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[Senate Report 114-414]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 310
                                                       
114th Congress    }                                         {    Report
                                  SENATE
 2d Session       }                                         {   114-414

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 IMPROVING SMALL BUSINESS INNOVATION AND TECHNOLOGIES RESEARCH ACT OF 
                                  2015

                                _______
                                

               December 20, 2016.--Ordered to be printed

   Filed, under authority of the order of the Senate of December 10 
                  (legislative day, December 9), 2016

                                _______
                                

Mr. Vitter, from the Committee on Small Business and Entrepreneurship, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 2136]

    The Committee on Small Business and Entrepreneurship, to 
which was referred the bill (S. 2136) to establish the Regional 
SBIR State Collaborative Initiative Pilot Program, and for 
other purposes, having considered the same, reports favorably 
thereon with an amendment, and recommends that the bill, as 
amended, do pass.

                            I. INTRODUCTION

    The Improving Small Business Innovation and Technologies 
Research Act of 2015 (S. 2136) was introduced by Senator 
Vitter, with Senator Enzi, on October 6, 2015. Senator Coons is 
also a cosponsor.
    S. 2136 seeks to amend the Small Business Act to extend the 
requirement that allows federal agencies required to conduct a 
Small Business Innovation Research (SBIR) Program to use up to 
3% of its SBIR funds for the administration of its SBIR or 
Small Business Technology Transfer (STTR) Program as well as 
other specified costs.
    The bill also establishes the Regional SBIR State 
Collaborative Initiative Pilot Program. This program shall 
provide one-year renewable awards to a regional collaborative 
to address the needs of small businesses. This shall be done in 
order for small businesses to be more competitive in the 
proposal and selection process of SBIR and STTR Program awards, 
and to increase technology transfer and commercialization.
    The legislation also reauthorizes the Federal and State 
Technology Partnership (FAST) Program. This includes Mentoring 
Networks and the mentoring database.

             II. HISTORY (PURPOSE AND NEED FOR LEGISLATION)

    The Small Business Innovation Research (SBIR) Program was 
created under the Small Business Innovation Development Act of 
1982. SBIR was created in order to increase the role of small 
businesses in federally funded research and development (R&D) 
with the potential for commercialization. The Program has four 
main goals: to stimulate technological innovation, to meet 
federal R&D needs, to foster participation in innovation by 
disadvantaged persons, and to increase private-sector 
commercialization of innovation that comes from federal R&D. 
There are currently eleven federal agencies that participate in 
the SBIR Program.
    The Small Business Technology Transfer (STTR) Program was 
modeled after the SBIR Program as another way to expand 
opportunities for small businesses to participate in federal 
R&D projects. The program was established by the Small Business 
Technology Transfer Act of 1992 and has been reauthorized 
numerous times since. The major goal of the STTR program is to 
facilitate the transfer of technology through cooperation 
between research institutions and small businesses. Currently, 
5 federal agencies participate in the STTR Program which is 
administered individually by the participating agency.
    The bill addresses two main policy issues. First, it 
addresses the concern raised by stakeholders that federal 
agencies participating in the SBIR and STTR programs did not 
have assurance that they would be able to use program funds to 
carry out the administrative aspects of the programs that they 
have been charged with running. Second, this bill addresses 
challenges that low participation states have had in competing 
for SBIR/STTR contracts. S. 2136 creates the Regional SBIR 
State Collaborative Initiative Pilot Program. These one-year 
awards of up to $300,000 per state, renewable annually for up 
to three years, will help small businesses located in the 
bottom half of states for SBIR funding gain the skills needed 
to successfully compete for and win SBIR and STTR grants. S. 
2136 has passed the Committee two times. By unanimous voice 
vote on October 7, 2015, and as part of S. 2812, on May 11, 
2016.
    Lastly, the bill extends the FAST program through fiscal 
year 2017. The FAST program was created to support the 
development of small high-technology firms, including SBIR and 
STTR firms, for economic development and to increase the number 
and technological competitiveness of SBIR/STTR applications 
from small business concerns in low-participation states. A 
major purpose of the program was to increase the geographic 
disbursement of SBIR and STTR projects around the country in a 
way that would protect the competitive integrity of the SBIR 
and STTR programs instead of resorting to state-by-state 
quotas. Congress wanted to increase the applications from the 
low-award states because of the correlation between 
applications and awards; a study from the U.S. Government 
Accountability Office (GAO) found that awards were 
proportionate to applications. Through the FAST program, Small 
Business Development Centers (SBDCs) or state entities, 
typically with expertise in technology transfer and economic 
development, compete for matching grants. These entities then 
provide technical assistance to small businesses to apply for 
and fulfill SBIR and STTR contracts, provide general support to 
build an ecosystem for research and development by small firms, 
and promote technology transfer from university research to 
technology-based small business concerns. S. 2136 would allow 
states to compete for FAST and the Regional Collaborative 
pilot, but prohibit any state from receiving assistance from 
both programs to prevent against fraud. The program first 
appeared in the Consolidated Appropriations Act of 2001 (15 
U.S.C. Sec. 657d(c)). The program was allowed to expire on 
September 30, 2005 but was reestablished in the Consolidated 
Appropriations Act of 2010.

                     III. HEARINGS AND ROUNDTABLES

    In the 114th Congress:
    In the 114th Congress, on January 28, 2016, issues related 
to the SBIR and STTR programs and the State Collaborative 
Initiative Pilot Program were addressed at a hearing in the 
Senate Committee on Small Business and Entrepreneurship 
entitled ``Reauthorization of the SBIR/STTR Program: The 
Importance of Small Business Innovation to National and 
Economic Security''. At the hearing, witnesses testified that 
more personnel were needed to administer the SBIR and STTR 
programs and that initiatives in the state were needed to 
complement outreach efforts of the 11 SBIR agencies and the 
SBA. Chairman Vitter briefly explained the State Collaborative 
Initiative Pilot Program.

                        IV. DESCRIPTION OF BILL

    The Improving Small Business Innovative Research and 
Technologies Act of 2015 (S. 2136) amends the Small Business 
Act (15 U.S.C. 638) to establish a pilot program that will be 
known as the Regional SBIR State Collaborative Initiative Pilot 
Program. The Regional SBIR State Collaborative Initiative Pilot 
Program is designed to provided assistance to SBIR and STTR 
program participants in a number of ways. S. 2136 describes 
where the funding for the new pilot program will come from and 
the uses of the funds within the new program.
    The legislation also amends section 34 of the Small 
Business Act (15 U.S.C. 657d) by extending the FAST program for 
2016 and 2017.

                           V. COMMITTEE VOTE

    In compliance with rule XXVI(7)(b) of the Standing Rules of 
the Senate, the following vote was recorded on October 7, 
2015.\1\
---------------------------------------------------------------------------
    \1\The bill also passed the Committee as part of S. 2812, the SBIR 
and STTR Reauthorization and Improvement Act of 2016, on May 11, 2016.
---------------------------------------------------------------------------
    A motion to adopt the Improving Small Business Innovative 
Research and Technologies Act of 2015, was approved unanimously 
by voice vote with the following Senators present: Vitter, 
Scott, Fischer, Gardner, Ernst, Enzi, Shaheen, Cantwell, 
Cardin, Booker, Hirono, and Peters.

                           VI. COST ESTIMATE

    In compliance with rule XXVI(11)(a)(1) of the Standing 
Rules of the Senate, the Committee estimates the cost of the 
legislation will be equal to the amounts discussed in the 
following letter from the Congressional Budget Office:

                                                     July 15, 2016.
Hon. David Vitter, Chairman,
Committee on Small Business and Entrepreneurship,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 2136, Improving 
Small Business Innovative Research and Technologies Act of 
2015.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Stephen 
Rabent.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

S. 2136--Improving Small Business Innovation and Technologies Research 
        Act of 2015

    Summary: S. 2136 would authorize grants for 2017 to 
facilitate collaboration between research institutions and 
small businesses to help small businesses better compete for 
awards under the Small Business Innovation Research (SBIR) and 
the Small Business Technology Transfer (STTR) programs. The 
bill also would authorize agencies to use a portion of the 
amounts available to them for research and development for the 
administrative costs of the SBIR and STTR programs. Finally, S. 
2136 would authorize appropriations for the Federal and State 
Technology Partnership program.
    Based on information from the Small Business Administration 
(SBA) and agencies that participate in the SBIR and STTR 
programs, CBO estimates that implementing S. 2136 would cost 
$23 million over the 2017-2021 period, assuming appropriation 
of the necessary amounts. Pay-as-you-go procedures do not apply 
to this legislation because enacting it would not affect direct 
spending or revenues.
    CBO estimates that enacting S. 2136 would not increase net 
direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2027.
    S. 2136 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
    Estimated cost to the Federal Government: The estimated 
budgetary effect of S. 2136 is shown in the following table. 
The costs of this legislation fall within several budget 
functions including 370 (commerce), 050 (national defense), 250 
(general science, space, and technology), and 550 (health).

----------------------------------------------------------------------------------------------------------------
                                                                 By fiscal year, in millions of dollars--
                                                         -------------------------------------------------------
                                                            2017     2018     2019     2020     2021   2017-2021
----------------------------------------------------------------------------------------------------------------
                                 INCREASES IN SPENDING SUBJECT TO APPROPRIATION
 
Regional SBIR and STTR State Collaborative Initiative
 Pilot Program:
    Estimated Authorization Level.......................       13        0        0        0        0        13
    Estimated Outlays...................................       10        2        1        0        0        13
Federal and State Technology Partnership Program:
    Authorization Level.................................       10        0        0        0        0        10
    Estimated Outlays...................................        8        2        0        0        0        10
    Total Changes:
        Estimated Authorization Level...................       23        0        0        0        0        23
        Estimated Outlays...............................       18        4        1        0        0        23
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Note: SBIR = Small Business Innovation Research; STTR = Small Business Technology Transfer.

    Basis of estimate: Under current law, the SBIR program 
requires federal agencies with extramural budgets for research 
and development (R&D) that exceed $100 million per year to set 
aside 3 percent of such funds for contracts with small 
businesses. (Extramural budgets consist of expenditures for 
activities not performed by agency employees.) Likewise, the 
STTR program requires federal agencies with extramural budgets 
for R&D that exceed $1 billion per year to set aside 0.45 
percent of that budget for cooperative research between small 
businesses and a federal laboratory or nonprofit research 
institution. Eleven agencies currently participate in at least 
one of those programs, including the Departments of Defense, 
Health and Human Services, Energy, Agriculture, and Homeland 
Security, as well as the National Aeronautics and Space 
Administration, the National Science Foundation, and the 
Environmental Protection Agency.
    For participating agencies, the cost of those programs 
consists primarily of personnel and associated overhead 
expenses to solicit applications, prepare reports, and track 
outcomes. The organizational structure of the program offices 
varies. Some agencies have full-time staff members devoted to 
the SBIR and STTR programs, with other staff assisting as part 
of their duties; other agencies, however, have employees 
working part-time on the program.
    For this estimate, CBO assumes that the bill will be 
enacted near the end of 2016, that the necessary amounts will 
be appropriated, and that spending will follow historical 
patterns.

Regional SBIR and STTR state collaborative initiative pilot program

    S. 2136 would establish a one-year program that would 
provide grants to research institutions and small businesses 
that collaborate to improve the ability of those small 
businesses to compete successfully for awards under the SBIR 
and STTR programs. Grant recipients would be expected to 
provide:
    Opportunities for national experts to review the 
applications of small businesses competing for an award under 
the SBIR or STTR programs for the first time;
    Mentors to assist applicants with the process of preparing 
and submitting a proposal for an award;
    Outreach that is focused on certain small businesses, those 
owned and controlled by women, for example; and
    Technical assistance to prepare applicants to compete more 
effectively for awards.
    For 2017, S. 2136 would authorize each agency to use three 
percent of its research and development funding dedicated to 
the SBIR program for costs to administer the pilot program. The 
bill also would authorize the SBA to use a portion of funds 
dedicated to the program by each agency for its administrative 
costs. Based on information from the SBA and several 
participating agencies about the size of their extramural R&D 
budgets and their respective administrative costs, CBO 
estimates that implementing the one-year pilot program would 
cost $13 million over the 2017-2021 period.

Federal and State Technology Partnership Program

    S. 2136 would authorize the appropriation of $10 million in 
2017 to fund the Federal and State Technology Partnership 
program. That program awards grants to support the efforts of 
colleges and universities and business development centers to 
provide technical assistance and other support to small 
businesses competing for awards under the SBIR and STTR 
programs. Based on information from the SBA and historical 
spending for the FAST program, CBO estimates that implementing 
this provision of S. 2136 would cost $10 million over the 2017-
2021 period, assuming appropriation of the authorized amounts.
    Pay-as-you-go considerations: None.
    Increase in long-term direct spending and deficits: CBO 
estimates that enacting the bill would not increase net direct 
spending or on-budget deficits in any of the four consecutive 
10-year periods beginning in 2027.
    Intergovernmental and private-sector impact: S. 2136 
contains no intergovernmental or private-sector mandates as 
defined in UMRA. State, local, and tribal governments would 
benefit from assistance for research and other activities 
related to technology and small business. Any cost to those 
governments would be incurred voluntarily as a condition of 
receiving federal assistance.
    Estimate prepared by: Federal Costs: Stephen Rabent; Impact 
on State, Local, and Tribal Governments: Leo Lex; Impact on the 
Private Sector: Logan Smith.
    Estimate approved by: H. Samuel Papenfuss, Deputy Assistant 
Director for Budget.

                  VII. EVALUATION OF REGULATORY IMPACT

    In compliance with rule XXVI(11)(b) of the Standing Rules 
of the Senate, it is the opinion of the Committee that no 
significant additional regulatory impact will be incurred in 
carrying out the provisions of this legislation. There will be 
no additional impact on the personal privacy of companies or 
individuals who utilize the services provided.

                   VIII. SECTION-BY-SECTION ANALYSIS

Section 1: Short title

    This section provides the title the ``Improving Small 
Business Innovative Research and Technologies Act of 2015.''

Section 2: Regional SBIR State Collaborative Initiative Pilot Program

    Section 2 of S. 2136 extends through fiscal year 2017 the 
requirement allowing federal agencies that are required to 
conduct an SBIR Program to use up to 3% of its SBIR funding for 
administration of its SBIR or STTR Program. This 3% may also be 
used for other administrative, oversight, and processing costs.
    A Regional SBIR State Collaborative Initiative Pilot 
Program will be established. This program will award one-year 
renewable rewards, for up to three years, to a regional 
collaborative of entities frm multiple states. The Pilot 
Program is designed to address the needs of small businesses so 
that they may be more competitive in the proposal and selection 
for SBIR and STTR awards as well as increase the technology 
transfer and commercialization of those projects.

Section 3: FAST Program

    This section reauthorizes the FAST Program for fiscal year 
2017.
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