[Senate Report 114-417]
[From the U.S. Government Publishing Office]
Calendar No. 480
114th Congress } { Report
SENATE
2d Session } { 114-417
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SBIR/STTR REAUTHORIZATION ACT OF 2016
_______
December 20, 2016.--Ordered to be printed
Filed, under authority of the order of the Senate of December 10
(legislative day, December 9), 2016
_______
Mr. Vitter, from the Committee on Small Business and Entrepreneurship,
submitted the following
R E P O R T
[To accompany S. 2812]
The Committee on Small Business and Entrepreneurship, to
which was referred the bill (S. 2812) to amend the Small
Business Act 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, reports favorably thereon with an amendment and
recommends that the bill, as amended, do pass.
I. Introduction
The ``SBIR/STTR Reauthorization Act of 2016'' (S. 2812) was
introduced by the Ranking Member, Senator Jeanne Shaheen, for
herself and Chairman Vitter, on April 18, 2016. Other
cosponsors include Senators Kelly Ayotte and Ed Markey.
The ``SBIR/STTR Reauthorization Act of 2016'' amends the
Small Business Act to make permanent the SBIR and STTR
programs. It makes changes to the programs in order to increase
commercialization, expand the participation of small businesses
in more regions of the country, increase the participation of
small businesses owned by women and minorities, reduce
administrative and reporting burdens on small businesses and
agencies, accelerate application reviews and disbursements of
awards, and strengthen oversight and compliance.
During the markup of the bill on May 11, 2016, the
Committee adopted five amendments, including an amendment by
Senator Peters to increase the participation of women and
minorities and an amendment by Senators Coons and Gardner to
increase the technical and business assistance to SBIR and STTR
firms in order to increase the commercialization of SBIR and
STTR projects. The underlying bill included a pilot program by
Chairman Vitter designed to increase the participation of small
businesses from states that are underrepresented in these
important federal innovation programs by allowing states in a
region to collaborate on outreach, as well as provide technical
and business assistance. Specifically, Chairman Vitter's pilot
would establish a 4-year program in which the SBA provides
grants to regional, multi-state collaboratives in order to
address the needs of states in the bottom 50% of the SBIR
program, and make several changes to the 3% SBIR Administrative
Funds Pilot Program. It was originally introduced as S. 2136 on
October 6, 2015 and reported out of the Committee favorably on
December 3, 2015.
The Shaheen-Vitter substitute amendment made technical
changes to the allocation section to clarify that funding for
the SBIR and STTR programs comes from the research,
development, test, and evaluation of the Department of
Defense's budget, added STTR where accidently omitted, added a
cross-agency Phase II sequential clarification, and expanded
the Government Accountability Office (GAO) tracking of
violations against SBIR/STTR firms by an agency or prime
contractor.
The bill, as amended, was approved by roll call vote of 18-
1, as part of a manager's package that included five bills: S.
2812, S. 2831, S. 2838, S. 2846 and S. 2850. Senators Vitter,
Risch, Rubio, Scott, Fischer, Gardner, Ernst, Ayotte, Enzi,
Shaheen, Cantwell, Cardin, Heitkamp, Markey, Booker, Coons,
Hirono and Peters voted for the manager's package. Senator Paul
voted against the manager's package.
II. Purpose & Need For Legislation
The purpose of the ``SBIR/STTR Reauthorization Act of
2016'' is to permanently reauthorize, make current and improve
the Small Business Innovation Research (SBIR) and Small
Business Technology Transfer (STTR) programs.
The SBIR and STTR programs need to be reauthorized because
they are set to sunset on September 30, 2017. The Committee
agreed it was important to act early, rather than waiting till
the next Congress, in order to provide certainty and stability
for the small businesses and government agencies that rely on
these public-private partnerships. The small business community
made clear to Congress that they did not want to repeat the
damage caused during the last reauthorization, when the
programs expired and limped along for three years, through a
series of 14 temporary authorizations.
Despite representing only a sliver of the federal R&D
budget (roughly $2 billion of $140 billion annually), the
programs have been a huge success. The Information Technology &
Innovation Foundation has said that the prominence of SBIR
firms on the annual list of top 100 innovations is ``a powerful
indication that the SBIR program has become a key force in the
innovation economy of the United States.'' The SBIR and STTR
programs have played a role in the growth of firms that now
employ thousands of Americans across the country. In addition,
the technologies developed through the SBIR and STTR programs
have resulted in a good return on investment for taxpayers: Two
recent studies found that for every federal dollar awarded to
SBIR firms through the Air Force and Navy, $12 to $19 was
returned to the economy.
The Committee believes that these programs need to be fully
reauthorized in order to continue to stimulate America's
innovation economy, to remedy the continued underrepresentation
of small businesses in federal research and development, and to
use small businesses to help government agencies meet national
needs.
Government-industry partnerships in innovation and research
have become increasingly critical to keeping our nation
competitive internationally and to fulfilling the needs of the
American people.\1\ Together, SBIR and STTR form one of the
largest such public-private partnerships in the nation, and
they are essential to fulfilling the priority research needs of
the country. Furthermore, these programs utilize the innovative
capabilities of small businesses to create jobs, to stimulate
local economies, and to commercialize ideas originally
developed in our federal science agencies and universities. The
SBIR and STTR programs also serve to increase the diversity of
individuals, geographically and demographically, in federal
research and development, thereby increasing competition,
diversifying the government's supply base, and reducing costs.
For these reasons, the programs need and deserve to be
reauthorized, strengthened, and improved.
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\1\National Research Council, SBIR Challenges and Opportunities,
Charles Wessner ed. (National Academies Press, 1999), p. 7.
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III. Description of Bill
The Shaheen-Vitter SBIR/STTR Reauthorization Act of 2016
permanently reauthorizes and strengthens the important and
successful Small Business Innovation Research (SBIR) and Small
Business Technology Transfer (STTR) programs.
SBIR and STTR harness the creativity and ingenuity of
America's small businesses to meet the research and development
(R&D) missions of our federal agencies, such as addressing
threats to public health and our national security. The
programs also support the growth of small, high-tech companies
that create good jobs in local communities across the country
and keep the United States competitive.
Under SBIR and STTR, participating federal agencies foster
government-industry partnerships by making competitive awards
to small firms with the best scientific proposals in response
to public research and development needs. By ensuring that
American entrepreneurs can compete for R&D awards, the programs
tap into the ingenuity of American small businesses and enhance
our ability to move technologies from the lab to the
marketplace.
S. 2812 makes these programs permanent while also building
in mechanisms for Congressional oversight and making
significant improvements by:
Expanding opportunities for small businesses
to commercialize their technologies;
Increasing gradually the allocation of SBIR
and STTR awards in order to make more awards and
explore more innovations;
Clarifying and increasing assistance to
small businesses to protect their intellectual
property;
Strengthening state outreach and technical
assistance in order to diversify the geographic
distribution of awards around the country as well as
increasing the participation of women and minorities;
Enhancing oversight of the Small Business
Administration and the 11 participating SBIR agencies
to ensure implementation of outstanding provisions from
past SBIR/STTR reauthorization bills; and,
Implementing initiatives to reduce
duplicative reporting for small businesses, speed up
the review of applications, and simplify program
implementation for agencies.
IV. Hearings & Roundtables
On January 28, 2016, the Committee held a hearing entitled,
``Reauthorization of the SBIR/STTR Programs--The Importance of
Small Business Innovation to National and Economic Security.''
The purpose of the hearing was to examine the SBIR and STTR
programs and discuss their effectiveness at solving technology
problems for our country, especially for national security, as
well as their contributions to our general economy with new
firms and quality jobs. The witnesses included: Mr. Robert
Smith, Director, Department of Navy SBIR/STTR Programs, Office
of Naval Research; Mr. John Williams, Director of Innovation
and Technology, Office of Investment and Innovation, U.S. Small
Business Administration; Mr. Robert Kline-Schoder, Ph.D.,
President, Creare, Hanover, N.H.; Mr. Jere W. Glover, Executive
Director, Small Business Technology Council, Annapolis, MD; and
Mr. Roy Keller, Director, LA Technology Transfer Office, LSU
Innovation Park, Louisiana Business & Technology Center, Baton
Rouge, LA (invited but unable to attend due to weather).
On August 4, 2016, the Committee held a field hearing in
Hawaii entitled, ``Expanding Hawaii's STEM Pipeline: Examining
Opportunities to Grow Small Businesses, Entrepreneurs, and the
STEM Workforce.'' Witnesses included: Dr. Walter Jones,
Executive Director, Office of Naval Research, Arlington, VA;
Dr. Sylvia James, Director, Division of Human Resource
Development, Directorate for Education and Human Resources,
National Science Foundation, Arlington, VA; Ms. Jane A. Sawyer,
Hawaii District Office Director, U.S. Small Business
Administration; Dr. Lui Hokoana, Chancellor, Maui College,
Kahului, HI; Ms. Sarah A. Jenkins, Student, Duke University,
Kaunakakai, HI; Ms. Lily N. Jenkins, Student, Molokai High
School, Kaunakakai, HI; Ms. Audrey S.C. Cabrera, P.E., Brown
and Caldwell, Wailuku, Maui, HI; Ms. Leslie Wilkins, Vice
President, Women in Technology Program Director, Maui Economic
Development Board, Inc. Kihei, HI.
V. Committee Vote
In compliance with rule XXVI(7)(b) of the Standing Rules of
the Senate, the following vote was recorded on May 11, 2016.
A motion by the Chair to adopt the ``SBIR/STTR
Reauthorization Act of 2016,'' as amended, as part of a
manager's package, was reported favorably with a record vote of
18-1. The following Senators voted in the affirmative: Senators
Vitter, Risch, Rubio, Scott, Fischer, Gardner, Ernst, Ayotte,
Enzi, Shaheen, Cantwell, Cardin, Heitkamp, Markey, Booker,
Coons, Hirono and Peters voted for the manager's package.
Senator Paul voted against the manager's package. The manager's
package included five bills: S. 2812, S. 2831, S. 2838, S. 2846
and S. 2850.
The amendments to S. 2812 that were included in the
manager's package as reported favorably include: five
amendments by Senator Peters to increase the participation of
women and minorities, and an amendment by Senators Coons and
Gardner to increase the technical and business assistance to
SBIR and STTR firms in order to increase the commercialization
of SBIR and STTR projects.
VI. Cost Estimate
In compliance with rule XXVI(11)(a)(1) of the Standing
Rules of the Senate, the Committee estimates the cost of the
legislation will be equal to the amounts discussed in the
following letter from the Congressional Budget Office.
September 9, 2016.
Hon. David Vitter,
Chairman, Committee on Small Business and Entrepreneurship,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 2812, the SBIR and
STTR Reauthorization and Improvement Act of 2016.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Stephen
Rabent.
Sincerely,
Keith Hall.
Enclosure.
S. 2812 would permanently authorize and expand the Small
Business Innovation Research (SBIR) and the Small Business
Technology Transfer (STTR) programs. Those programs help small
businesses compete for research and development contracts. The
bill also would authorize federal agencies to use a portion of
their funding for research and development to cover
administrative costs of the SBIR and STTR programs. S. 2812
also would direct the Small Business Association (SBA) to
develop a pilot program to provide grants to establish regional
collaboratives to help small businesses increase their
competitiveness for awards from these programs and would
authorize a variety of other activities.
Based on information from the SBA and other affected
agencies, CBO estimates that implementing S. 2812 would cost
$166 million over the 2017-2021 period; such spending would be
subject to appropriation. Pay-as-you-go procedures do not apply
to this legislation because it would not affect direct spending
or revenues.
CBO estimates that enacting S. 2812 would not increase net
direct spending or on-budget deficits in any of the four
consecutive 10-year periods beginning in 2027.
S. 2812 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
Estimated cost to the Federal Government: The estimated
budgetary effect of S. 2812 is shown in the following table.
The costs of this legislation fall primarily within budget
functions 370 (commerce), 050 (national defense), 250 (general
science, space, and technology), and 550 (health).
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By fiscal year, in millions of dollars--
------------------------------------------------------------
2017 2018 2019 2020 2021 2017-2021
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INCREASES IN SPENDING SUBJECT TO APPROPRIATION
Permanent Authorization and Expansion of the SBIR
and STTR Programs:
Estimated Authorization Level.................. 0 10 10 10 10 40
Estimated Outlays.............................. 0 8 9 10 10 37
Regional SBIR and STTR State Collaborative
Initiative Pilot Program:
Estimated Authorization Level.................. 13 16 17 20 21 87
Estimated Outlays.............................. 10 15 16 19 20 80
Federal and State Technology Partnership Program:
Authorization Level............................ 10 10 10 10 10 50
Estimated Outlays.............................. 8 9 10 10 10 47
Additional Agency Activities:
Estimated Authorization Level.................. 1 1 * * * 2
Estimated Outlays.............................. 1 1 * * * 2
Total Changes:
Estimated Authorization Level.............. 24 37 37 40 41 179
Estimated Outlays.......................... 19 33 35 39 40 166
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Notes: SBIR = Small Business Innovation Research; STTR = Small Business Technology Transfer; FAST = Federal and
State Technology Partnership; * = between zero and less than $500,000.
Basis of estimate: For this estimate, CBO assumes that the
bill will be enacted near the end of fiscal year 2016, that the
necessary amounts will be appropriated, and that spending will
follow historical patterns.
Under current law, the SBIR program requires federal
agencies with extramural budgets for research and development
(R&D) that exceed $100 million per year to set aside 3 percent
of that budget for contracts with small businesses. (Extramural
budgets consist of expenditures for activities not performed by
agency employees.) Likewise, the STTR program requires federal
agencies with extramural budgets for R&D that exceed $1 billion
per year to set aside 0.45 percent of that budget for
cooperative research between small businesses and a federal
laboratory or nonprofit research institution. Eleven agencies
currently participate in one or both programs, including the
Departments of Defense, Health and Human Services, Energy,
Agriculture, and Homeland Security, as well as the National
Aeronautics and Space Administration, the National Science
Foundation, and the Environmental Protection Agency.
For participating agencies, the cost of those programs
consists primarily of personnel and associated overhead
expenses to solicit applications, prepare reports, and track
outcomes. The organizational structure of the program offices
varies. Some agencies have full-time staff members devoted to
the SBIR and STTR programs, with other staff assisting as part
of their duties; other agencies, however, have employees
working part-time on the program.
Permanent authorization and expansion of the SBIR and STTR programs
S. 2812 would permanently authorize the SBIR and STTR
programs. Under current law, both programs are scheduled to
terminate at the end of fiscal year 2017. The bill would
increase the amount of extramural R&D funding that each
participating agency sets aside for each program, starting in
fiscal year 2018. The SBA spent approximately $10 million in
2015 to administer the two programs. On that basis, CBO
estimates that it would cost the SBA $37 million over the 2018-
2021 period to coordinate with participating agencies and
administer those programs.
S. 2812 also would extend, through fiscal year 2021, a
pilot program that authorizes participating agencies to use up
to 3 percent of the R&D amounts set aside for the SBIR program
for administrative costs, rather than paying those costs from
general operating funds. Under current law, the authority for
that pilot program is scheduled to expire at the end of fiscal
year 2017. Because the pilot program would not affect the
underlying costs of administering the SBIR program, CBO
estimates that extending the pilot program would have no
budgetary effect.
Regional SBIR and STTR State Collaborative Initiative Pilot program
S. 2812 would direct the SBA to establish and operate,
through fiscal year 2021, a pilot program to provide grants to
research institutions and small business that collaborate to
improve small businesses' chances of successfully competing for
awards under the SBIR and STTR programs. The bill would
authorize the SBA to use a portion of funds dedicated to those
programs by each participating agency to cover its costs to
administer the proposed pilot program.
Based on information from the SBA and several participating
agencies about the size of their extramural R&D budgets and
their respective administrative costs, CBO estimates that
implementing the pilot program would cost $80 million over the
2017-2021 period, assuming appropriation of the necessary
amounts.
Federal and State Technology Partnership Program
S. 2812 would authorize the appropriation of $10 million
for each of fiscal years 2017 through 2021 to fund the Federal
and State Technology (FAST) Partnership Program. Through that
program, the SBA awards grants to support efforts by colleges
and universities as well as business development centers to
provide technical assistance and other support to small
businesses competing for awards under the SBIR and STTR
programs. Based on information from the SBA and historical
trends for spending related to the FAST program, CBO estimates
that implementing this provision would cost $47 million over
the 2017-2021 period, assuming appropriation of the authorized
amounts.
Other provisions
CBO estimates that implementing a variety of other
provisions of S. 2812 would involve modest costs. Those
provisions would:
Authorize grants to small businesses to
support internships for recent graduates from the
fields of science, technology, engineering, or math who
belong to underrepresented populations;
Require the SBA to form an interagency
committee to recommend ways to improve data collection
across federal agencies participating in the SBIR and
STTR programs;
Direct the SBA to make numerous changes to
its policy directives for the SBIR and STTR programs;
and
Require the Government Accountability Office
to complete certain reports related to the SBIR and
STTR programs and federal agencies' compliance with
goals for awarding contracts to small businesses.
Based on information from the SBA and other affected
agencies, CBO estimates that implementing those provisions
would cost a total of $2 million over the 2017-2021 period,
assuming the availability for appropriated funds.
Pay-as-you-go considerations: None.
Increase in long term direct spending and deficits: CBO
estimates that enacting S. 2812 would not increase net direct
spending or on-budget deficits in any of the four consecutive
10-year periods beginning in 2027.
Intergovernmental and private-sector impact: S. 2812
contains no intergovernmental or private-sector mandates as
defined in UMRA. Reauthorizing the FAST program would benefit
states that help develop small businesses focused on
technology. States also would benefit from a pilot program
established in the bill that would provide grants to multi-
state collaboratives that address the needs of small
businesses. Any costs to state governments, including matching
contributions, would result from complying with conditions of
assistance.
Previous CBO estimate: CBO has transmitted estimates for
two other bills with provisions that are similar to provisions
of S. 2812.
On July 15, 2016, CBO transmitted a cost estimate for S.
2136, the Improving Small Business Innovative Research and
Technologies Act of 2015, as reported by the Senate Committee
on Small Business and Entrepreneurship on December 3, 2015. S.
2812 would reauthorize the FAST program through 2017 and
establish a one-year Regional SBIR and STTR State Collaborative
Initiative Pilot Program. Our estimate of spending for those
programs under S. 2812 is larger because S. 2812 would
authorize them for a longer period of time.
On August 31, 2016, CBO transmitted a cost estimate for
H.R. 4783, the Commercializing on Small Business Innovation Act
of 2016, as reported by the House Committee on Small Business
on July 25, 2016. H.R. 4783 would reauthorize the SBIR and STTR
programs through fiscal year 2022, and our estimates of
spending for those activities over the 2017-2021 period is the
same as under S. 2812.
Estimate prepared by: Federal Costs: Stephen Rabent; Impact
on State, Local, and Tribal Governments: Rachel Austin; Impact
on the Private Sector: Logan Smith.
Estimate approved by: Theresa Gullo, Assistant Director for
Budget Analysis.
VII. Evaluation of Regulatory Impact
In compliance with rule XXVI(11)(b) of the Standing Rules
of the Senate, it is the opinion of the Committee that no
significant additional regulatory impact will be incurred in
carrying out the provisions of this legislation. There will be
no additional impact on the personal privacy of companies or
individuals who utilize the services provided.
VIII. Section-by-Section Analysis
Sec. 1. Short title
Specifies the short title of the legislation as the ``SBIR/
STTR Reauthorization Act of 2016.''
Sec. 2. Table of contents
Breaks out the six titles of the bill.
TITLE I--REAUTHORIZATION OF PROGRAMS
Sec. 101. Permanency of SBIR and STTR programs
Makes the SBIR and STTR programs permanent.
TITLE II--ENHANCED SMALL BUSINESS ACCESS TO FEDERAL INNOVATION
INVESTMENTS
Sec. 201. Allocation increases and transparency in base calculation
Makes several changes to the required expenditure amounts
for the SBIR and STTR programs to clarify the law, increase the
percentages, and provide simplification and transparency for
the base funding calculation at the Department of Defense
(DoD).
Revises the law to require agencies to obligate for
expenditure a minimum percentage each year instead of to expend
each year. The Government Accountability Office (GAO)
recommended this change in order to make clearer Congressional
intent and expectations for the spending requirement, which
impacts agencies like DoD that use the money over a two-year
period and have a hard time demonstrating that they are
complying with the allocation requirement as interpreted by the
GAO.
Increases the amounts that agencies are required to
allocate to the SBIR and STTR programs, in order to stimulate
America's innovation economy and to remedy the continued
underrepresentation of small businesses in federal research and
development.
For the SBIR program at all non-Department of
Defense agencies, the allocation increases incrementally over
ten years (2018-2028) from 3.2 percent to 6 percent. The
funding is based on and taken out of each agency's extramural
research and development budget.
For the SBIR program at DoD, the allocation
increases incrementally over the same period of ten years, but
the funding source has been modified in order to reduce the
administrative burden on the DoD, improve transparency of how
DoD calculates the allocation and to increase the Department's
compliance with the allocation requirement. The baseline
percentage has been adjusted accordingly. Specifically, the
DoD's allocation increases from 2.5 percent to 5 percent. The
funding is based on and taken out of DoD's entire research and
development budget, not just the extramural portion. DoD staff
requested and GAO recommended changing the funding source in
order to streamline the calculation process. Under current
practice, DoD wastes significant staff time recalculating the
extramural budget of DoD throughout the year as expenditures
change. The Committee emphasizes that the new percentage does
not reduce the dollars to SBIR and STTR firms; it increases
them.
For the STTR program at all agencies (non-DoD and
DoD), the allocation increases incrementally over six years
(2018-2024 from .45 percent to 1 percent. Similar to the SBIR
program change, at DoD the funding source for the STTR program
has been changed and comes out of the entire research and
development budget, not just the extramural portion, in order
to reduce the administrative burden on the DoD, improve
transparency of how DoD calculates the allocation and to
increase the Department's compliance with the allocation
requirement. Unlike the SBIR program changes, the bill does not
adjust the percentages because the amounts are so small.
Sec. 202. Regular oversight of award amounts
Builds in regular Congressional review of the dollar amount
of award levels. The purpose is to ensure that the dollar
amounts allowed for the various phases are sufficient for the
expected research and development while maintaining a balance
between the size of award and the number of awards. The
guidelines for size of awards reside in the SBIR and STTR
policy directives, not in the Small Business Act.
Accordingly, this section directs the Small Business
Administration (SBA) to modify the policy directives in two
ways: (1) eliminate the Administration's authority to
automatically increase the award levels each year for
inflation, and (2) clarify that Congress intends to review the
dollar value of awards every three years.
Includes a Sense of Congress that every three years the
Congress should evaluate whether to adjust the dollar amount of
the award levels.
Clarifies that a sequential Phase II award is subject to
the same requirements for regular Phase I and Phase II awards,
which safeguard against awards that significantly exceed the
guidelines. Specifically, size of awards cannot be increased by
more than 50 percent of the award size guidelines. It is
important to note that returning the award adjustment authority
to Congress has the added value of building in regular
oversight of the SBIR and STTR programs in general.
TITLE III--COMMERCIALIZATION IMPROVEMENTS
Sec. 301. Permanency of the Commercialization Pilot program for
civilian agencies
Makes the voluntary Commercialization Pilot program
permanent. It also makes it faster and easier for more agencies
to implement the program and therefore available to more small
businesses. To make the program easier to use, this section
eliminates a part of the pilot program that required agencies
that wanted to opt into the program to go through an
application process. Interested agencies were required to
submit an application to SBA justifying the use of 10 percent
of SBIR funds for maturation instead of for Phase I and Phase
II projects.
The Commercialization Readiness Pilot Program for civilian
agencies was established in 2011 in order to address ongoing
concerns about the valley of death, which is the time between
the end of a Phase II award and commercialization. Some small
businesses with promising SBIR and STTR technologies needed
more support to advance their development, especially in those
fields with high manufacturing or regulatory costs. The program
allows all non-DoD agencies to use up to 10 percent of their
SBIR funding to make post Phase II awards of up to three times
the regular size (up to $3 million).
At the time Congress was contemplating creation of the
program, there was concern that these very large awards would
use already scarce funding for Phase I and Phase II awards,
which would disproportionately adversely impact small
businesses in low-participation states. To provide some safe
guards, the program was structured so that agencies would need
to proactively opt in through an application process. SBA could
only approve an agency's application if the agency had a
compelling reason to make the additional investments, thereby
shifting money from earlier stage research and development in
Phases I and II. Small businesses and small-business advocates
have urged Congress during this reauthorization to find more
ways to increase commercialization of SBIR and STTR
technologies. Making the program permanent will help increase
commercialization because it allows for an award after Phase II
of up to $3 million.
Sec. 302. Enforcement of national small business goal for Federal
research and development
Modifies a provision enacted 34 years ago that requires
federal agencies with research and research and development
budgets of more than $20 million to establish a goal for
federal research and research and development with small
businesses, not lower than what they currently do. The agencies
have never established the goal and this provision enforces the
statute by requiring the agencies to put in place a goal of not
less than 10 percent by fiscal year 2018.
Sec. 303. Tracking Rapid Innovation Fund awards in annual congressional
report
Modifies the requirements of the annual SBIR/STTR report
from SBA to Congress to include data on commercialization
through DoD's Rapid Innovation Fund (RIF) program. The
information will help track the number and dollar of Rapid
Innovation Fund awards that go to SBIR and STTR firms each
year, as well as small businesses in general. It will also
include a projection of awards that could be made if Congress
were to provide a more stable funding source for the RIF
program and thereby increase the commercialization of such
technologies. The RIF program is set to expire in 2023. The
SBIR/STTR Reauthorization Act of 2016 anticipates passage of a
separate, complementary bill that would make the RIF program
permanent and create a steady and larger funding stream to
further develop SBIR and STTR technologies and technologies of
non-traditional contractors.
Sec. 304. Intellectual property protection for technology development
Clarifies, at the urging of SBIR/STTR firms, that costs for
seeking intellectual property protections for SBIR/STTR
technologies are allowable as indirect cost expenses. This
provision is in order to address concerns that contracting and
auditing agents across the agencies had been inconsistently
allowing or denying cost coverage, creating severe
administrative burdens for SBIR and STTR firms undergoing
routine audits from the government.
Specific patent costs that may be expensed as indirect
costs include, but are not limited to:
Costs of preparing invention disclosures,
reports and related documents
Costs for searching current patents to
determine potentially conflicting rights
U.S. Patent and Trademark Office fees
Advising on patent laws, regulations,
clauses and employee agreements
Limits patent cost coverage to technologies specifically
developed through SBIR and STTR program phases. Phase I is
limited to an amount of not more than $5,000. Phase II is
limited to not more than $15,000. Phase III, which does not use
SBIR or STTR dollars, has no limitations.
Sec. 305. Annual GAO audit of compliance with commercialization goals
Replaces annual self-reporting from the agencies to
Congress with an annual audit of the agencies by GAO. GAO will
track implementation of outstanding key commercialization
goals, such as:
National Small Business Goal enacted in
1982--Agency by agency goal for research and
development projects with small businesses
Phase III Insertion Goals for Subcontracting
enacted in 2011--Authorized the DoD to create
incentives for contracting officers to transition small
business technologies for contracts of $100 million or
more by:
Establishing goals for the transition of
Phase III technologies in subcontracting plans
Requiring a prime contractor on such
contracts to report the number and dollar
contracts with small businesses for their Phase
III SBIR or STTR projects
Phase II Insertion Goals and Incentives
enacted in 2011--Required the DoD to set a goal to
increase the number of Phase II SBIR and STTR contracts
that transition into programs of record or fielded
systems.
Requires GAO to document how the agencies have complied
with each of those requirements when they are implemented.
Finally, as part of the report, GAO must provide a list, by
agency, of small businesses that believe their technology was
stolen by the government or a prime contractor, or that the
Phase III preference was not exercised even though the contract
was for work that derived from, extended, or completed efforts
made under prior SBIR or STTR projects.
Sec. 306. Clarifying Phase III preferences
Clarifies that the Phase III preference for SBIR and STTR
technologies includes awards through the Rapid Innovation Fund
program. The Phase III preference says that agencies shall, to
the greatest extent practicable, issue Phase III awards to
technology related to technology, including sole source awards,
to the SBIR or STTR recipients that developed the technology.
Sec. 307. Improvements to technical and business assistance
Modernizes the dollar amounts allowed for providing
technical and business assistance to SBIR and STTR firms in
order to help them succeed in commercializing their
technologies. The amounts are increased from $5,000 to $6,500
per Phase I award and $10,000 to $15,000 per Phase II award.
Reduces administrative burdens on the agencies that offer
business and technical assistance by eliminating the current
requirement that micro-manages the disbursement of funds by
year instead of by award.
Clarifies that the assistance is for not only technical
assistance but also for business assistance and expands the
examples of uses of the types of assistance to firms.
Additional business assistance examples include assistance for
selling their products, market research and intellectual
property protections.
Includes an amendment from Senators Coons and Gardner that
builds on the bill's business and commercialization assistance.
It increases from $15,000 to $35,000 the maximum amount of
business assistance funds for SBIR/STTR Phase II awardees,
expands the list of allowable expenses to include market
research and development of regulatory and manufacturing plans,
clarifies and enhances language allowing awardees the ability
to select local vendor or vendors of their choice to provide
technical and business-related assistance services, and
authorizes a change within existing program resources so there
will be no additional cost to government.
TITLE IV--PROGRAM DIVERSIFICATION INITIATIVES
Sec. 401. Regional SBIR State Collaborative Initiative Pilot program
Establishes a pilot program in which the SBA provides
grants to regional, multi-state collaboratives in order to
address the needs of small business concerns in the bottom 50%
of the SBIR program. Grants to each state would be up to
$300,000 for one year, and may be renewed for one extra year.
The goal is to help small businesses in these states become
more competitive in the proposal and selection process for
awards under the SBIR and STTR program.
This section also extends the 3% SBIR
Administration Funds Pilot program from September 30,
2017, to September 30, 2021. It requires SBIR agencies
that opt into the 3% Pilot to transfer 15% of that
funding to the SBA for three purposes (about $8.8
million):
To implement the Regional State
Collaborative Initiative Pilot Program
To carry out the SBIR Federal and State
Technology Partnership Program (FAST)
To support the SBA's office that adds the
SBIR program and the STTR program in order to
deploy outreach initiatives in a coordinated
and streamlined way.
Extends the authorization of the FAST program for four
years, through September 30, 2021, to make it uniform with the
authorizations of the related programs--the 3% Administrative
Funds Pilot and the new Collaborative Pilot.
Sec. 402. Federal and State Technology Partnership program
Brings the Federal and State Technology Partnership (FAST)
program into sync with the Regional SBIR State Collaborative
Initiative Pilot Program by reauthorizing the FAST program
through September 30, 2021. Updating the sunset not only puts
the FAST program on the same schedule as the Regional SBIR
State Collaborative Pilot, but it also adds another provision
in law that requires Congress to regularly review the SBIR and
STTR programs. The FAST program was created in 2000 to
strengthen the technological competitiveness of small
businesses in all 50 states by providing competitive matching
grants to states to help them support the SBIR and STTR
programs. The goal was to address concerns that awards were
concentrated in only a few states, and the Committee was
looking for a way to increase participation without imposing
quotas, which would have undermined making awards based on the
merits of the proposals. The program is mostly used by the
state technology transfer directors, with the strongest
interest from rural states which have traditionally been in the
lower tier of states in terms of SBIR/STTR awards and total
dollars.
TITLE V--OVERSIGHT AND SIMPLIFICATION
Sec. 501. Data modernization summit
Uses the Interagency Policy Committee, made up of the SBA,
the SBIR/STTR program managers and agency IT experts, to
resolve within one year a way to reduce and make more uniform
the paperwork and data collection from SBIR and STTR firms.
This responds to concerns heard by the Committee that small
businesses face unnecessary burdens when providing agencies and
the SBA with information, especially for the commercialization
index.
Sec. 502. Implementation of outstanding reauthorization provisions
Addresses concerns that agencies have not implemented key
outstanding provisions of the 2011 Reauthorization Act, and
that SBA has a backlog of annual reports to Congress. If the
agencies and SBA do not implement those provisions or clear out
the report backlog, they will not be able to use their 3%
administration dollars. This holds harmless the portion of the
3% administrative funds that go to the SBA to run the Regional
SBIR State Collaborative Initiative Pilot Program and the FAST
program.
Sec. 503. Strengthening of the requirement to shorten the application
review and decision time
Clarifies a requirement from the 2011 reauthorization act
that required most agencies to reduce their application review
and decision time to 90 days. There was an exemption for the
HHS and NSF that allowed them up to one year for a decision.
USDA has requested the same exemption. This section instead
gives USDA more time but not one year. Going forward, the goal
would be for USDA and NSF to get their review time to six
months, and the HHS to ten months from one year.
Sec. 504. Continued GAO oversight of allocation compliance and accuracy
in funding base calculations
Directs GAO, through fiscal year 2019, to continue its
annual audit of the agencies' compliance with the allocation
amounts. Adds a date to determine whether the change in the
base funding for the Department of Defense improves
transparency for figuring out if the agency is complying with
the allocation requirements, reduces the burden of calculating
the allocations, and whether the change improves DoD's
compliance with the allocation requirements.
TITLE VI--PARTICIPATION BY WOMEN AND MINORITIES
Sec. 601. SBA coordination on increasing outreach for women and
minority-owned businesses
Amendment by Senator Peters that makes it an explicit duty
for SBA to increase outreach and awards to women and minority-
owned businesses, in coordination with agencies.
Sec. 602. Federal agency outreach requirements for women and minority-
owned businesses
Amendment by Senator Peters that makes SBIR outreach
requirements consistent with STTR outreach requirements by
including women and minority-owned businesses.
Sec. 603. STTR policy directive modification
Amendment by Senator Peters that makes the STTR policy
directives consistent with the SBIR policy directives regarding
outreach to women and minorities.
Sec. 604. Interagency SBIR/STTR policy committee
Amendment by Senator Peters that builds on the SBIR/STTR
Interagency Policy Committee's requirements to review outreach
efforts to women and minorities with a requirement to meet at
least twice a year.
Sec. 605. Diversity and STEM workforce development pilot program
Amendment by Senator Peters that establishes a STEM
Workforce Development Pilot Program for women and minorities to
intern at SBIR and STTR firms.
TITLE VII--TECHNICAL CHANGES
Sec. 701. Uniform reference to the Department of Health and Human
Service
Makes universal the reference to NIH as HHS.
Sec. 702. Flexibility for Phase II award
Clarifies a provision from the 2011 reauthorization that
eliminated all invitations to Phase II awards. This now
provides flexibility so that agencies can invite firms to Phase
II but cannot exclude firms from competing.
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