I 

109TH CONGRESS 

1ST SESSION H. R. 2943

To amend the Small Business Act to establish eligibility requirements for 

business concerns to receive awards under the Small Business Innovation 

Research Program. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 16, 2005

Mr. GRAVES (for himself, Mr. HONDA, Mr. INSLEE, and Mr. BAIRD) introduced the following bill; which was referred to the Committee on Small 

Business, and in addition to the Committee on Science, for a period to 

be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee 

concerned 

A BILL

To amend the Small Business Act to establish eligibility 

requirements for business concerns to receive awards 

under the Small Business Innovation Research Program.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Save Biotechnology 

5 Innovative Research Act of 2005’’ or ‘‘SABIR Act’’. 
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1 SEC. 2. ELIGIBILITY FOR PARTICIPATION IN SMALL BUSI2 NESS INNOVATION RESEARCH PROGRAM. 

3 (a) IN GENERAL.—Section 9 of the Small Business 

4 Act (15 U.S.C. 638) is amended by adding at the end the 

5 following new subsection: 

6 ‘‘(x) ELIGIBILITY FOR PARTICIPATION IN SBIR PRO7 GRAM.—

8 ‘‘(1) IN GENERAL.—To be eligible to receive an 

9 award under the SBIR program, a business con10 cern—

11 ‘‘(A) shall have not more than 500 employ12 ees; and 

13 ‘‘(B) shall be owned in accordance with 

14 one of the ownership requirements described in 

15 paragraph (2). 

16 ‘‘(2) OWNERSHIP REQUIREMENTS.—The owner17 ship requirements referred to in paragraph (1) are 

18 the following: 

19 ‘‘(A) The business concern is—

20 ‘‘(i) at least 51 percent owned and 

21 controlled by individuals or eligible venture 

22 capital companies, who are citizens of or 

23 permanent resident aliens in the United 

24 States; and 

25 ‘‘(ii) not more than 49 percent owned 

26 and controlled by a single eligible venture 
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1 capital company (or group of commonly2 controlled eligible venture capital compa3 nies). 

4 ‘‘(B) The business concern is at least 51 

5 percent owned and controlled by another busi6 ness concern that is itself at least 51 percent 

7 owned and controlled by individuals who are 

8 citizens of or permanent resident aliens in the 

9 United States. 

10 ‘‘(C) The business concern is a joint ven11 ture in which each entity to the joint venture 

12 meets one of the ownership requirements under 

13 this paragraph. 

14 ‘‘(3) EMPLOYEE DEFINED.—For purposes of 

15 paragraph (1)(A), the term ‘employee’ means an in16 dividual employed by the business concern and does 

17 not include—

18 ‘‘(A) an individual employed by an eligible 

19 venture capital company providing financing to 

20 the business concern; or 

21 ‘‘(B) an individual employed by any entity 

22 in which the eligible venture capital company is 

23 invested other than that business concern. 

24 ‘‘(4) TREATMENT OF OTHER FORMS OF OWNER25 SHIP.—
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1 ‘‘(A) STOCK OPTION OWNERSHIP.—For 

2 purposes of this subsection, in the case of a 

3 business concern owned in whole or in part by 

4 an employee stock option plan, each stock trust5 ee or plan member shall be deemed to be an 

6 owner. 

7 ‘‘(B) TRUST OWNERSHIP.—For purposes 

8 of this subsection, in the case of a business con9 cern owned in whole or in part by a trust, each 

10 trustee or trust beneficiary shall be deemed to 

11 be an owner. 

12 ‘‘(5) EXCEPTION FOR START-UP CONCERNS.—

13 Notwithstanding paragraphs (1) through (4), any 

14 business concern that is a start-up concern shall be 

15 eligible to receive funding under the SBIR pro16 gram.’’. 

17 (b) DEFINITIONS.—Section 9(e) of the Small Busi18 ness Act (15 U.S.C. 638(e)) is amended by adding at the 

19 end the following new paragraphs: 

20 ‘‘(9) The term ‘eligible venture capital com21 pany’ means a business concern—

22 ‘‘(A) that—

23 ‘‘(i) is a Venture Capital Operating 

24 Company, as that term is defined in regu-
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1 lations promulgated by the Secretary of 

2 Labor; or 

3 ‘‘(ii) is an entity that— 

4 ‘‘(I) is registered under the In5 vestment Company Act of 1940 (15 

6 U.S.C. 80a–51 et seq.); or 

7 ‘‘(II) is an investment company, 

8 as defined in section 3(c)(14) of such 

9 Act (15 U.S.C. 80a–3(c)(14)), which 

10 is not registered under such Act be11 cause it is beneficially owned by less 

12 than 100 persons; and 

13 ‘‘(B) that is not controlled by any business 

14 concern that is not a small business concern 

15 within the meaning of section 3. 

16 ‘‘(10) The term ‘start-up concern’ means a 

17 business concern that— 

18 ‘‘(A) for at least 2 of the 3 preceding fiscal 

19 years has had— 

20 ‘‘(i) sales of not more than 

21 $3,000,000; or 

22 ‘‘(ii) no positive cash flow from oper23 ations; and 

24 ‘‘(B) is not formed to acquire any business 

25 concern other than a small business concern 
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1 that meets the requirement under subparagraph 

2 (A).’’. 

3 (c) REGULATIONS.—Before the date that is 90 days 

4 after the date of the enactment of this Act, the Adminis5 trator of the Small Business Administration shall— 

6 (1) in accordance with the exceptions to public 

7 rulemaking under section 553(b) (A) and (B) of title 

8 5, United States Code, promulgate regulations to 

9 implement the provisions of this Act; 

10 (2) publish in the Federal Register a notifica11 tion of the changes in eligibility for participation in 

12 the Small Business Innovation Research program 

13 made by this Act; and 

14 (3) communicate such changes to Federal agen15 cies that award grants under the Small Business In16 novation Research program. 

17 (d) EFFECTIVE DATE.—The amendments made by 

18 this Act shall apply with respect to any business concern 

19 that participates in the Small Business Innovation Re20 search program on or after the date of the enactment of 

21 this Act. 

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