[House Report 114-705]
[From the U.S. Government Publishing Office]
114th Congress } { Rept. 114-705
HOUSE OF REPRESENTATIVES
2d Session } { Part 1
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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.
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\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.
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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.
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\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).
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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\
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\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.
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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.
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\5\Federal agencies with extramural R&D budgets that exceed $1
billion are required to participate in the STTR program.
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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\
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\6\NRC, National Academies of Science, An Assessment of the Small
Business Innovation Research Program 3 (2007).
\7\Id. at 3-6.
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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\
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\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).
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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\
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\12\GAO, Small Business Research Programs: Challenges Remain in
Meeting Spending and Reporting Requirements (GAO15-358) (Ap. 2015).
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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\
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\13\H.R. Conf. Rep. No. 112-705, at 942-943 (2012).
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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\
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\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.
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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.
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\17\The Act at Sec. 9(j)(2)(D).
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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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