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)''.
Commercializing on Small Business Innovation Act of 2016 (Sec. 2) This bill amends the Small Business Act to reauthorize for FY2017-FY2022 both the Small Business Innovation Research (SBIR) Program and the Small Business Technology Transfer (STTR) Program. The Small Business Administration (SBA) shall continue through FY2022 to permit each federal agency to use up to 3% of its SBIR program funds to assist the agency in its required SBIR or STTR program's administration and related activities.  (Sec. 3) The bill also increases the percentages of required agency expenditures with small business concerns under these programs for each of those fiscal years. (Sec. 4) The bill revises SBIR and STTR annual reporting requirements to establish deadline dates. The SBA's annual report to Congress on these programs shall be due by December 31 of each year. Federal agency annual reports to the SBA on their SBIR or STTR program shall be due by March 30. The SBA must report annually to Congress by June 30 on the use of SBIR program funds by federal agencies for specified purposes in the Act.  (Sec. 5) SBA policy directives shall index SBIR and STTR awards for inflation. As under current law, an award for: (1) Phase I of an SBIR or STTR program may not exceed $150,000, and (2) Phase II of such program may not exceed $1 million. The SBA shall continue to adjust these dollar amounts for inflation.  (Sec. 6) This bill requires the Department of Defense (which under current law is already authorized) to create insertion incentives under the Department of Defense Commercialization Readiness Program for any contract with a value of at least $100 million to:  establish goals for the transition of Phase III technologies in subcontracting plans, and 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.  (Sec. 7) The SBA shall modify its policy directives to make clear that HUBZone small business concerns owned and controlled by Alaska Native Corporations, owned by Indian tribal governments, and owned by Native Hawaiian Organizations are eligible to receive SBIR and STTR awards. (Sec. 8) Any federal agency required to have an SBIR program (covered agency) shall implement a commercialization assistance pilot program (CAPP) through FY2022 to award eligible entities with a second sequential SBIR award, unless the agency already has a program sufficiently similar to CAPP. A covered agency may spend up to 5% of its total SBIR budget for CAPP awards, to be distributed during the recipient's Phase II award period. Such awards may only be used for research and development activities that build on the eligible entity's Phase II program and catalyze acceleration towards commercialization. The SBA shall require as a condition of any CAPP award that an equal matching amount (excluding any fees collected from recipients of such assistance) be provided from an eligible third-party investor before the end of the CAPP award. An eligible entity may not use funding from ineligible sources to meet this matching requirement. The term:  &quot;eligible entity&quot; 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; &quot;eligible third-party investor&quot; 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; and &quot;ineligible sources&quot; means the awardee's internal research and development funds, funding in forms other than cash such as in-kind or other intangible assets, funding from the owners of the eligible entity, or the family members or affiliates of such owners, or funding attained through loans or other forms of debt obligations.  (Sec. 9) The bill eliminates the authority of an agency to request a waiver of the requirement to use a portion of SBIR funds for outreach efforts to increase the participation of:  social and economically disadvantaged small business concerns and certain woman-owned small business concerns, and states in which a low level of SBIR awards have historically been awarded. 
Commercializing on Small Business Innovation Act of 2016