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[House Report 107-213]
[From the U.S. Government Publishing Office]

107th Congress                                            Rept. 107-213
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 1

======================================================================

 
 SMALL BUSINESS TECHNOLOGY TRANSFER PROGRAM REAUTHORIZATION ACT OF 2001

                                _______
                                

               September 21, 2001.--Ordered to be printed

                                _______
                                

   Mr. Manzullo, from the Committee on Small Business, submitted the 
                               following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 1860]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Small Business, to whom was referred the 
bill (H.R. 1860) to reauthorize 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.
  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 ``Small Business Technology Transfer 
Program Reauthorization Act of 2001''.

SEC. 2. EXTENSION OF PROGRAM AND EXPENDITURE AMOUNTS.

  (a) In General.--Section 9(n)(1) of the Small Business Act (15 U.S.C. 
638(n)(1)) is amended to read as follows:
          ``(1) Required expenditure amounts.--
                  ``(A) In general.--With respect to each fiscal year 
                through fiscal year 2009, 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; and
                          ``(ii) 0.3 percent for fiscal year 2004 and 
                        each fiscal year thereafter.''.
  (b) Conforming Amendment.--Section 9 of the Small Business Act (15 
U.S.C. 638) is amended in subsections (b)(4) and (e)(6), by striking 
``pilot'' each place it appears.

SEC. 3. INCREASE IN AUTHORIZED PHASE II AWARDS.

  (a) In General.--Section 9(p)(2)(B)(ix) of the Small Business Act (15 
U.S.C. 638(p)(2)(B)(ix)) is amended--
          (1) by striking ``$500,000'' and inserting ``$750,000''; and
          (2) by inserting before the semicolon at the end the 
        following: ``, and shorter or longer periods of time to be 
        approved at the discretion of the awarding agency where 
        appropriate for a particular project''.
  (b) Effective Date.--The amendments made by subsection (a) shall be 
effective beginning in fiscal year 2004.

SEC. 4. AGENCY OUTREACH.

  Section 9(o) of the Small Business Act (15 U.S.C. 638(o)) is 
amended--
          (1) in paragraph (12), by striking ``and'' at the end;
          (2) in paragraph (13), by striking the period at the end and 
        inserting a semicolon; and
          (3) by adding at the end the following:
          ``(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; and''.

SEC. 5. POLICY DIRECTIVE MODIFICATIONS.

  Section 9(p) of the Small Business Act (15 U.S.C. 638(p)) is amended 
by adding at the end the following:
          ``(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 the first phase (as described in subsection 
        (e)(6)(A)), the second phase (as described in subsection 
        (e)(6)(B)), and the third phase (as described in subsection 
        (e)(6)(C)).''.

SEC. 6. STTR PROGRAM DATA COLLECTION.

  (a) In General.--Section 9(o) of the Small Business Act (15 U.S.C. 
638(o)), as amended by section 4 of this Act, is amended by adding at 
the end the following:
          ``(15) collect, and maintain in a common format, in 
        accordance with subsection (v), such information from awardees 
        as is necessary to assess the STTR program, including 
        information necessary to maintain the database described in 
        subsection (k).''.
  (b) Database.--Section 9(k) of the Small Business Act (15 U.S.C. 
638(k)) is amended--
          (1) in paragraph (1)--
                  (A) by inserting ``or STTR'' after ``SBIR'' each 
                place it appears;
                  (B) in subparagraph (C), by striking ``and'' at the 
                end;
                  (C) in subparagraph (D), by striking the period at 
                the end and inserting ``; and''; and
                  (D) by adding at the end the following:
                  ``(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 the 
                        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
          (2) in paragraph (2)--
                  (A) by inserting ``or an STTR program pursuant to 
                subsection (n)(1)'' after ``(f)(1)'';
                  (B) by inserting ``and STTR'' after ``solely for 
                SBIR'';
                  (C) in subparagraph (A)(iii), by inserting ``and 
                STTR'' after ``SBIR''; and
                  (D) in subparagraph (D), by inserting ``or STTR'' 
                after ``SBIR''.
  (c) Simplified Reporting Requirements.--Section 9(v) of the Small 
Business Act (15 U.S.C. 638(v)) is amended by inserting ``or STTR'' 
after ``SBIR'' each place it appears.
  (d) Reports to Congress.--Section 9(b)(7) of the Small Business Act 
(15 U.S.C. 638(b)(7)) is amended by striking ``and (o)(9),'' and 
inserting ``, (o)(9), and (o)(15), the number of proposals received 
from, and the number and total amount of awards to, HUBZone small 
business concerns under each of the SBIR and STTR programs,''.

SEC. 7. STTR PROGRAM-WIDE MODEL AGREEMENT FOR INTELLECTUAL PROPERTY 
                    RIGHTS.

  (a) Development of Model Agreement.--Section 9 of the Small Business 
Act (15 U.S.C. 638) is amended by adding at the end the following new 
subsection:
  ``(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 affected 
        agencies, small business concerns, research institutions, and 
        other interested parties the opportunity to submit written 
        comments.''.
  (b) Adoption of Model Agreement by Federal Agencies.--Section 
9(o)(11) of the Small Business Act (15 U.S.C. 638(o)(11)) is amended by 
striking ``develop a model agreement not later than July 31, 1993, to 
be approved by the Administration,'' and inserting ``adopt the 
agreement developed by the Administrator under subsection (w) as the 
agency's model agreement''.

SEC. 8. FAST PROGRAM ASSISTANCE TO LOW-INCOME AREAS.

  (a) Selection Consideration.--Section 34(c)(2)(B) of the Small 
Business Act (15 U.S.C. 657d(c)(2)(B)) is amended--
          (1) in clause (iv) by striking ``and'' at the end;
          (2) in clause (v) by striking the period and inserting ``; 
        and''; and
          (3) by adding at the end the following new clause:
                          ``(vi) whether the proposal addresses the 
                        needs of small business concerns located in 1 
                        or more qualified census tracts, as that term 
                        is defined in section 42(d)(5)(C)(ii) of the 
                        Internal Revenue Code of 1986.''.
  (b) Regulations.--Section 34(c)(4) of the Small Business Act (15 
U.S.C. 657d(c)(4)) is amended by adding at the end the following: ``The 
Administrator shall promulgate regulations establishing standards for 
the consideration of proposals under paragraph (2), including standards 
regarding each of the considerations identified in paragraph (2)(B).''.

                                Purpose

    The purpose of H.R. 1860 is to amend the Small Business Act 
to extend the Small Business Technology Transfer (STTR) Program 
through the end of September, 2009. Under present law, the STTR 
Program will terminate on September 30, 2001. The STTR Program 
was created by Congress under the Small Business Research and 
Development Enhancement Act of 1992 and was initially 
authorized for three years beginning in FY1994. The program was 
reauthorized for one additional year in 1996 and subsequently 
extended for an additional four years, through the end of 
FY2001, by the Small Business Reauthorization Act of 1997. 
Besides extending the life of the program for eight additional 
years, H.R. 1860 makes improvements to the program similar to 
those made previously to the Small Business Innovative Research 
(SBIR) Program.
    Beginning in FY2004 the percentage of the extramural budget 
required to be expended by agencies participating in the 
program increases from 0.15 percent to 0.3 percent. The 
permanent nature of the program is acknowledged by striking the 
word ``pilot'' as previously used to describe the program. 
Again, beginning in FY2004, the amount that a small business 
can receive for a Phase II award is increased from $500,000 to 
$750,000, in line with Phase II awards made under the SBIR 
Program.
    Participating agencies are directed to implement an 
outreach program to research institutions and small business 
concerns for the purpose of enhancing the STTR Program, in 
conjunction with any outreach done for purposes of the SBIR 
Program. The Administrator of the Small Business Administration 
is directed to modify the STTR Program policy directive to 
clarify that the rights to data provisions apply to all three 
phases of the STTR Program. The Administrator is also required 
to collect and maintain data in a common format necessary to 
fairly evaluate the successes or shortcomings of the program 
and to work with the participating agencies to simplify and 
standardize the reporting requirements for the collection of 
data from STTR applicants and awardees.
    The provisions of the Federal and State Technology 
Partnership (FAST) Program are amended to require that the 
Administrator promulgate regulations establishing standards for 
the consideration of proposals for funding under the FAST 
Program and adds as one of the evaluation criteria whether the 
proposal addresses the needs of small business concerns located 
in one or more qualified census tracts. Reports to Congress 
regarding awards under the SBIR and STTR Programs are required 
to include information concerning the number of proposals 
received from, and the total of awards to, HUBZone small 
business concerns. The Administrator is directed to promulgate 
an STTR Program-wide model agreement for intellectual property 
rights.

                               Background

    The STTR Program is independent of the SBIR Program with 
which it is frequently confused. The STTR Program requires a 
cooperative venture between a for-profit small business and a 
researcher from a university, federal laboratory, or a non-
profit research institution for the purpose of developing 
commercially viable products from ideas spawned in a laboratory 
environment. The STTR Program builds on the well established 
reputation that small businesses have for innovation and job 
creation to the benefit of the economy, generally, and, 
specifically, those who participate in the program.
    The program also benefits from the vast wealth of 
scientific knowledge that is available in this Nation's 
research institutions that employ approximately one-fourth of 
the scientists and engineers in the United States. Together, 
small business concerns and the research community have proved 
a successful vehicle for moving ideas from academic environs to 
the practical, useful, commercial world to the benefit of the 
U.S. economy and workers.
    For the Federal agency to participate in the program, it 
must have an extramural budget for research or research and 
development that exceeds $1 billion for any fiscal year. 
Presently, there are five federal agencies that meet the 
funding requirement. They are: Department of Defense, 
Department of Energy, Department of Health and Human Services, 
National Aeronautics and Space Administration, and National 
Science Foundation.
    No new funding is required to reauthorize the program since 
the program is funded as a percentage of the extramural 
research and development funds annually appropriated by 
Congress to those federal agencies meeting the funding 
threshold. The percentage has increased from the initial amount 
of no less than 0.05 percent for FY1994 to the present level of 
no less than 0.15 percent.
    To be eligible for an STTR award a small business must have 
no more than 500 employees, and be independently owned and 
operated with its principal place of business in the United 
States. In addition, the small business may not be the dominant 
entity in the field in which the project is contained and must 
be primarily owned by U.S. citizens. To be eligible to 
participate in the program, a research entity must be a non-
profit institution as defined by the Stevenson-Wyler Act of 
1980 or a federally funded research and development center as 
determined by the National Science Foundation under the 
provisions of section 35(c)(1) of the Office of Federal 
Procurement Policy Act.
    The program requires that the project be research and 
development conducted jointly by a small business and a 
research institution in which not less than 40 percent of the 
work is performed by the small business and that not less than 
30 percent of the work is performed by the research 
institution. Though the venture is cooperative in nature, the 
small business is responsible for the overall management and 
control of each project.
    The statute mandates that each award go through three 
phases. Phase I is the start-up part of a particular project 
and entails, as may be possible, a determination of the 
scientific, technical, and commercial merit of the concepts 
underlying a particular award. Phase II provides an opportunity 
to further develop the concepts to meet the objectives of the 
particular award. Only projects that successfully complete 
Phase I can be considered for funding under Phase II. Phase III 
is the point at which the project moves from the laboratory to 
commercial application or further cooperative research and 
development. No STTR funds may be used to pay for Phase III. 
The funding must come from the private sector or non-STTR 
federal funding.
    The five federal agencies presently participating in the 
STTR Program determine the projects to be funded through the 
program. In choosing those areas to be included, the 
participating agencies are required to give special 
consideration to research topics and critical technologies 
identified by the National Critical Technologies Panel and the 
Secretary of Defense. Each participating agency selects the 
awardees to be funded based on proposals solicited, normally on 
an annual basis, by the agency.
    The Small Business Act requires each participating agency 
to develop a model agreement, to be approved by the 
Administrator, 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. The five agencies in the program issued two 
model agreements that were approved by the Administrator, one 
was promulgated by the Departments of Energy and Health and 
Human Services and the other by the Department of Defense, the 
National Science Foundation, and the National Aeronautics and 
Space Administration. Use of the model agreements is not 
mandatory. Small businesses, research institutions, and the 
agencies may negotiate their own agreements which has led to a 
lack of uniformity in the protection of rights of the parties 
involved from agency-to-agency and from agreement-to-agreement.
    To protect a small business from losing the benefit of 
technical data generated in the course of a project, current 
law provides that the rights in data generated by a small 
business in the course of a STTR project shall be retained by 
the small businesses for a period of not less than four years. 
This provision authorizes a participating agency to protect 
technical data generated by a small business while performing 
under a STTR project agreement and to refrain from disclosing 
such data to competitors of the small business. Some doubt had 
been raised whether the four-year period applied to all three 
phases of an STTR project. The provisions of H.R. 1860 make it 
clear that the four-year period applies to all three phases.
    The U.S. General Accounting Office recently completed a 
report on the STTR Program dated June 4, 2001, based on 102 
projects that had received Phase II awards in fiscal years 1995 
through 1997, the first three years the awards were made. Among 
the findings, the report states:

          For the 102 partnerships that we reviewed, the 
        companies reported that both the companies and the 
        research institutions contributed significantly to the 
        R&D. For example, the companies believed that both 
        parties contributed significantly to the knowledge and/
        or expertise essential to the project. Furthermore, 
        they generally believed that both parties contributed 
        significantly in constructing or testing prototypes and 
        in providing special equipment or facilities. However, 
        the companies reported that, in aggregate, the 
        companies played a substantially greater role in 
        originating the key ideas for the R&D: in their view, 
        they originated or were primarily responsible for 
        originating the key ideas in 72 percent of the 
        projects.
          The companies reported a variety of results, 
        including sales of a product, process, or service, the 
        receipt of additional developmental funding, patents 
        granted, and discontinuance of projects. As of April 
        2001, the companies reported about $132 million in 
        total sales and about $53 million in additional 
        developmental funding. About two-thirds of the projects 
        with reported sales achieved their first sale in 1999 
        or 2000 and projected about $900 million in additional 
        sales by December 31, 2005. The companies also reported 
        receiving 41 patents for the core technologies 
        associated with their projects and the creation of 12 
        spin-off companies. Twenty-seven projects were 
        discontinued. When asked to identify those factors that 
        had a great role in the decision to discontinue the 
        project, companies most frequently cited insufficient 
        additional funding for further technical development. 
        (U.S. General Accounting Office, Survey of Companies 
        Receiving Small Business Technology Transfer (STTR) 
        Phase II Awards Fiscal Years 1995-1997, Letter to the 
        Honorable Christopher S. Bond and others, dated June 4, 
        2001, GAO-01-766R Small Business Technology Transfer 
        Program).

                            Committee Action

               hearing on reauthorization of sttr program

    On Wednesday, June 20, 2001, the Subcommittee on Workforce, 
Empowerment and Government Programs and the Subcommittee on 
Rural Enterprises, Agriculture and Technology of the Committee 
on Small Business held a joint hearing, commencing at 3:00 
p.m., to hear testimony with regard to the reauthorization of 
the STTR Program. The Subcommittees received the testimony of 
six witnesses: Mr. Maurice Swinton, Assistant Administrator, 
Office of Technology, U.S. Small Business Administration; Mr. 
Timothy Foremen, Director, Office of Small and Disadvantaged 
Business Utilization, Department of Defense; Dr. Walter M. 
Polansky, Office of Science, Department of Energy; Ms. Jo Anne 
Goodnight, SBIR and STTR Program Coordinator, National 
Institutes of Health, Department of Health and Human Services; 
Mr. Anthony Camarota, President, Avtec Industries, Inc., 
Hudson, Massachusetts; and, Mr. Richard W. Carroll, Chief 
Executive Officer, Digital System Resources, Inc., Fairfax, 
Virginia.
    The hearing stressed the urgency of reauthorizing the STTR 
Program, the successful use of the program by Federal agencies 
involved, and the success of the program in bringing new 
technologies to the marketplace.

                       consideration of h.r. 1860

    At 10:05 a.m. on August 1, 2001, the Committee on Small 
Business met to consider and report four bills, including H.R. 
1860. After consideration of H.R. 1860, Chairman Manzullo asked 
unanimous consent that H.R. 1860 be considered as read and open 
for amendment at any point. Chairman Manzullo and the ranking 
minority Member, Ms. Velazquez, jointly offered an amendment in 
the nature of a substitute. There were no amendments to the 
amendment in the nature of a substitute. Chairman Manzullo 
moved that the amendment in the nature of a substitute be 
adopted and it was adopted unanimously by voice vote. The 
Chairman then moved the bill to be reported, and at 10:45 a.m., 
by voice vote, a quorum being present, the Committee 
unanimously passed H.R. 1860, as amended, and ordered it to be 
reported.

                      section-by-section analysis

Section 1. Short title

    This section establishes the short title as the ``Small 
Business Technology Transfer Program Reauthorization Act.''

Section 2. Extension of program and expenditure amounts

    Subsection (a) extends the STTR program, authorized by 
section 9(n) of the Small Business Act, through September 30, 
2009. The percentage of extramural budget required to be 
expended by a participating agency annually on the program is 
established at 0.15 percent for each fiscal year through 2003 
and is increased to 0.3 percent for fiscal year 2004 and each 
fiscal year thereafter. Subsection (b) strikes the word 
``pilot,'' as it appears in section 9 of the Small Business 
Act, to describe the previous, trial basis of the program, and, 
thereby, establishes the permanent nature of the program.

Section 3. Increase in authorized Phase II awards

    Subsection (a) increased from $500,000 to $750,000 the 
amount that a participating agency may generally pay for a 
Phase II award. Further, the subsection permits the 
participating agency to shorten or lengthen the periods of 
Phase I and Phase II awards where appropriate for particular 
projects. Presently, a Phase I is a one-year award and a Phase 
II is a two-year award.
    Subsection (b) makes the amendments contained in subsection 
(a), above, i.e., increasing the amount of a Phase II award and 
making the length of Phase I and II awards more flexible, 
effective beginning October 1, 2003.

Section 4. Agency outreach

    This section requires that a participating agency implement 
an outreach program to research institutions and small 
businesses to increase participation and to enhance its STTR 
Program. Such STTR outreach program is to be undertaken in 
conjunction with an agency's outreach with respect to the SBIR 
Program.

Section 5. Policy directive modification

    This section amends section 9(p) of the Small Business Act 
to require the Administrator of the SBA to clarify the policy 
directive applicable to the STTR Program to insure that it is 
clear that the retention by a small business of rights to data 
generated by a small business in the performance of an STTR 
project does not terminate for a period of not less than four 
years after the small business completes participation in a 
phase of the award.

Section 6. STTR Program data collection

    Subsection (a) requires that SBA maintain sufficient data 
to effectively evaluate the STTR Program.
    Subsection (b) provides for the maintenance of an 
electronic database of information about the STTR Program 
similar to the database maintained for the SBIR Program. In 
addition, in collecting information concerning the STTR 
Program, the Administrator shall provide data concerning (1) 
whether a small business or a research institution initiated 
the collaboration with respect to a particular project, (2) 
whether the small business or the research institution 
originated the technology that is the subject of a project, (3) 
the length of time it took to negotiate a licensing agreement 
between the small business and the research institution, and 
(4) how the proceeds from the commercialization, marketing, or 
sale of technology resulting from each assisted STTR project 
were allocated (by percentage) between the small business and 
the research institution.
    Subsection (c) requires that the Administrator work in 
cooperation with the participating agencies to establish 
standardized reporting requirements for the collection of data 
from STTR applicants and awardees, taking into consideration 
the unique needs of each agency, and where possible permitting 
electronic updating to the maximum extent possible. Data 
collection shall be designed to minimize the burden on small 
businesses.
    Subsection (d) requires that the Administrator in reporting 
to Congress annually include in such reports the number of 
proposals received from, and the number and total amounts of 
awards to HUBZone small businesses under the SBIR and STTR 
Programs.

Section 7. STTR program-wide model agreement for intellectual property 
        rights

    Subsection (a) requires the Administrator to issues 
regulations, after an opportunity for comment by affected 
agencies, small businesses, research institutions, and other 
interested parties, that establish one model agreement for use 
by all participating agencies which allocates between small 
businesses and research institutions intellectual property 
rights and rights, if any, to carry out follow-on research, 
development, or commercialization.
    Subsection (b) requires participating agencies to adopt the 
model agreement that the Administrator promulgates by 
regulation

Section 8. FAST Program assistance to low-income areas

    Subsection (a) amends the Federal and State Technology 
(FAST) Partnership Program by adding a further criteria for 
reviewing proposals for funding under the program. The 
reviewers are to also consider whether the proposal addresses 
the needs of small businesses located in one or more HUBZones.
    Subsection (b) requires the Administrator to promulgate 
regulations establishing the standards for consideration of 
FAST Program proposals, including addressing the need of small 
businesses located in one or more HUBZones.

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, August 15, 2001.
Hon. Donald Manzullo,
Chairman, Committee on Small Business,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1860, the Small 
Business Technology Transfer Program Reauthorization Act of 
2001.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Ken Johnson.
            Sincerely,
                                            Dan L. Crippen,
                                                          Director.
    Enclosure.

               Congressional Budget Office Cost Estimate

H.R. 1860.--Small Business Technology Transfer Program Reauthorization 
        Act of 2001

    Summary: H.R. 1860 would change the expiration date of the 
Small Business Technology Transfer (STTR) program from 2001 to 
2009. The STTR program requires federal agencies with annual 
appropriations for extramural research of more than $1 billion 
to set aside a portion of their extramural research budget for 
cooperative research between small businesses and a federal 
laboratory or nonprofit research institution. H.R. 1860 also 
would modify the STTR program in several ways, including a 
gradual increase in the percentage of extramural research funds 
that would be set aside for the program.
    Assuming appropriation of the necessary amounts, CBO 
estimates that implementing H.R. 1860 would cost about $26 
million over the 2002-2006 period. H.R. 1860 would not affect 
direct spending or receipts; therefore, pay-as-you-go 
procedures would not apply.
    H.R. 1860 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA). 
The bill would benefit state colleges and universities that 
participate in the STTR program, and any related costs would be 
incurred voluntarily.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 1860 is shown in the following table. 
The costs of this legislation fall within budget functions 370 
(commerce and housing credit), 250 (general science, space, and 
technology), 050 (national defense), 270 (energy), and 550 
(health).

----------------------------------------------------------------------------------------------------------------
                                                                  By fiscal year, in millions of dollars--
                                                           -----------------------------------------------------
                                                              2001     2002     2003     2004     2005     2006
----------------------------------------------------------------------------------------------------------------

                                        SPENDING SUBJECT TO APPROPRIATION
STTR Spending Under Current Law:
    Budget Authority \1\..................................        4        0        0        0        0        0
    Estimated Outlays.....................................        4        1        0        0        0        0
Proposed Changes:
    Estimated Authorization Level.........................        0        5        4        6        6        6
    Estimated Outlays.....................................        0        4        4        6        6        6
STTR Spending Under H.R. 1860:
    Estimated Authorization Level.........................        4        5        4        6        6        6
    Estimated Outlays.....................................        4        5        4        6        6        6
----------------------------------------------------------------------------------------------------------------
\1\ The 2001 level is the amount that CBO estimates was appropriated to administer the STTR program in 2001.

    Basis of estimate: The five federal agencies that currently 
participate in the program are the Department of Defense, the 
Department of Energy, the Department of Health and Human 
Services, the National Aeronautics and Space Administration, 
and the National Science Foundation. Program oversight is 
conducted by the Small Business Administration (SBA). The costs 
of the STTR program to the participating agencies consist 
primarily of salaries and expenses for personnel to evaluate 
grant applications, associated overhead costs, printing costs, 
and mailing expenses. The costs associated with administering 
awards through the STTR program are slightly higher than 
administering the same awards through regular program channels.
    Based on information from SBA and the participating 
agencies, CBO estimates that administering the STTR program 
will cost a total of about $4 million this year. Therefore, CBO 
estimates that extending the current program through 2009 would 
cost these agencies approximately that amount each year, 
assuming appropriation of the necessary amounts.
    In addition, H.R. 1860 would increase the percentage of the 
agencies' extramural research budgets that would be set aside 
for the STTR program starting in 2004. Based on information 
from the affected agencies, CBO expects that this provision 
would cause the number of applications for STTR grants to 
increase, thereby increasing the administrative cost of the 
program. Based on information from SBA and the participating 
agencies, CBO estimates that this expansion would cost an 
additional $2 million a year during the 2004-2006 period, 
subject to the appropriation of the necessary funds.
    Finally, H.R. 1860 would modify the STTR program in three 
other ways. The bill would expand the program's outreach 
efforts to small businesses and the research community. The 
legislation also would alter and expand the data that the 
participating agencies would have to report to SBA each year as 
part of its oversight responsibilities. Finally, H.R. 1860 
would require SBA to issue a regulation that would establish a 
model legal agreement for small businesses and research 
institutions participating in STTR projects to delineate their 
intellectual property rights. Based on information from the 
affected agencies, CBO estimates that implementing these three 
provisions would cost about $500,000 in 2002 and negligible 
amounts in 2003 and each year thereafter, subject to the 
availablilty of appropriated funds.
    Pay-as-you-go considerations: None.
    Intergovernmental and private-sector impact: H.R. 1860 
contains no intergovernmental or private-sector mandates as 
defined in UMRA. The bill would benefit state colleges and 
universities that participate in the STTR program, and any 
related costs would be incurred voluntarily.
    Previous CBO estimate: On August 2, 2001, CBO transmitted a 
cost estimate for S. 856, the Small Business Technology 
Transfer Program Reauthorization Act of 2001, as ordered 
reported by the Senate Committee on Small Business on July 19, 
2001. S. 856 is very similar to H.R. 1860, with two exceptions. 
S. 856 would reauthorize the STTR program for an additional 
year and would not require the SBA to issue new regulations 
related to the intellectual property rights. Therefore, CBO 
estimates that the cost of implementing H.R. 1860 would be 
slightly higher than for S. 856 over the 2002-2006 period, but 
would be slightly lower over the 2002-2011 period, assuming the 
appropriation of the necessary amounts.
    Estimate prepared by: Federal Costs: Ken Johnson. Impact on 
State, Local, and Tribal Governments: Susan Sieg Tompkins. 
Impact on the Private Sector: Cecil McPherson.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                        committee correspondence

                          House of Representatives,
                                      Committee on Science,
                                Washington, DC, September 21, 2001.
Hon. J. Dennis Hastert,
Speaker, Office of the Speaker,
House of Representatives, Washington, DC.
    Dear Speaker Hastert: I am writing to inform you that the 
Committee on Science has discharged from further consideration 
H.R. 1860--a bill to reauthorize the Small Business Technology 
Transfer Program, and for other purposes. H.R. 1860 was 
referred to this Committee on May 16, 2001.
            Sincerely,
                                      Sherwood L. Boehlert,
                                                          Chairman.

                      committee estimate of costs

    Pursuant to the Congressional Budget Act of 1974, the 
Committee estimates that the amendments to the Small Business 
Act contained in H.R. 1860 will not significantly increase 
discretionary spending or appropriations over the next eight 
fiscal years. Furthermore, pursuant to clause 3(d)(2)(A) of 
rule XIII of the Rules of the House of Representatives, the 
Committee estimates that implementation of H.R. 1860 will 
increase the administrative costs, as set forth in the 
Congressional Budget Office estimate.

                           oversight findings

    In accordance with clause 4(c)(2) of rule X of the Rules of 
the House of Representatives, the Committee states that no 
oversight findings or recommendations have been made by the 
Committee on Government Reform with respect to the subject 
matter contained in H.R. 1860.
    In accordance with clause 2(b)(1) of rule X of the Rules of 
the House of Representatives, the oversight findings and 
recommendations of the Committee on Small Business with respect 
to the subject matter contained in H.R. 1860 are contained in 
the descriptive portions of this report.

                 statement of constitutional authority

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in Article I, Section 8, Clause 18 of the 
Constitution of the United States.

         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, existing law in which no change is 
proposed is shown in roman):

                          SMALL BUSINESS ACT

           *       *       *       *       *       *       *

  Sec. 9. (a) * * *
  (b) It shall be the duty of the Administration, and it is 
hereby empowered--
          (1) * * *

           *       *       *       *       *       *       *

          (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 [pilot] programs;

           *       *       *       *       *       *       *

          (7) to report not less than annually 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 the data on output and 
        outcomes collected pursuant to subsections (g)(10) [and 
        (o)(9),], (o)(9), and (o)(15), the number of proposals 
        received from, and the number and total amount of 
        awards to, HUBZone small business concerns under each 
        of the SBIR and STTR programs, and a description of the 
        extent to which Federal agencies are providing in a 
        timely manner information needed to maintain the 
        database described in subsection (k).

           *       *       *       *       *       *       *

  (e) For the purpose of this section--
          (1) * * *

           *       *       *       *       *       *       *

          (6) the term ``Small Business Technology Transfer 
        Program'' or ``STTR'' means a [pilot] 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--

           *       *       *       *       *       *       *

  (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 first phase or second phase 
                SBIR or STTR award from a Federal agency;
                  (B) a description of each first phase or 
                second phase SBIR or STTR award received by 
                that small business concern, including--

           *       *       *       *       *       *       *

                  (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; [and]
                  (D) information regarding mentors and 
                Mentoring Networks, as required by section 
                35(d)[.]; and
                  (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 the 
                        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.
          (2) Government 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, 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 solely for SBIR and STTR program 
        evaluation that--
                  (A) contains for each second phase award made 
                by a Federal agency--
                          (i) * * *

           *       *       *       *       *       *       *

                          (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;

           *       *       *       *       *       *       *

                  (D) 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; and

           *       *       *       *       *       *       *

  (n) Required Expenditures for STTR by Federal Agencies.--
          [(1) Required expenditure amounts.--With respect to 
        fiscal years 1998, 1999, 2000, and 2001, 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, is authorized to expend with 
        small business concerns not less than 0.15 percent of 
        that extramural budget specifically in connection with 
        STTR programs that meet the requirements of this 
        section and any policy directives and regulations 
        issued under this section.]
          (1) Required expenditure amounts.--
                  (A) In general.--With respect to each fiscal 
                year through fiscal year 2009, 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; and
                          (ii) 0.3 percent for fiscal year 2004 
                        and each fiscal year thereafter.

           *       *       *       *       *       *       *

  (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) * * *

           *       *       *       *       *       *       *

          (11) [develop a model agreement not later than July 
        31, 1993, to be approved by the Administration,] 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) * * *

           *       *       *       *       *       *       *

          (13) not later than July 31, 1993, develop procedures 
        for assessing the commercial merit and feasibility of 
        STTR proposals, as evidenced by--
                  (A) * * *

           *       *       *       *       *       *       *

                  (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; and
          (15) collect, and maintain in a common format, in 
        accordance with subsection (v), such information from 
        awardees as is necessary to assess the STTR program, 
        including information necessary to maintain the 
        database described in subsection (k).
  (p) STTR Policy Directive.--
          (1) * * *
          (2) Contents.--The policy directive required by 
        paragraph (1) shall provide for--
                  (A) * * *
                  (B) a simplified, standardized funding 
                process that provides for--
                          (i) * * *

           *       *       *       *       *       *       *

                          (ix) 1-year awards for the first 
                        phase of an STTR program, generally not 
                        to exceed $100,000, and 2-year awards 
                        for the second phase of an STTR 
                        program, generally not to exceed 
                        [$500,000] $750,000, 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;

           *       *       *       *       *       *       *

          (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 the first phase 
        (as described in subsection (e)(6)(A)), the second 
        phase (as described in subsection (e)(6)(B)), and the 
        third phase (as described in subsection (e)(6)(C)).

           *       *       *       *       *       *       *

  (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 affected agencies, small business 
        concerns, research institutions, and other interested 
        parties the opportunity to submit written comments.

           *       *       *       *       *       *       *

SEC. 34. FEDERAL AND STATE TECHNOLOGY PARTNERSHIP PROGRAM.

  (a) * * *

           *       *       *       *       *       *       *

  (c) Grants and Cooperative Agreements.--
          (1) * * *
          (2) Selection considerations.--In making awards or 
        entering into cooperative agreements under this 
        section, the Administrator and the SBIR program 
        managers referred to in paragraph (1)--
                  (A) * * *
                  (B) shall consider, at a minimum--
                          (i) * * *

           *       *       *       *       *       *       *

                          (iv) whether the proposal integrates 
                        and coordinates the proposed activities 
                        with other State and local programs 
                        assisting small high-technology firms 
                        in the State; [and]
                          (v) the manner in which the applicant 
                        will measure the results of the 
                        activities to be conducted[.]; and
                          (vi) whether the proposal addresses 
                        the needs of small business concerns 
                        located in 1 or more qualified census 
                        tracts, as that term is defined in 
                        section 42(d)(5)(C)(ii) of the Internal 
                        Revenue Code of 1986.

           *       *       *       *       *       *       *

          (4) Process.--Proposals and applications for 
        assistance under this section shall be in such form and 
        subject to such procedures as the Administrator shall 
        establish. The Administrator shall promulgate 
        regulations establishing standards for the 
        consideration of proposals under paragraph (2), 
        including standards regarding each of the 
        considerations identified in paragraph (2)(B).

           *       *       *       *       *       *       *

                            ADDITIONAL VIEWS

    Democratic Members of the Committee on Small Business are 
well aware of the important role that technology plays in not 
only developing small businesses, but in strengthening the 
nation's economy. This was well-proven by the technology boom 
of the 1990s, fueled by small businesses and, especially high-
tech firms. The strength of the economy, for such an 
unprecedented time period, was directly related to the success 
of the high-tech sector.
    The Small Business Technology Transfer (STTR) Program, and 
its sister program, the Small Business Innovation Research 
(SBIR) Program, both work to foster the development of small 
technology businesses. These businesses can, in turn, improve 
the economic stability of their towns and communities. 
Reauthorizing the STTR Program through fiscal year 2009, is an 
important step in growing these small high-tech firms.
    This reauthorization legislation also increases the 
percentage of agency's extra-mural research budgets to be 
devoted to the STTR Program from .15 percent to .3 percent 
beginning in fiscal year 2004. This action doubles the amount 
of research that the government will be devoting to small 
firms.
    By increasing the grant amount of Phase I awards from the 
current $500,000 to $750,000 as proposed in the bill, small 
businesses will have more funding with which to conduct their 
research, thereby increasing the likelihood that their research 
will result in useful items that will culminate with 
commercialization.
    Additionally, language in the bill includes provisions that 
will assist with the assessment of the STTR program, by 
requiring the collection and maintaining of pertinent data, 
that can later be used to evaluate the program's strengths and 
weaknesses.
    Further, agency outreach for the STTR program has 
traditionally been incorporated with that of the SBIR program 
at many agencies. There have been numerous conferences for the 
SBIR program over the years that focused on the SBIR program 
only. The mandate to implement an outreach program to research 
institutions and small businesses to increase participation in 
the program is a necessary and much needed enhancement.
    Democratic Committee Members included three very important 
changes to encourage the growth of high-tech businesses. These 
changes include developing an STTR Program-wide model 
agreement, increasing awards to low-income areas, and tracking 
low income awards.
    The STTR Program operates by small businesses forming 
partnerships with either research institutions, federally-
funded research and development centers (FFRDCs), or non-profit 
organizations. This partnership then submits a proposal for 
necessary federal research requirements. The partnership is 
formalized with an agreement outlining the rights and 
responsibilities of each partner, and addressing the 
intellectual property rights and rights to carry out follow-on 
research, development or commercialization, if any, that are 
assigned to each partner.
    It has come to the Committee's attention that each 
participating agency has a model agreement, and many 
universities and FFRDCs have model agreements. The result is an 
exercise in which the small business and its research partner 
must come to an agreement, and have that agreement parallel the 
agency's agreement. The scenario often occurs wherein a small 
business doing work for the same agency, but with multiple 
research partners, must have multiple agreements, none of which 
are standard. Ultimately, this results in time devoted to 
developing partnership agreements when that time would be more 
effectively used to actually conduct research.
    Therefore, Committee Democrats have included language that 
requires the Small Business Administration (SBA) to go through 
a rule-making process to develop a single model agreement that 
can be acceptably used by all small businesses, agencies, and 
research partners. It is intended that this rule-making process 
involve commentary from affected agencies, small business 
owners, research institutions, and other interested parties. 
The resulting model agreement shall be used by all agencies as 
their model agreement so that small research firms can devote 
their time to that which they do best--research.
    Secondly, Committee Democrats have included language in the 
STTR reauthorization bill to modify the Federal and State 
Technology Partnership (FAST) Program that was made part of the 
statute with the enactment of P.L. 106-554. This five-year 
temporary program was designed to promote the development of 
high-technology firms in states that have few SBIR awards, and 
states that have few awards in low-income areas. Firms who 
participate in the STTR Program will also benefit from this 
Program.
    Grants or loans under the FAST Program may be given to 
companies to pay all or some of the cost of developing SBIR or 
STTR proposals. Outreach, financial support and technical 
assistance may be provided to establish a Mentoring Network 
will be developed within the FAST program to assist small 
businesses identified by FAST participants, SBIR agencies, the 
Administrator or other entities; a training program for 
individuals providing SBIR outreach and assistance at the state 
level; and to ``encourage'' commercialization of SBIR-funded 
technology.
    There is a limit of one proposal for each state in the FAST 
program in any fiscal year. The matching requirements for FAST 
Program grants are as follows: Fifty cents private for each 
federal dollar for the 18 states that receive the fewest SBIR 
first phase awards. One dollar private for each federal dollars 
for the 16 states receiving the greatest number of SBIR first 
phase awards. For the rest of the states: 75 cents private for 
each federal dollar.
    Language was included in this Program by House Democrats on 
the Committee on Small Business that allows a 50 cents private 
for each federal dollar for assistance directed to low-income 
areas--even if the state is a high-volume state as far as SBIR 
awards. We were concerned when this language was included, that 
it would not be implemented properly, and that not enough 
emphasis would be placed on this issue. This has become a 
reality in that the SBA did not include any reference to low-
income area assistance under the FAST Program in its recent 
Policy Directive.
    Therefore, at the insistence of Committee Democrats, 
language was included in the STTR reauthorization legislation 
to require that a separate evaluation criteria for FAST 
proposals be developed to ensure that these proposals address 
how they are going to increase technology in low income areas 
of states--areas that have been historically underutilized as 
far as the STTR and SBIR programs. It is the intent of the 
proposal that the SBA go through a rule-making process to 
determine the weight that this criteria should have compared to 
other criteria, and to determine the standards by which these 
proposals shall be evaluated.
    Lastly, we included language in the STTR reauthorization to 
require that the SBA report to Congress, on an annual basis, on 
the number of SBIR and STTR awards made to small businesses 
located in HUBZones. These ``Historically Underutilized 
Business'' Zones are specifically defined as areas of high 
unemployment and low income. These locations have been out of 
the mainstream of economic growth that the nation has 
experienced over the past 10 years, and, as such, would benefit 
greatly from the economic strength that technology provides to 
a community. Further, tracking awards made to these businesses 
will assist in evaluating the success of the FAST Program.
    From a program administration standpoint, we believe it is 
important to address the staffing needs of the Office of 
Technology within the SBA's Office of Government Contracting 
and Business Development. We also believe it is important to 
address the placement of the Office of Technology within the 
SBA's current organizational structure. The Office of 
Technology administers the SBIR and STTR Programs.
    We are concerned that with a staff of six, with three 
employees being support personnel, the Office of Technology is 
approaching the point of critical under-staffing. This division 
manages and administers the two research and development 
programs, two outreach grant programs, the National Research 
Council study on the SBIR Program, the public/private database, 
submits annual reports for SBIR and STTR to Congress, conducts 
outreach for technology programs to the ten participating 
agencies and small businesses across the country, implements a 
program policy directive, and administers an internal 
initiative through Historically Black Colleges and 
Universities. With all of these functions and only three 
professional staff members, we believe that the success of the 
programs could be doomed before all of the programs and 
initiatives are fully implemented.
    We are also concerned with the fact that the Office of 
Technology is effectively buried within the Office of 
Government Contracting and Business Development, under the 
supervision of the Associate Administrator for the Office of 
Policy Planning and Liaison. The SBIR and STTR Programs do not 
have the same mission as the Office of Government Contracting 
and Business Development. The purpose of the Office of 
Government Contracting and Business Development is to ensure 
that small businesses receive their fair share of contracts 
with the Federal government. The SBIR and STTR Programs within 
the Office of Technology are in place to improve the capacity 
of small research and development companies, by ensuring that 
small firms receive Federal R&D projects.
    The SBA, overall, has a scatter-shot approach, at best, to 
assisting small businesses with technology, and particularly 
electronic commerce. This is especially disturbing to Committee 
Democrats in light of a recent report by Forrester Research 
that predicted online sales will reach $3 trillion by 2003. 
SBA's electronic commerce initiatives include various memoranda 
of understanding with private companies to provide training, 
but no long-term strategic plan to increase the number of small 
businesses who have the capacity to take advantage of 
electronic commerce. Further, SBA appears to have no strategy 
whatsoever to encourage small businesses to improve their 
internal ordering mechanisms through business-to-business 
electronic commerce. There is no focal point for the existing 
electronic commerce-related initiatives other than directly 
within the Administrator's office.
    Therefore, we believe it is more reasonable to expand the 
mission of the existing Office of Technology to include 
electronic commerce and other technology-related issues and 
place this Office under the direct supervision of the 
Administrator, than to have the Office of Technology report to 
the Office of Government Contracting and Business Development, 
and to have no office evaluating electronic commerce and 
business-to-business electronic commerce initiatives.
    To conclude, Committee Democrats are committed to ensuring 
that small businesses across the country are able to grow and 
expand their technology capabilities. We know that not only do 
small businesses, in general, employ more than half of the non-
farm workforce, but small businesses account for 38 percent of 
the private sector workforce in the high tech industry. We 
believe the STTR and SBIR Programs are critical to increasing 
the capacity of small business technology companies, and that 
these programs should continue to be monitored and evaluated, 
and given the appropriate resources to ensure their continued 
success.

                                                Nydia M. Velazquez.

                                  
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