Committee on Science and Technology
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Legislative Highlights :: July 28, 2009

Enhancing Small Business Research and Innovation Act of 2009

H.R. 2965

Bill Summary and Status

Passed the Senate on July 13, 2009

Passed the House on July 8, 2009

Reported (as amended) by the Full Committee on June 24, 2009 

Introduced in the House on June 19, 2009

Section-by-Section

Sec. 1. Short Title; Table of Contents
 
“Enhancing Small Business Research and Innovation Act of 2009”
 
Title I. Program Extension and Venture Capital Operating Company Involvement
 
Sec. 101. Extension of Termination Dates
 
Amends the Small Business Act to extend through FY2011 the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs of the Small Business Administration (SBA).
 
Sec. 102. Ensuring that Innovative Small Businesses with Substantial Investment from Venture Capital Operating Companies are Eligible to Participate in the SBIR and STTR Programs
 
Provides that, effective only for the SBIR and STTR programs: (1) a business concern that has more than 500 employees shall not qualify as a small business concern; (2) in determining whether a small business concern is independently owned and operated, the SBA Administrator shall not consider a business concern to be affiliated with a venture capital operating company if the venture capital operating company (VCOC) does not own 50% or more of the business concern and employees of the VCOC do not constitute a majority of the board of directors of the business concern; (3) a business concern shall be deemed to be independently owned and operated if it is owned in majority part by one or more natural persons or VCOCs, there is no single VCOC that owns 50% or more of the business concern, and there is no single VCOC the employees of which constitute a majority of the board of directors of the business concern; and (4) if a VCOC controlled by a business with more than 500 employees has an ownership interest in a small business owned in majority by VCOCs, that small business is eligible to receive an SBIR or STTR award only if not more than two of such VCOCs have an ownership interest in the small business and such VCOCs do not collectively own more than 20% of the small business.
 
Defines the term “venture capital operating company”.
 
Title II. Commercialization Activities and Research Topics Deserving Special Consideration
 
Sec. 201. Focus on Commercialization
 
Amends section 9 to modify the purpose and policy of the SBIR and STTR programs as follows:
 
“It is further the policy of Congress that the purpose of the programs established in this section should focus on promoting research and the development of projects governed by commercial business plans, which have significant potential to produce products or services for the marketplace or for acquisition by Federal agencies.”
 
Sec. 202. Inclusion of Energy-Related Research Topics and Rare Disease-Related Research Topics as Deserving ‘Special Consideration’ as SBIR Research Topics
 
Includes energy-related research (as identified by the National Academy of Sciences, in the final report issued by the ‘America’s Energy Future: Technology Opportunities, Risks, and Tradeoffs’ project, and in subsequent reports issued by the National Academy of Sciences on sustainability, energy, and alternative fuels), rare disease-related research (as identified by the National Institutes of Health, in the annual report on the rare diseases research activities of the National Institute of Health for fiscal year 2005, and in subsequent reports issued by the National Institutes of Health on rare diseases research activities), and transportation and infrastructure research (as identified by the National Academy of Sciences, in the final report issued by the ‘Transit Research and Development: Federal Role in the National Program’ project and the ‘Transportation Research, Development and Technology Strategic Plan (2006-2010)’ issued by the United States Department of Transportation Research and Innovative Technology Administration, and in subsequent reports issued by the National Academy of Sciences and United States Department of Transportation on transportation and infrastructure) as “special consideration” SBIR research topics. 
 
Sec. 203. Nanotechnology-Related Research Topics
 
Includes nanotechnology research (as identified by the national nanotechnology strategic plan required under section 2(c)(4) of the 21st Century Nanotechnology Research and Development Act and in subsequent reports issued by the National Science and Technology Council Committee on Technology, focusing on areas of nanotechnology identified in such plan) as a “special consideration” SBIR and STTR research topic. 
 
Sec. 204. Clarifying the Definition of “Phase Three”
 
Clarifies that the “third phase” of the SBIR program “shall consist of work that derives, extends, or logically concludes efforts performed under prior SBIR funding agreements (which may be referred to as ‘Phase III’)”.
 
Also provides that the term “commercialization” means “the process of developing marketable products or services and producing and delivering products or services for sale (whether by the originating party or by others) to government or commercial markets”.
 
Sec. 205. Agency Research Goals
 
Requires agencies with SBIR programs that award annually $5 billion or more in procurement contracts to establish annual goals for commercialization of projects funded by SBIR awards. Outlines specific goals required, including: (1) the percentage of SBIR projects that receive private sector funds during the third phase; (2) the percentage of SBIR projects that are integrated into a program of record; and (3) the amount of Federal dollars received by SBIR projects through Federal contracts, not including dollars received through the SBIR program. 
 
Requires that the goals be reported not later than 60 days after the beginning of the fiscal year and the extent to which the goals were met and a description of the methodology used to collect such data be reported not later than 90 days after the end of the fiscal year to the Committee on Small Business and the Committee on Science and Technology of the House of Representatives and the Committee on Small Business and Entrepreneurship of the Senate.
 
Sec. 206. Commercialization Program
 
Requires each agency to establish a commercialization program that supports the progression of SBIR awardees to the third phase. 
 
Requires an analysis of the various activities considered for inclusion in the commercialization program and a statement of the reasons why each activity considered was included or not included to be submitted to Congress. 
 
Authorizes $27.5 million in funding to SBA, to be transferred to agencies to support commercialization programs. Specifies that agencies may not use more than an amount equal to 1% of the funds set aside for the agency’s SBIR program to administer the commercialization program. 
 
Title III. Rural Development and Outreach
 
Sec. 301. Outreach and Support Activities
 
Directs the Administrator to make grants on a competitive basis to organizations to: (1) conduct outreach efforts to increase participation in the programs; and (2) provide application support and entrepreneurial and business skills support to prospective participants.
 
Authorizes $10 million for each of fiscal years 2010 and 2011 to carry out these outreach and support activities. 
 
Provides that the amount of assistance provided to an organization in any fiscal year shall be equal to the total amount of matching funds from non-Federal sources provided by the organization and shall not exceed $250,000. 
 
Requires organizations receiving grants to direct activities towards small business concerns located in geographic areas that are underrepresented in the programs and/or small business concerns owned and controlled by women, by service-disabled veterans, and by minorities.
 
Requires the Administrator to establish an advisory board for outreach and support activities. Members of the advisory board shall include the Administrator (or the Administrator’s designee), the head (or the designee of the head) of each Federal agency with an SBIR program, representatives of small business concerns that are current or former recipients of SBIR awards, and representatives of service providers of SBIR outreach and assistance. Assigns the following duties to the advisory board: (1) to develop guidelines for outreach awards; (2) to identify opportunities for coordinated outreach, technical assistance, and commercialization activities among Federal agencies, the recipients of the outreach awards, and applicants and recipients of SBIR awards; (3) to review and recommend revisions to outreach activities; and (4) to submit to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business and the Committee on Science and Technology of the House of Representatives an annual report on outreach activities and the effectiveness and impact of those activities. 
 
Requires the Administrator to use selection criteria developed by the advisory board in awarding grants, including criteria designed to give preference to applicants who: (1) propose to carry out activities that will reach either an underperforming geographic area or an underrepresented population group; (2) propose to carry out activities that complement the existing public-private innovation support system for the targeted region or population; (3) propose to measure to effectiveness of the proposed activities; and (4) include a Small Business Development Center program that is accredited for its technology services.
 
Specifies that, in awarding grants, the Administrator is to use a peer review process. 
 
States that, to be eligible to receive a grant, the applicant must have the written endorsement of the Governor of the State where the targeted regions or populations are located. Specifies that the endorsement must indicate that the Governor will ensure that the activities to be carried out under the grant will be integrated with the balance of the State’s portfolio of investments to help small business concerns commercialize technology. Includes a limitation stating that, each fiscal year, a Governor may have in effect not more than one written endorsement for an outreach grant and not more than one written endorsement for a support grant. 
 
Provides that each award shall be for a period of 2 fiscal years.
 
 
Sec. 302. Rural Preference
 
Requires agencies to give priority to SBIR and STTR award applications so as to increase the number of award recipients from rural areas. 
 
Sec. 303. Obtaining SBIR Applicant’s Consent to Release Contact Information to Economic Development Organizations
 
Requires each agency to enable an SBIR applicant to indicate whether the agency has its consent to identify the applicant to appropriate local and State-level economic development organizations as an applicant and release the applicant’s contact information to such organizations.  
 
Sec. 304. Increased Partnerships Between SBIR Awardees and Prime Contractors, Venture Capital Investment Companies, and Larger Businesses
 
Directs each agency to establish initiatives to encourage partnerships between SBIR awardees and prime contractors, venture capital investment companies, business incubators, and larger businesses in order to facilitate the progress of SBIR awardees to the third phase. 
 
Defines “business incubator”.
 
Title IV. SBIR and STTR Enhancement
 
Sec. 401. Increased Number of Research Topic Solicitations Annually and Shortened Period for Final Decisions on Applications
 
Requires the Administrator to establish by regulation a process in which each agency conducts at least two rounds of SBIR research solicitations per year, and renders a final decision on each proposal within 90 days after the solicitation closes (with an authorized extension to 180 days on a case-by-case basis).
 
Sec. 402. Agencies Should Fund Vital R & D Projects with the Potential for Commercialization
 
Requires the Administrator to submit annually to the Committee on Small Business and the Committee on Science and Technology of the House of Representatives and the Committee on Small Business and Entrepreneurship of the Senate a list of small businesses that, during the previous five-year period, received 15 or more first phase SBIR awards and no second phase SBIR awards.
 
Sec. 403. Federal Agency Engagement with SBIR Awardees that Have Been Awarded Multiple Phase One Awards But Have Not Been Awarded Phase Two Awards
 
Requires each agency to engage with SBIR awardees that have been awarded multiple first phase awards but no second phase awards, and to develop performance measures with respect to awardee progression in the SBIR program. 
 
Sec. 404. Funding for Administrative, Oversight, and Contract Processing Costs.
 
Authorizes $27.5 million for each of fiscal years 2010 and 2011 to the Administrator, to be transferred to agencies, to assist with the administrative, oversight, and contract processing costs relating to the SBIR program. States that an agency may not receive in a fiscal year an amount greater than 3 percent of the SBIR budget of such agency for such fiscal year under this subsection.   
 
Sec. 405. Comptroller General Audit of How Federal Agencies Calculate Extramural Research Budgets
 
Requires GAO to carry out a detailed audit of how Federal agencies calculate extramural research budgets for purposes of calculating the size of the agencies’ SBIR and STTR budgets. 
 
Requires that GAO submit a report on the results of the audit within 1 year of the date of enactment to the Committee on Small Business and the Committee on Science and Technology of the House of Representatives and the Committee on Small Business and Entrepreneurship of the Senate.
 
Sec. 406. Agency Databases to Support Program Evaluation
 
Requires that the government database for SBIR and STTR program evaluation include information on the ownership structure of award recipients, both at the time of receipt of the award and upon completion of the award period.
 
Requires: (1) SBIR and STTR small business participants to provide updated information for purposes of updating the government database for SBIR and STTR program evaluation; and (2) participating agencies to develop and maintain such databases. 
 
Sec. 407. Agency Databases to Support Technology Utilization
 
Requires each agency to create and maintain a technology utilization database, available to the public and containing data supplied by award recipients, to help them attract customers for the products and services generated under the SBIR or STTR project, and to attract additional investors or business partners. Participation in a database shall be voluntary, except that participation is required of all award recipients who received supplemental payments from SBIR and STTR program funds above their initial Phase II award. 
 
Sec. 408. Interagency Policy Committee
 
Requires the Director of the Office of Science and Technology Policy (OSTP) to establish an Interagency SBIR/STTR Policy Committee comprised of one representative from each Federal agency with an SBIR program. Specifies that the Director of OSTP and the Director of the National Institute of Standards and Technology shall jointly chair the committee. 
 
Requires the committee to review the following issues and make policy recommendations on ways to improve the program effectiveness and efficiency: (1) the public and government databases; (2) Federal agency flexibility in establishing Phase I and Phase II award sizes; and (3) commercialization assistance best practices in Federal agencies with significant potential to be employed by other agencies, as well as proposals for new initiatives to address funding gaps business concerns face after Phase II but before commercialization. 
 
Requires the committee to transmit to the Committee on Science and Technology and the Committee on Small Business of the House of Representatives and the Committee on Small Business and Entrepreneurship of the Senate reports on the issues identified above. 
 
Sec. 409. National Research Council SBIR Study
 
Amends the Small Business Reauthorization Act of 2000 to remove the requirement that the National Research Council provide an updated report on the SBIR program.
 
Sec. 410. Express Authority to “Fast-Track” Phase Two Awards for Promising Phase One Research
 
Authorizes agencies to develop fast-track programs to eliminate funding delays by issuing Phase Two SBIR awards as soon as practicable, including simultaneously with the issuance of the Phase One award.
 
Requires the Administrator to encourage the development of such “fast-track” programs.
 
Sec. 411. Increased SBIR and STTR Award Levels
 
Increases, for both the SBIR and STTR programs, the individual small business award levels from: (1) $100,000 to $250,000, for participation at a Phase One level; and (2) $750,000 to $2 million, for participation at a Phase Two level. Provides for an annual readjustment to these levels to reflect economic conditions and programmatic considerations.
 
Sec. 412. Express Authority for an Agency to Award Sequential Phase Two Awards for SBIR-Funded Projects
 
States that a small business concern that receives a second phase SBIR award for a project remains eligible to receive additional second phase SBIR awards for such project. 
 
States that agencies are expressly authorized to provide additional second phase SBIR awards for testing and evaluation assistance for the insertion of SBIR technologies into technical or weapons systems. 
 
Sec. 413. First Phase Required
 
States that an agency shall provide to a small business concern an award for a second phase of an SBIR program with respect to a project only if such agency finds that the small business concern has been provided an award for the first phase of an SBIR program with respect to such project or has completed the determinations described in subsection (e)(4)(A) with respect to such project despite not having been provided an award for the first phase.  

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