July 16, 2018
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Committee Approves Legislation Reauthorizing Small Business Research Programs



of the
Honorable Nydia M. Velázquez, Chair
House Committee on Small Business
Full Committee Mark Up of H.R. 2965, the Enhancing Small Business Research and Innovation Act of 2009
Thursday, June 25, 2009


Today, the Committee will consider legislation that will modernize the Small Business Innovation Research and Small Business Technology Transfer programs.  These initiatives – which were last updated eight years ago – are fundamental to creating new technologies as well as new jobs.  With national unemployment at a staggering 9.4 percent – and many states well beyond this level – now is the right time to strengthen and broaden these programs.

I want to thank Chairman Nye and Ranking Member Schock of the Subcommittee on Contracting and Technology for shepherding this legislation through Committee.  In addition, I’d like to also thank the four Committee members whose bills have been incorporated into H.R. 2965 – Representatives Bright, Halvorson, Schock, and Ranking Member Graves.

SBIR is the largest dedicated source of federal R&D funds for small businesses.  Under the program, federal agencies with extramural research budgets of $100 million or more dedicate 2.5 percent of their overall research budget for technology development contracts toward small business awards.

Currently, 11 federal departments are required to participate in the program. They combine to award over $2 billion in grants annually to small firms in all 50 states and the District of Columbia and Puerto Rico, funding thousands of projects and helping over 1,500 new companies get off the ground every year.

Under the STTR program, government agencies that spend more than $1 billion annually in extramural R&D dedicate a percentage of their research budget to supporting joint proposals between small firms and nonprofit research organizations, such as universities.  These partnerships are critical to transferring technology from universities to the private sector, and for creating jobs in local communities.

The continued success of the SBIR and STTR programs is dependant on three primary issues.  First, the program must attract new applicants. Second, awardees must have adequate access to investment from all types of capital.  Third, more needs to be done to bring these breakthrough products to the marketplace, meaning we must promote greater commercialization in these initiatives.

The bill before us today addresses all of these issues and has the support of the Biotechnology Industry Organization, the Advanced Medical Technology Association, the Parkinson’s Action Network, the National Venture Capital Association, the Cystic Fibrosis Foundation, the US Women’s Chamber of Commerce, and the Medical Device Manufacturers Association.   Modernizing the SBIR and STTR programs will make them more responsive to the needs of today’s small businesses. This is absolutely critical to creating more jobs and growth in our economy.”

We will now consider HR 2965, the Enhancing Small Business Research and Innovation Act of 2009 introduced by Representative Altmire.  The reauthorization legislation is an important step toward securing the future success of these important programs.  Among the most notable legislative changes to the programs are increases in award sizes, which raise Phase One awards to $250,000 and Phase Two awards to $2 million.  This will ensure that SBIR and STTR continue to attract the best and brightest companies.

The Act also takes steps to move research from the laboratory to the marketplace more quickly. Defense and civilian research agencies will establish programs that support the commercialization of SBIR research.  Goals are also included for these commercialization efforts. That way, taxpayers can more readily benefit from new technologies and therapies.

In order to increase outreach to rural and underrepresented firms, H.R. 2965 establishes an initiative to broaden participation in SBIR and STTR.  This new effort will not only increase outreach efforts, but also provide application support for current and prospective participants.

Perhaps most importantly, the legislation restores the pre-2003 eligibility rules permitting small businesses with venture capital investment to qualify for SBIR awards.  This is not a groundbreaking change.  We are simply reinstating the policies that were in place until 2003.  We have done so in a balanced manner, and included important safeguards and protections.

Small businesses are the focus of this policy.  A single venture capital firm cannot own a majority of an SBIR awardee, nor can they have a majority of seats on its board of directors.  In addition, limitations are placed on the venture capital company, including considerations of its size and its control by larger corporations.  Overall, this once again gives entrepreneurs – not Washington, DC bureaucrats – the final say on how their company should be financed.

HR 2965 takes steps to develop the next generation of small research firms. In passing this bill we will ensure that SBIR and STTR awards remain competitive, fund top-notch research, and produce cutting-edge breakthroughs.

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