Majority-Owned 
by Venture Capital Operating Companies, Hedge Funds, or Private 
Equity Firms in the SBIR Program.--
          (1) Authority.--Upon providing a written 
        determination described in paragraph (2) to the 
        Administrator, the Committee on Small Business and 
        Entrepreneurship of the Senate, and the Committee on 
        Small Business and the Committee on Science, Space, and 
        Technology of the House of Representatives, not later 
        than 30 days before the date on which any such award is 
        made--
                  (A) the Director of the National Institutes 
                of Health, the Secretary of Energy, and the 
                Director of the National Science Foundation may 
                award not more than 25 percent of the funds 
                allocated for the SBIR program of the 
                applicable Federal agency to small business 
                concerns that are owned in majority part by 
                multiple venture capital operating companies, 
                hedge funds, or private equity firms through 
                competitive, merit-based procedures that are 
                open to all eligible small business concerns; 
                and
                  (B) the head of a Federal agency other than a 
                Federal agency described in subparagraph (A) 
                that participates in the SBIR program may award 
                not more than 15 percent of the funds allocated 
                for the SBIR program of the Federal agency to 
                small business concerns that are owned in 
                majority part by multiple venture capital 
                operating companies, hedge funds, or private 
                equity firms through competitive, merit-based 
                procedures that are open to all eligible small 
                business concerns.
          (2) Determination.--A written determination described 
        in this paragraph is a written determination by the 
        head of a Federal agency that explains how the use of 
        the authority under paragraph (1) will--
                  (A) induce additional venture capital, hedge 
                fund, or private equity firm funding of small 
                business innovations;
                  (B) substantially contribute to the mission 
                of the Federal agency;
                  (C) demonstrate a need for public research; 
                and
                  (D) otherwise fulfill the capital needs of 
                small business concerns for additional 
                financing for SBIR projects.
          (3) Registration.--A small business concern that is 
        majority-owned by multiple venture capital operating 
        companies, hedge funds, or private equity firms and 
        qualified for participation in the program authorized 
        under paragraph (1) shall--
                  (A) register with the Administrator on the 
                date that the small business concern submits an 
                application for an award under the SBIR 
                program; and
                  (B) indicate in any SBIR proposal that the 
                small business concern is registered under 
                subparagraph (A) as majority-owned by multiple 
                venture capital operating companies, hedge 
                funds, or private equity firms.
          (4) Compliance.--
                  (A) In general.--The head of a Federal agency 
                that makes an award under this subsection 
                during a fiscal year shall collect [and submit] 
                and, not later than March 30 of each year, 
                submit to the Administrator data relating to 
                the number and dollar amount of Phase I awards, 
                Phase II awards, and any other category of 
                awards by the Federal agency under the SBIR 
                program during that fiscal year.
                  (B) Annual reporting.--The Administrator 
                shall include as part of each annual report by 
                the Administration under subsection (b)(7) any 
                data submitted under subparagraph (A) and a 
                discussion of the compliance of each Federal 
                agency that makes an award under this 
                subsection during the fiscal year with the 
                maximum percentages under paragraph (1).
          (5) Enforcement.--If a Federal agency awards more 
        than the percent of the funds allocated for the SBIR 
        program of the Federal agency authorized under 
        paragraph (1) for a purpose described in paragraph (1), 
        the head of the Federal agency shall transfer an amount 
        equal to the amount awarded in excess of the amount 
        authorized under paragraph (1) to the funds for general 
        SBIR programs from the non-SBIR and non-STTR research 
        and development funds of the Federal agency not later 
        than 180 days after the date on which the Federal 
        agency made the award that caused the total awarded 
        under paragraph (1) to be more than the amount 
        authorized under paragraph (1) for a purpose described 
        in paragraph (1).
          (6) Final decisions on applications under the sbir 
        program.--
                  (A) Definition.--In this paragraph, the term 
                ``covered small business concern'' means a 
                small business concern that--
                          (i) was not majority-owned by 
                        multiple venture capital operating 
                        companies, hedge funds, or private 
                        equity firms on the date on which the 
                        small business concern submitted an 
                        application in response to a 
                        solicitation under the SBIR programs; 
                        and
                          (ii) on the date of the award under 
                        the SBIR program is majority-owned by 
                        multiple venture capital operating 
                        companies, hedge funds, or private 
                        equity firms.
                  (B) In general.--If a Federal agency does not 
                make an award under a solicitation under the 
                SBIR program before the date that is 9 months 
                after the date on which the period for 
                submitting applications under the solicitation 
                ends--
                          (i) a covered small business concern 
                        is eligible to receive the award, 
                        without regard to whether the covered 
                        small business concern meets the 
                        requirements for receiving an award 
                        under the SBIR program for a small 
                        business concern that is majority-owned 
                        by multiple venture capital operating 
                        companies, hedge funds, or private 
                        equity firms, if the covered small 
                        business concern meets all other 
                        requirements for such an award; and
                          (ii) the head of the Federal agency 
                        shall transfer an amount equal to any 
                        amount awarded to a covered small 
                        business concern under the solicitation 
                        to the funds for general SBIR programs 
                        from the non-SBIR and non-STTR research 
                        and development funds of the Federal 
                        agency, not later than 90 days after 
                        the date on which the Federal agency 
                        makes the award.
          (7) Evaluation criteria.--A Federal agency may not 
        use investment of venture capital or investment from 
        hedge funds or private equity firms as a criterion for 
        the award of contracts under the SBIR program or STTR 
        program.
  (ee) Collaborating With Federal Laboratories and Research and 
Development Centers.--
          (1) Authorization.--Subject to the limitations under 
        this section, the head of each participating Federal 
        agency may make SBIR and STTR awards to any eligible 
        small business concern that--
                  (A) intends to enter into an agreement with a 
                Federal laboratory or federally funded research 
                and development center for portions of the 
                activities to be performed under that award; or
                  (B) has entered into a cooperative research 
                and development agreement (as defined in 
                section 12(d) of the Stevenson-Wydler 
                Technology Innovation Act of 1980 (15 U.S.C. 
                3710a(d))) with a Federal laboratory.
          (2) Prohibition.--No Federal agency shall--
                  (A) condition an SBIR or STTR award upon 
                entering into agreement with any Federal 
                laboratory or any federally funded laboratory 
                or research and development center for any 
                portion of the activities to be performed under 
                that award;
                  (B) approve an agreement between a small 
                business concern receiving an SBIR or STTR 
                award and a Federal laboratory or federally 
                funded laboratory or research and development 
                center, if the small business concern performs 
                a lesser portion of the activities to be 
                performed under that award than required by 
                this section and by the SBIR Policy Directive 
                and the STTR Policy Directive of the 
                Administrator; or
                  (C) approve an agreement that violates any 
                provision, including any data rights 
                protections provision, of this section or the 
                SBIR and the STTR Policy Directives.
          (3) Implementation.--Not later than 180 days after 
        the date of enactment of this subsection, the 
        Administrator shall modify the SBIR Policy Directive 
        and the STTR Policy Directive issued under this section 
        to ensure that small business concerns--
                  (A) have the flexibility to use the resources 
                of the Federal laboratories or federally funded 
                research and development centers; and
                  (B) are not mandated to enter into agreement 
                with any Federal laboratory or any federally 
                funded laboratory or research and development 
                center as a condition of an award.
          (4) Advance payment.--If a small business concern 
        receiving an award under this section enters into an 
        agreement with a Federal laboratory or federally funded 
        research and development center for portions of the 
        activities to be performed under that award, the 
        Federal laboratory or federally funded research and 
        development center may not require advance payment from 
        the small business concern in an amount greater than 
        the amount necessary to pay for 30 days of such 
        activities.
  (ff) Additional SBIR and STTR Awards.--
          (1) Express authority for awarding a sequential phase 
        ii award.--A small business concern that receives a 
        Phase II SBIR award or a Phase II STTR award for a 
        project remains eligible to receive 1 additional Phase 
        II SBIR award or Phase II STTR award for continued work 
        on that project.
          (2) Preventing duplicative awards.--The head of a 
        Federal agency shall verify that any activity to be 
        performed with respect to a project with a Phase I or 
        Phase II SBIR or STTR award has not been funded under 
        the SBIR program or STTR program of another Federal 
        agency.
  (gg) Pilot Program.--
          (1) Authorization.--The head of each covered Federal 
        agency may allocate not more than 10 percent of the 
        funds allocated to the SBIR program and the STTR 
        program of the covered Federal agency--
                  (A) for awards for technology development, 
                testing, evaluation, and commercialization 
                assistance for SBIR and STTR Phase II 
                technologies; or
                  (B) to support the progress of research, 
                research and development, and commercialization 
                conducted under the SBIR or STTR programs to 
                Phase III.
          (2) Application by federal agency.--
                  (A) In general.--A covered Federal agency may 
                not establish a pilot program unless the 
                covered Federal agency makes a written 
                application to the Administrator, not later 
                than 90 days before the first day of the fiscal 
                year in which the pilot program is to be 
                established, that describes a compelling reason 
                that additional investment in SBIR or STTR 
                technologies is necessary, including unusually 
                high regulatory, systems integration, or other 
                costs relating to development or manufacturing 
                of identifiable, highly promising small 
                business technologies or a class of such 
                technologies expected to substantially advance 
                the mission of the agency.
                  (B) Determination.--The Administrator shall--
                          (i) make a determination regarding an 
                        application submitted under 
                        subparagraph (A) not later than 30 days 
                        before the first day of the fiscal year 
                        for which the application is submitted;
                          (ii) publish the determination in the 
                        Federal Register; and
                          (iii) make a copy of the 
                        determination and any related materials 
                        available to the Committee on Small 
                        Business and Entrepreneurship of the 
                        Senate and the Committee on Small 
                        Business and the Committee on Science, 
                        Space, and Technology of the House of 
                        Representatives.
          (3) Maximum amount of award.--The head of a covered 
        Federal agency may not make an award under a pilot 
        program in excess of 3 times the dollar amounts 
        generally established for Phase II [awards under 
        subsection (j)(2)(D) or (p)(2)(B)(ix).] awards under 
        subsection (tt)(2).
          (4) Registration.--Any applicant that receives an 
        award under a pilot program shall register with the 
        Administrator in a registry that is available to the 
        public.
          (5) Award criteria or consideration.--When making an 
        award under this section, the head of a covered Federal 
        agency shall give consideration to whether the 
        technology to be supported by the award is likely to be 
        manufactured in the United States.
          (6) Report.--The head of each covered Federal agency 
        shall [include in the annual] include, not later than 
        March 30 of each year, a report of the covered Federal 
        agency to the Administrator an analysis of the various 
        activities considered for inclusion in the pilot 
        program of the covered Federal agency and a statement 
        of the reasons why each activity considered was 
        included or not included, as the case may be.
          (7) Termination.--The authority to establish a pilot 
        program under this section expires at the end of fiscal 
        year 2017.
          (8) Definitions.--In this subsection--
                  (A) the term ``covered Federal agency''--
                          (i) means a Federal agency 
                        participating in the SBIR program or 
                        the STTR program; and
                          (ii) does not include the Department 
                        of Defense; and
                  (B) the term ``pilot program'' means each 
                program established under paragraph (1).
  (hh) Timing of Release of Funding.--Federal agencies 
participating in the SBIR program or STTR program shall, to the 
extent possible, attempt to shorten the amount of time between 
the provision of notice of an award under the SBIR program or 
STTR program and the subsequent release of funding with respect 
to the award.
  (ii) Reporting on Timing.--Federal agencies participating in 
the SBIR program or STTR program shall, not later than March 30 
of each year, provide to the Administrator, for the annual 
report on the SBIR and STTR program under subsection (b)(7), 
the average amount of time the agency takes to make a final 
decision on proposals submitted under such programs, the 
average amount of time the agency takes to release funding with 
respect to an award under such programs, and the goals 
established to reduce such amounts.
  (jj) Phase 0 Proof of Concept Partnership Pilot Program.--
          (1) In general.--The Director of the National 
        Institutes of Health may use $5,000,000 of the funds 
        allocated under subsection (n)(1) for a Proof of 
        Concept Partnership pilot program to accelerate the 
        creation of small businesses and the commercialization 
        of research innovations from qualifying institutions. 
        To implement this program, the Director shall award, 
        through a competitive, merit-based process, grants to 
        qualifying institutions. These grants shall only be 
        used to administer Proof of Concept Partnership awards 
        in conformity with this subsection.
          (2) Definitions.--In this subsection--
                  (A) the term ``Director'' means the Director 
                of the National Institutes of Health;
                  (B) the term ``pilot program'' refers to the 
                Proof of Concept Partnership pilot program; and
                  (C) the terms ``qualifying institution'' and 
                ``institution'' mean a university or other 
                research institution that participates in the 
                National Institutes of Health's STTR program.
          (3) Proof of concept partnerships.--
                  (A) In general.--A Proof of Concept 
                Partnership shall be set up by a qualifying 
                institution to award grants to individual 
                researchers. These grants should provide 
                researchers with the initial investment and the 
                resources to support the proof of concept work 
                and commercialization mentoring needed to 
                translate promising research projects and 
                technologies into a viable company. This work 
                may include technical validations, market 
                research, clarifying intellectual property 
                rights position and strategy, and investigating 
                commercial or business opportunities.
                  (B) Award guidelines.--The administrator of a 
                Proof of Concept Partnership program shall 
                award grants in accordance with the following 
                guidelines:
                          (i) The Proof of Concept Partnership 
                        shall use a market-focused project 
                        management oversight process, 
                        including--
                                  (I) a rigorous, diverse 
                                review board comprised of local 
                                experts in translational and 
                                proof of concept research, 
                                including industry, start-up, 
                                venture capital, technical, 
                                financial, and business experts 
                                and university technology 
                                transfer officials;
                                  (II) technology validation 
                                milestones focused on market 
                                feasibility;
                                  (III) simple reporting 
                                effective at redirecting 
                                projects; and
                                  (IV) the willingness to 
                                reallocate funding from failing 
                                projects to those with more 
                                potential.
                          (ii) Not more than $100,000 shall be 
                        awarded towards an individual proposal.
                  (C) Educational resources and guidance.--The 
                administrator of a Proof of Concept Partnership 
                program shall make educational resources and 
                guidance available to researchers attempting to 
                commercialize their innovations.
          (4) Awards.--
                  (A) Size of award.--The Director may make 
                awards to a qualifying institution for up to 
                $1,000,000 per year for up to 3 years.
                  (B) Award criteria.--In determining which 
                qualifying institutions receive pilot program 
                grants, the Director shall consider, in 
                addition to any other criteria the Director 
                determines necessary, the extent to which 
                qualifying institutions--
                          (i) have an established and proven 
                        technology transfer or 
                        commercialization office and have a 
                        plan for engaging that office in the 
                        program's implementation;
                          (ii) have demonstrated a commitment 
                        to local and regional economic 
                        development;
                          (iii) are located in diverse 
                        geographies and are of diverse sizes;
                          (iv) can assemble project management 
                        boards comprised of industry, start-up, 
                        venture capital, technical, financial, 
                        and business experts;
                          (v) have an intellectual property 
                        rights strategy or office; and
                          (vi) demonstrate a plan for 
                        sustainability beyond the duration of 
                        the funding award.
          (5) Limitations.--The funds for the pilot program 
        shall not be used--
                  (A) for basic research, but to evaluate the 
                commercial potential of existing discoveries, 
                including--
                          (i) proof of concept research or 
                        prototype development; and
                          (ii) activities that contribute to 
                        determining a project's 
                        commercialization path, to include 
                        technical validations, market research, 
                        clarifying intellectual property 
                        rights, and investigating commercial 
                        and business opportunities; or
                  (B) to fund the acquisition of research 
                equipment or supplies unrelated to 
                commercialization activities.
          (6) Evaluative report.--The Director shall submit to 
        the Committee on Science, Space, and Technology and the 
        Committee on Small Business of the House of 
        Representatives and the Committee on Small Business and 
        Entrepreneurship of the Senate an evaluative report 
        regarding the activities of the pilot program. The 
        report shall include--
                  (A) a detailed description of the 
                institutional and proposal selection process;
                  (B) an accounting of the funds used in the 
                pilot program;
                  (C) a detailed description of the pilot 
                program, including incentives and activities 
                undertaken by review board experts;
                  (D) a detailed compilation of results 
                achieved by the pilot program, including the 
                number of small business concerns included and 
                the number of business packages developed, and 
                the number of projects that progressed into 
                subsequent STTR phases; and
                  (E) an analysis of the program's 
                effectiveness with supporting data.
          (7) Sunset.--The pilot program under this subsection 
        shall terminate at the end of fiscal year 2017.
  (kk) Phase III Reporting.--The annual SBIR or STTR report to 
Congress by the Administration under subsection (b)(7) shall 
include, for each Phase III award--
          (1) the name of the agency or component of the agency 
        or the non-Federal source of capital making the Phase 
        III award;
          (2) the name of the small business concern or 
        individual receiving the Phase III award; and
          (3) the dollar amount of the Phase III award.
  (ll) Consent To Release Contact Information to 
Organizations.--
          (1) Enabling concern to give consent.--Each Federal 
        agency required by this section to conduct an SBIR 
        program or an STTR program shall enable a small 
        business concern that is an SBIR applicant or an STTR 
        applicant to indicate to the Federal agency whether the 
        Federal agency has the consent of the concern to--
                  (A) identify the concern to appropriate local 
                and State-level economic development 
                organizations as an SBIR applicant or an STTR 
                applicant; and
                  (B) release the contact information of the 
                concern to such organizations.
          (2) Rules.--The Administrator shall establish rules 
        to implement this subsection. The rules shall include a 
        requirement that a Federal agency include in the SBIR 
        and STTR application a provision through which the 
        applicant can indicate consent for purposes of 
        paragraph (1).
  (mm) Assistance for Administrative, Oversight, and Contract 
Processing Costs.--
          (1) In general.--Subject to paragraph (3) and until 
        September 30, [2017] 2022, the Administrator shall 
        allow each Federal agency required to conduct an SBIR 
        program to use not more than 3 percent of the funds 
        allocated to the SBIR program of the Federal agency 
        for--
                  (A) the administration of the SBIR program or 
                the STTR program of the Federal agency;
                  (B) the provision of outreach and technical 
                assistance relating to the SBIR program or STTR 
                program of the Federal agency, including 
                technical assistance site visits, personnel 
                interviews, and national conferences;
                  (C) the implementation of commercialization 
                and outreach initiatives that were not in 
                effect on the date of enactment of this 
                subsection;
                  (D) carrying out the program under subsection 
                (y);
                  (E) activities relating to oversight and 
                congressional reporting, including waste, 
                fraud, and abuse prevention activities;
                  (F) targeted reviews of recipients of awards 
                under the SBIR program or STTR program of the 
                Federal agency that the head of the Federal 
                agency determines are at high risk for fraud, 
                waste, or abuse to ensure compliance with 
                requirements of the SBIR program or STTR 
                program, respectively;
                  (G) the implementation of oversight and 
                quality control measures, including 
                verification of reports and invoices and cost 
                reviews;
                  (H) carrying out subsection (dd);
                  (I) contract processing costs relating to the 
                SBIR program or STTR program of the Federal 
                agency; and
                  (J) funding for additional personnel and 
                assistance with application reviews.
          [(2) Outreach and technical assistance.--
                  [(A) In general.--Except as provided in 
                subparagraph (B), a Federal agency 
                participating in the program under this 
                subsection shall use a portion of the funds 
                authorized for uses under paragraph (1) to 
                carry out the policy directive required under 
                subsection (j)(2)(F) and to increase the 
                participation of States with respect to which a 
                low level of SBIR awards have historically been 
                awarded.
                  [(B) Waiver.--A Federal agency may request 
                the Administrator to waive the requirement 
                contained in subparagraph (A). Such request 
                shall include an explanation of why the waiver 
                is necessary. The Administrator may grant the 
                waiver based on a determination that the agency 
                has demonstrated a sufficient need for the 
                waiver, that the outreach objectives of the 
                agency are being met, and that there is 
                increased participation by States with respect 
                to which a low level of SBIR awards have 
                historically been awarded.]
          (2) Outreach and technical assistance.--A Federal 
        agency participating in the program under this 
        subsection shall use a portion of the funds authorized 
        for uses under paragraph (1) to carry out the policy 
        directive required under subsection (j)(2)(F) and to 
        increase the participation of States with respect to 
        which a low level of SBIR awards have historically been 
        awarded.
          (3) Performance criteria.--A Federal agency may not 
        use funds as authorized under paragraph (1) until after 
        the effective date of performance criteria, which the 
        Administrator shall establish, to measure any benefits 
        of using funds as authorized under paragraph (1) and to 
        assess continuation of the authority under paragraph 
        (1).
          (4) Rules.--Not later than 180 days after the date of 
        enactment of this subsection, the Administrator shall 
        issue rules to carry out this subsection.
          (5) Coordination with ig.--Each Federal agency shall 
        coordinate the activities funded under subparagraph 
        (E), (F), or (G) of paragraph (1) with their respective 
        Inspectors General, when appropriate, and each Federal 
        agency that allocates more than $50,000,000 to the SBIR 
        program of the Federal agency for a fiscal year may 
        share such funding with its Inspector General when the 
        Inspector General performs such activities.
          (6) Reporting.--The Administrator shall, not later 
        than June 30 of each year, collect data and provide to 
        the Committee on Small Business and Entrepreneurship of 
        the Senate and the Committee on Small Business, the 
        Committee on Science, Space, and Technology, and the 
        Committee on Appropriations of the House of 
        Representatives a report on the use of funds under this 
        subsection, including funds used to achieve the 
        objectives of paragraph (2)[(A) and any use of the 
        waiver authority under paragraph (2)(B)].
          (7) Failure to report administrative funds.--
                  (A) In general.--Not later than March 30 
                following each fiscal year for which funds are 
                authorized to be used by a Federal agency under 
                paragraph (1), the Federal agency shall submit 
                a report to the Administrator that identifies 
                how the Federal agency used such funds during 
                such fiscal year.
                  (B) Failure to submit a report.--If a Federal 
                agency fails to submit a report required under 
                subparagraph (A), paragraph (1) shall not apply 
                to such Federal agency unless--
                          (i) such report is submitted; and
                          (ii) such Federal agency submits an 
                        additional report to the Administrator 
                        that identifies how such Federal agency 
                        plans to ensure timely reporting under 
                        this paragraph.
  (nn) Annual Report on SBIR and STTR Program Goals.--
          (1) Development of metrics.--The head of each Federal 
        agency required to participate in the SBIR program or 
        the STTR program shall develop metrics to evaluate the 
        effectiveness and the benefit to the people of the 
        United States of the SBIR program and the STTR program 
        of the Federal agency that--
                  (A) are science-based and statistically 
                driven;
                  (B) reflect the mission of the Federal 
                agency; and
                  (C) include factors relating to the economic 
                impact of the programs.
          (2) Evaluation.--The head of each Federal agency 
        described in paragraph (1) shall conduct an annual 
        evaluation using the metrics developed under paragraph 
        (1) of--
                  (A) the SBIR program and the STTR program of 
                the Federal agency; and
                  (B) the benefits to the people of the United 
                States of the SBIR program and the STTR program 
                of the Federal agency.
          (3) Report.--
                  (A) In general.--The head of each Federal 
                agency described in paragraph (1) shall, not 
                later than March 30 of each year, submit to the 
                appropriate committees of Congress and the 
                Administrator [an annual] a report describing 
                in detail the results of an evaluation 
                conducted under paragraph (2).
                  (B) Public availability of report.--The head 
                of each Federal agency described in paragraph 
                (1) shall make each report submitted under 
                subparagraph (A) available to the public 
                online.
                  (C) Definition.--In this paragraph, the term 
                ``appropriate committees of Congress'' means--
                          (i) the Committee on Small Business 
                        and Entrepreneurship of the Senate; and
                          (ii) the Committee on Small Business 
                        and the Committee on Science, Space, 
                        and Technology of the House of 
                        Representatives.
  (oo) Competitive Selection Procedures for SBIR and STTR 
Programs.--All funds awarded, appropriated, or otherwise made 
available in accordance with subsection (f) or (n) must be 
awarded pursuant to competitive and merit-based selection 
procedures.
  (pp) Limitation on Pilot Programs.--
          (1) Existing pilot programs.--The Administrator may 
        only carry out a covered pilot program that is in 
        operation on the date of enactment of this subsection 
        during the 3-year period beginning on such date of 
        enactment.
          (2) New pilot programs.--The Administrator may only 
        carry out a covered pilot program established after the 
        date of enactment of this subsection--
                  (A) during the 3-year period beginning on the 
                date on which such program is established; and
                  (B) if such program does not continue and is 
                not based on, in any manner, a previously 
                established covered pilot program.
          (3) Covered pilot program defined.--In this 
        subsection, the term ``covered pilot program'' means 
        any initiative, project, innovation, or other 
        activity--
                  (A) established by the Administrator;
                  (B) relating to an SBIR or STTR program; and
                  (C) not specifically authorized by law.
  (qq) Minimum Standards for Participation.--
          (1) Progress to phase ii success.--
                  (A) Establishment of system and minimum 
                commercialization rate.--Not later than 1 year 
                after the date of enactment of this subsection, 
                the head of each Federal agency participating 
                in the SBIR or STTR program shall--
                          (i) establish a system to measure, 
                        where appropriate, the success of small 
                        business concerns with respect to the 
                        receipt of Phase II SBIR or STTR awards 
                        for projects that have received Phase I 
                        SBIR or STTR awards;
                          (ii) establish a minimum performance 
                        standard for small business concerns 
                        with respect to the receipt of Phase II 
                        SBIR or STTR awards for projects that 
                        have received Phase I SBIR or STTR 
                        awards; and
                          (iii) begin evaluating, each fiscal 
                        year, whether each small business 
                        concern that received a Phase I SBIR or 
                        STTR award from the agency meets the 
                        minimum performance standard 
                        established under clause (ii).
                  (B) Consequence of failure to meet minimum 
                commercialization rate.--If the head of a 
                Federal agency determines that a small business 
                concern that received a Phase I SBIR or STTR 
                award from the agency is not meeting the 
                minimum performance standard established under 
                subparagraph (A)(ii), such concern may not 
                participate in Phase I (or Phase II if under 
                the authority of subsection (cc)) of the SBIR 
                or STTR program of that agency during the 1-
                year period beginning on the date on which such 
                determination is made.
          (2) Progress to phase iii success.--
                  (A) Establishment of system and minimum 
                commercialization rate.--Not later than 2 years 
                after the date of enactment of this subsection, 
                the head of each Federal agency participating 
                in the SBIR or STTR program shall--
                          (i) establish a system to measure, 
                        where appropriate, the success of small 
                        business concerns with respect to the 
                        receipt of Phase III SBIR or STTR 
                        awards for projects that have received 
                        Phase I SBIR or STTR awards;
                          (ii) establish a minimum performance 
                        standard for small business concerns 
                        with respect to the receipt of Phase 
                        III SBIR or STTR awards for projects 
                        that have received Phase I SBIR or STTR 
                        awards; and
                          (iii) begin evaluating, each fiscal 
                        year, whether each small business 
                        concern that received a Phase I SBIR or 
                        STTR award from the agency meets the 
                        minimum performance standard 
                        established under clause (ii).
                  (B) Consequence of failure to meet minimum 
                commercialization rate.--If the head of a 
                Federal agency determines that a small business 
                concern that received a Phase I SBIR or STTR 
                award from the agency is not meeting the 
                minimum performance standard established under 
                subparagraph (A)(ii), such concern may not 
                participate in Phase I (or Phase II if under 
                the authority of subsection (cc)) of the SBIR 
                or STTR program of that agency during the 1-
                year period beginning on the date on which such 
                determination is made.
          (3) Administration oversight.--
                  (A) Approval and publication of systems and 
                minimum performance standards.--Each system and 
                minimum performance standard established under 
                paragraph (1) or paragraph (2) shall be 
                submitted by the head of the applicable Federal 
                agency to the Administrator and shall be 
                subject to the approval of the Administrator. 
                In making a determination with respect to 
                approval, the Administrator shall ensure that 
                the minimum performance standard exceeds a de 
                minimis level. The Administrator shall publish 
                on the Internet Web site of the Administration 
                the systems and minimum performance standards 
                approved.
                  (B) Submission of evaluation results by 
                agency.--The head of each covered Federal 
                agency shall submit to the Administrator the 
                results of each evaluation conducted under 
                paragraph (1) or paragraph (2).
          (4) Requirement of notice and comment.--Each system 
        and minimum performance standard established under 
        paragraph (1) or paragraph (2) and each approval 
        provided by the Administrator under paragraph (3)(A), 
        at least 60 days before becoming effective, shall be 
        preceded by the provision of notice of and an 
        opportunity for public comment on such system, 
        standard, or approval.
  (rr) Publication of Certain Information.--In order to 
increase the number of small businesses receiving awards under 
the SBIR or STTR programs of participating agencies, and to 
simplify the application process for such awards, the 
Administrator shall establish and maintain a public Internet 
Web site on which the Administrator shall publish such 
information relating to notice of and application for awards 
under the SBIR program and STTR program of each participating 
Federal agency as the Administrator determines appropriate.
  (ss) Report on Enhancement of Manufacturing Activities.--Not 
later than [October 1, 2013, and annually thereafter,] March 30 
of each year, the head of each Federal agency that makes more 
than $50,000,000 in awards under the SBIR and STTR programs of 
the agency combined shall submit to the Administrator, for 
inclusion in the annual report required under subsection 
(b)(7), information that includes--
          (1) a description of efforts undertaken by the head 
        of the Federal agency to enhance United States 
        manufacturing activities;
          (2) a comprehensive description of the actions 
        undertaken each year by the head of the Federal agency 
        in carrying out the SBIR or STTR program of the agency 
        in support of Executive Order 13329 (69 Fed. Reg. 9181; 
        relating to encouraging innovation in manufacturing);
          (3) an assessment of the effectiveness of the actions 
        described in paragraph (2) at enhancing the research 
        and development of United States manufacturing 
        technologies and processes;
          (4) a description of efforts by vendors selected to 
        provide discretionary technical assistance under 
        subsection (q)(1) to help SBIR and STTR concerns 
        manufacture in the United States; and
          (5) recommendations that the program managers of the 
        SBIR or STTR program of the agency consider appropriate 
        for additional actions to increase the effectiveness of 
        enhancing manufacturing activities.
  (tt) Awards Under Phase I and Phase II Adjusted for 
Inflation.--
          (1) Phase i awards.--An award for Phase I of an SBIR 
        or STTR program may not exceed $150,000.
          (2) Phase ii awards.--An award for Phase II of an 
        SBIR or STTR program may not exceed $1,000,000.
          (3) Adjustment for inflation.--The Administrator 
        shall adjust the dollar amounts under paragraphs (1) 
        and (2) for inflation in accordance with section 1908 
        of title 41, United States Code.
  (uu) Commercialization Assistance Pilot Programs.--
          (1) Pilot programs implemented.--
                  (A) In general.--Except as provided in 
                subparagraph (B), not later than one year after 
                the date of the enactment of Commercializing on 
                Small Business Innovation Act of 2016, a 
                covered agency shall implement a 
                commercialization assistance pilot program to 
                award eligible entities with a second 
                sequential SBIR award.
                  (B) Exception.--If the Administrator 
                determines that a covered agency has a program 
                that is sufficiently similar to a 
                commercialization assistance pilot program, 
                such agency shall not be required to implement 
                a commercialization assistance pilot program 
                under subparagraph (A).
                  (C) Percent of agency funds.--A covered 
                agency may not use more than 5 percent of its 
                total SBIR budget for awards under the 
                commercialization assistance pilot program.
                  (D) Termination.--The commercialization 
                assistance pilot programs shall terminate on 
                September 30, 2022.
          (2) Matching requirement.--
                  (A) In general.--The Administrator shall 
                require as a condition of any award made to an 
                eligible entity under a commercialization 
                assistance pilot program, that a matching 
                amount (excluding any fees collected from 
                recipients of such assistance) equal to the 
                amount of such award be provided from an 
                eligible third-party investor, before the end 
                of the commercialization assistance pilot 
                program award.
                  (B) Ineligible funding.--An eligible entity 
                may not use funding from ineligible sources to 
                meet the matching requirement of subparagraph 
                (A).
          (3) Award.--
                  (A) Size of award.--An award under this 
                subsection may not exceed the limitations in 
                subsection (aa)(1).
                  (B) Timing.--Awards provided under the 
                commercialization assistance pilot program 
                shall be distributed during the Phase II award 
                period of the recipient eligible entity.
          (4) Application.--In order to be selected to receive 
        a second sequential SBIR award under a 
        commercialization assistance pilot program, an eligible 
        entity shall submit to the covered agency implementing 
        such pilot program--
                  (A) an application at such time, in such 
                manner, and containing such information as the 
                covered agency may require; and
                  (B) the source and amount of the matching 
                funding required under paragraph (2).
          (5) Use of funds.--The funds awarded under a 
        commercialization assistance pilot program may only be 
        used for research and development activities that build 
        on the eligible entity's Phase II program and catalyze 
        acceleration towards commercialization.
          (6) Determination of recipients.--In determining 
        which applicants receive awards under the 
        commercialization assistance pilot program, the head of 
        a covered agency shall consider--
                  (A) the extent to which the supplemental 
                funds awarded under the pilot program could aid 
                the applicant commercialize its research;
                  (B) whether the proposed plan provides a 
                sound approach for establishing technical 
                feasibility that could lead to 
                commercialization;
                  (C) whether the proposed activity reflect 
                changes to the Phase II commercialization plan 
                that further improves the chances of conversion 
                of research in order to provide societal 
                benefits;
                  (D) whether the small business concern has 
                progressed satisfactorily in the Phase II 
                activity to justify additional funding;
                  (E) the expectations of the third-party 
                funding; and
                  (F) the likelihood that the third-party 
                funded activity will lead to commercial and 
                societal benefit.
          (7) Evaluation report.--Not later than 3 years after 
        the date of the enactment of Commercializing on Small 
        Business Innovation Act of 2016, the Comptroller 
        General of the United States shall submit to the 
        Committee on Science, Space, and Technology and the 
        Committee on Small Business of the House of 
        Representatives and the Committee on Small Business and 
        Entrepreneurship of the Senate an evaluative report 
        that includes--
                  (A) a summary of the activities of the 
                commercialization assistance pilot programs;
                  (B) a detailed compilation of results 
                achieved by the commercialization assistance 
                pilot programs, including the number of small 
                business concerns that received awards under 
                the pilot program;
                  (C) the rate at which the recipients under 
                the pilot program commercialized their 
                research;
                  (D) the growth in employment and revenue of 
                companies that participated in the pilot 
                program;
                  (E) a comparison of commercialization success 
                of pilot program participants and recipients of 
                a non-matching sequential Phase II award;
                  (F) demographic information such as ethnicity 
                and geographic location of participant 
                companies;
                  (G) an accounting of the funds used at each 
                participating agency in the pilot program;
                  (H) a distribution of third-party funding by 
                source;
                  (I) an analysis of the program's 
                effectiveness at each participating agency; and
                  (J) recommendations for improvement to the 
                pilot program, in the case that Congress were 
                to make it permanent.
          (8) Definitions.--For purposes of this subsection:
                  (A) Covered agency.--The term ``covered 
                agency'' means a Federal agency required to 
                have an SBIR program.
                  (B) Eligible entity.--The term ``eligible 
                entity'' means a small business concern that 
                has received a Phase II award and a Phase II 
                sequential award from the covered agency to 
                which such entity is applying for a second 
                sequential SBIR award.
                  (C) Eligible third-party investor.--The term 
                ``eligible third-party investors'' means a 
                small business concern other than the eligible 
                entity, a venture capital firm, an individual 
                investor, a non-SBIR Federal, State or local 
                government, or any combination thereof.
                  (D) Ineligible sources.--The term 
                ``ineligible sources'' means the following:
                          (i) The awardee's internal research 
                        and development funds.
                          (ii) Funding in forms other than cash 
                        such as in-kind or other intangible 
                        assets.
                          (iii) Funding from the owners of the 
                        eligible entity, or the family members 
                        or affiliates of such owners.
                          (iv) Funding attained through loans 
                        or other forms of debt obligations.

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