U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Publishing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

20–913PDF 2017

SBIR/STTR REAUTHORIZATION: 

A REVIEW OF TECHNOLOGY TRANSFER 

HEARING 

BEFORE THE

SUBCOMMITTEE ON RESEARCH AND TECHNOLOGY 

COMMITTEE ON SCIENCE, SPACE, AND 

TECHNOLOGY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

June 16, 2016 

Serial No. 114–84 

Printed for the use of the Committee on Science, Space, and Technology 

( 

Available via the World Wide Web: http://science.house.gov 
(II) 

COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY 

HON. LAMAR S. SMITH, Texas, Chair 

FRANK D. LUCAS, Oklahoma 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

DANA ROHRABACHER, California 

RANDY NEUGEBAUER, Texas 

MICHAEL T. MCCAUL, Texas 

MO BROOKS, Alabama 

RANDY HULTGREN, Illinois 

BILL POSEY, Florida 

THOMAS MASSIE, Kentucky 

JIM BRIDENSTINE, Oklahoma 

RANDY K. WEBER, Texas 

JOHN R. MOOLENAAR, Michigan 

STEPHEN KNIGHT, California 

BRIAN BABIN, Texas 

BRUCE WESTERMAN, Arkansas 

BARBARA COMSTOCK, Virginia 

GARY PALMER, Alabama 

BARRY LOUDERMILK, Georgia 

RALPH LEE ABRAHAM, Louisiana 

DRAIN LAHOOD, Illinois 

WARREN DAVIDSON, Ohio 

EDDIE BERNICE JOHNSON, Texas 

ZOE LOFGREN, California 

DANIEL LIPINSKI, Illinois 

DONNA F. EDWARDS, Maryland 

SUZANNE BONAMICI, Oregon 

ERIC SWALWELL, California 

ALAN GRAYSON, Florida 

AMI BERA, California 

ELIZABETH H. ESTY, Connecticut 

MARC A. VEASEY, Texas 

KATHERINE M. CLARK, Massachusetts 

DONALD S. BEYER, JR., Virginia 

ED PERLMUTTER, Colorado 

PAUL TONKO, New York 

MARK TAKANO, California 

BILL FOSTER, Illinois 

SUBCOMMITTEE ON RESEARCH AND TECHNOLOGY

HON. BARBARA COMSTOCK, Virginia, Chair 

FRANK D. LUCAS, Oklahoma 

MICHAEL T. MCCAUL, Texas 

RANDY HULTGREN, Illinois 

JOHN R. MOOLENAAR, Michigan 

BRUCE WESTERMAN, Arkansas 

GARY PALMER, Alabama 

RALPH LEE ABRAHAM, Louisiana 

DARIN LAHOOD, Illinois 

LAMAR S. SMITH, Texas 

DANIEL LIPINSKI, Illinois 

ELIZABETH H. ESTY, Connecticut 

KATHERINE M. CLARK, Massachusetts 

PAUL TONKO, New York 

SUZANNE BONAMICI, Oregon 

ERIC SWALWELL, California 

EDDIE BERNICE JOHNSON, Texas 
(III) 

C O N T E N T S 

June 16, 2016 

Page 

Witness List ............................................................................................................. 2 

Hearing Charter ...................................................................................................... 3 

Opening Statements 

Statement by Representative Barbara Comstock, Chairwoman, Subcommittee 

on Research and Technology, Committee on Science, Space, and Technology, 

U.S. House of Representatives ............................................................................ 4 

Written Statement ............................................................................................ 6 

Statement by Representative Daniel Lipinski, Ranking Member, Subcommittee on Research and Technology, Committee on Science, Space, and 

Technology, U.S. House of Representatives ....................................................... 8 

Written Statement ............................................................................................ 10 

Statement by Representative Lamar S. Smith, Chairman, Committee on 

Science, Space, and Technology, U.S. House of Representatives ..................... 12 

Written Statement ............................................................................................ 14 

Statement by Representative Eddie Bernice Johnson, Ranking Member, Committee on Science, Space, and Technology, U.S. House of Representatives .... 16 

Written Statement ............................................................................................ 18 

Witnesses: 

Dr. Pramod Khargonekar, Assistant Director, National Science Foundation 

Oral Statement ................................................................................................. 20 

Written Statement ............................................................................................ 23 

Dr. Michael Lauer, Deputy Director, National Institutes of Health 

Oral Statement ................................................................................................. 27 

Written Statement ............................................................................................ 29 

Dr. Patricia Dehmer, Deputy Director for Science Programs, Office of Science, 

Department of Energy 

Oral Statement ................................................................................................. 38 

Written Statement ............................................................................................ 40 

Dr. Jilda D. Garton, Vice President for Research and General Manager, 

Georgia Tech Research Corporation 

Oral Statement ................................................................................................. 46 

Written Statement ............................................................................................ 48 

Discussion ................................................................................................................. 55 

Appendix I: Answers to Post-Hearing Questions 

Dr. Pramod Khargonekar, Assistant Director, National Science Foundation .... 72 

Dr. Michael Lauer, Deputy Director, National Institutes of Health ................... 80 

Dr. Patricia Dehmer, Deputy Director for Science Programs, Office of Science, 

Department of Energy ......................................................................................... 88 

Dr. Jilda D. Garton, Vice President for Research and General Manager, 

Georgia Tech Research Corporation ................................................................... 105 

(1) 

SBIR/STTR REAUTHORIZATION: 

A REVIEW OF TECHNOLOGY TRANSFER 

THURSDAY, JUNE 16, 2016 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON RESEARCH AND TECHNOLOGY, 

COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY, 

Washington, D.C. 

The Subcommittee met, pursuant to call, at 9:41 a.m., in Room 

2318 of the Rayburn House Office Building, Hon. Barbara Comstock [Chairwoman of the Subcommittee] presiding. 
2 
3 
4 

Chairwoman COMSTOCK. Good afternoon. The Committee on 

Science, Space, and Technology will come to order. 

Without objection, the Chair is authorized to declare recesses of 

the Committee at any time. 

Good morning, and welcome to today’s hearing titled ’’SBIR/ 

STTR Reauthorization: A Review of Technology Transfer.’’ I now 

recognize myself for five minutes for an opening statement. 

The foundation of America’s future economic success is and will 

continue to be our global leadership in science and technology. 

Taxpayer-funded basic research conducted through the National 

Science Foundation, NASA, NIH, DOD, and other federal agencies 

underwrites the breakthrough science and the key discoveries that 

have created today’s world: the internet, wireless communications, 

lifesaving medicines, lasers, artificial intelligence, and so much 

more. 

Converting scientific breakthroughs into innovations creates new 

industries, new businesses, and new jobs. Such innovation transforms commerce, everyday life and our entire society. 

Risk-taking entrepreneurs and small businesses are the catalysts 

for innovation. They are the catalysts for economic growth, for generating the family and community-sustaining jobs that we need so 

badly. 

Congress enacted the Small Business Innovation Research, or 

SBIR, program in 1982, followed by the Small Business Technology 

Transfer, or STTR, program in 1992. These two programs accelerate technological innovation and commercialization of new products and services by small businesses. They also help the Department of Defense and other federal agencies meet their research and 

development needs. 

Federal agencies with large extramural research budgets—more than $100 million a year for the SBIR program and $1 billion for 

STTR—award competitive grants to small businesses for technology development and commercialization. Eleven agencies hit the $100 million research budget threshold 

for SBIR. They are required to set aside three percent of their extramural research budgets to support SBIR, and that will rise to 

3.2 percent in fiscal year 2017. 

Five agencies, including NSF, NASA and DOE, surpass the $1 

billion threshold for STTR. These five agencies also account for 

about 98 percent of SBIR. These five agencies are required to set 

aside 0.45 percent of their extramural research budgets for STTR 

grants. 

Since its inception, participating federal agencies have awarded 

SBIR and STTR contracts and grants to small businesses totaling 

more than $40 billion. A number of companies that use SBIR are 

located in my Congressional district, and I hear often about people 

who are both working in this program, have issues on how it can 

better be utilized, and so I really do look forward to that discussion. Just some of the companies I know in my district are three 

Phoenix, Inc., Aurora Flight Sciences in Manassas, and Mosaic 

ATM in Leesburg, Progeny Systems of Manassas, Virginia and 

there are a number of others. 

I do look forward to hearing from our panel of expert witnesses 

this morning, including individuals who lead the administration 
5 

and management of three of the largest SBIR and STTR programs 

and the Vice President of Research from one our Nation’s most 

prominent academic research universities. 

[The prepared statement of Chairwoman Comstock follows:] 
6 
7 
8 

Chairwoman COMSTOCK. I now recognize the Ranking Member, 

the gentleman from Illinois, Mr. Lipinski, for his opening statement. 

Mr. LIPINSKI. Thank you, Chairwoman Comstock, for holding this 

hearing to review the SBIR and STTR programs, as well as to examine national efforts to support commercialization of federally 

funded research and development. 

Those of you who follow this Committee know that I am always 

focused on finding better ways to promote commercialization of research, especially the great research funded by the American taxpayers at our universities and national labs. 

This hearing is an important step in the reauthorization of the 

SBIR and STTR commercialization programs, which our subcommittee has jurisdiction over. 

In the United States, where small businesses create 55 percent 

of all jobs, the success of the small business enterprise is key to 

economic growth. 

For almost 40 years, the SBIR program has been funding small 

business innovation across all sectors of our economy. There are 

many prominent success stories from SBIR grants. A recent Air 

Force review of Phase II winners between 2000 and 2013 found 

that 58 percent of them had sales in excess of $1 million. 

Importantly, many of the innovators who create these small businesses are educated and trained in our Nation’s great research institutions, with support from federal research dollars. And some 

even directly commercialize research funded by federal dollars. The 

Federal R&D enterprise is truly an ecosystem from basic research 

to commercialization. 

Unlike any other program that I’m aware of, SBIR and STTR are 

funded using a percentage of participating agencies’ extramural research and development budgets. That percentage has increased by 

30 percent since 2011, even as the larger budgets have remained 

flat. 

While the SBIR program has great value, we must look at it in 

the context of overall agency budgets and missions. Increasing the 

set-aside for SBIR and STTR as much as has been proposed by 

some could come at the expense of support for other critical research programs. 

Perhaps my biggest concern is harm done to the pipeline of 

STEM talent and innovators by increasingly lower research funding levels. This is a difficult choice in tough budget times because 

both research and commercialization activities are highly valuable 

investments. 

We must also look hard at assessments of the SBIR program and 

consider ways to make it more efficient and help the program better achieve its goals, and this hearing is a good opportunity to talk 

about other ways to improve the commercialization of federally 

funded research, including the very successful Innovation Corps 

program started at NSF in 2011 and now expanding to other agencies, as well as the NIH’s Proof of Concept pilot program. I–Corps 

is essentially an entrepreneurial education program. The I–Corps 

Node program provides this education and other support for 

innovators at our research universities, creating a true interconnected, national innovation network. 
9 

I am pleased that Ms. Garton is joining us today, and I look forward to her testimony regarding Georgia Tech’s I–Corps Node program and the challenges innovators face in seeking early stage 

funding. 

In the five years since the I–Corps program has been running, 

it has clearly demonstrated its value in improving tech transfer 

and commercialization, and we are beginning to see that it makes 

the SBIR program more efficient as well. Although it takes time to 

fully realize success in commercialization, the early returns show 

I–Corps-trained teams having more success than comparable teams 

without this training. I think the time has come to talk about having some kind of I–Corps program at every agency with an SBIR 

program, as the two truly go hand in hand. 

Finally, I want to mention language that I put in the 2011 SBIR 

Reauthorization bill which allowed for an NIH Proof of Concept 

pilot program, utilizing a small portion of the funds from the STTR 

set-aside, to give grants to researchers at a pre-SBIR stage. This 

could be called SBIR phase zero. 

Many university researchers are hesitant to start a company, 

which often means leaving their university, so they’re hesitant 

without having confidence that the idea can work out. The Proof 

of Concept pilot has led to programs at NIH such as the NIH Centers for Accelerated Innovations and the Research Evaluation and 

Commercialization Hubs, or REACH, programs. I believe programs 

like these can be an important part of the innovation ecosystem 

and I look forward to an update on the pilot from Dr. Lauer. 

I know the agencies here today are exploring many other aspects 

of early stage commercialization, including how to coordinate these 

efforts better with the SBIR program. I look forward to this broader discussion about commercializing federally funded research. I 

also look forward to your testimony about how you’ve implemented 

new requirements and flexibilities in the SBIR program since the 

2011 reauthorization, and what our Committee should consider as 

we take up the next reauthorization. 

I would like to ask unanimous consent to enter into the record 

the Administration’s Principles for SBIR/STTR Reauthorization 

and the letter dated May 10, 2016, from a coalition of science organizations and universities. 

Chairwoman COMSTOCK. Thank you—— 

Mr. LIPINSKI. Can I get unanimous consent to put those in the 

record? 

Chairwoman COMSTOCK. Without objection. 

[The information was not available at the time of publishing. ] 

Mr. LIPINSKI. Thank you, and with that, I will yield back. Thank 

you. 

[The prepared statement of Mr. Lipinski follows:] 
10 
11 
12 

Chairwoman COMSTOCK. Thank you, Mr. Lipinski, and I now recognize the Chairman of the full Committee, Mr. Smith. 

Chairman SMITH. Thank you, Madam Chairwoman, and I appreciate both your comments and the comments by the Ranking Member. 

The Small Business Innovation Research Act, or SBIR, was 

signed into law by President Reagan in 1982 to help spur innovation and increase small business participation in federal research 

and development activity. 

Since then, more than 100,000 small businesses in the United 

States have received SBIR grants to convert taxpayer-supported 

basic research discoveries into commercial technological innovation. 

The Small Business Technology Transfer program, or STTR, was 

approved by Congress in 1992. STTR’s unique feature is its requirement for a small business to collaborate with a nonprofit research institution in order to bridge the gap between basic science 

and commercialization of resulting innovations. 

Both SBIR and STTR are funded through a tax on federal agencies’ research budgets. The SBIR tax on research began at 0.2 percent; that tax is now three percent, or 15 times higher. Twelve federal agencies—those with annual external research budgets of $100 

million or more—are currently subject to the SBIR tax. 

The five federal departments and agencies with annual external 

research budgets of more than $1 billion are also taxed to provide 

funding for the STTR program. That tax is an additional .45 percent on the three research agencies represented here today: DOE, 

NSF, and NIH. These basic research taxes currently amount to approximately $2.5 billion each year for commercialization grants to 

small businesses. 

Grant recipients run the gamut. Although about one-quarter of 

the companies are first-time recipients, most participating small 

businesses have received multiple SBIR grants. 

Some former recipients of SBIR assistance have even become 

very large international corporations, such as Qualcomm, Sonicare, 

and Symantec. 

SBIR and STTR companies have created parts for NASA’s Mars 

Rover, equipped our military men and women with key war-fighting innovations, and generated a long list of lifesaving medicines 

and health care treatments. 

SBIR and STTR recipients have thousands of new patents and 

created thousands of new jobs, many in new areas of technology. 

In the leading-edge field of nanoscience, we’re learning that tiny 

particles can have very big effects. SBIR support enabled Applied 

Nanotech of Austin, TX, to become a world leader in nanotechnology breakthroughs: inventing cheaper, more efficient solar energy 

cells, new materials for blast-resistant structures and equipment, 

and low-cost, high-performance metallic inks and pastes for ink-jetprinted electronics. 

Xeris Pharmaceuticals, also Austin-based, has used SBIR grants 

to develop new delivery systems for injectable medicines that are 

not soluble with water. This includes a system for injectable 

glucagon to treat congenital hyperinsulinism that affects thousands 

of infants and young children. 
13 

The current legislative authorization for the SBIR and STTR programs doesn’t expire until September of next year. The Science 

Committee is holding its first hearing today in order to start the 

process of timely oversight and reauthorization consideration. 

There are still ways to improve SBIR and STTR and assure taxpayers are getting the greatest return for the investments of their 

hard-earned dollars. Instances of fraud and abuse continue to be 

problematic. 

Objective measurement of results across all participating federal 

agencies is needed. It is also important to examine if the current 

funding level—the taxes on basic research—are hurting fundamental scientific research. Any increases would necessarily reduce 

our Nation’s primary investments in basic research at a time when 

U.S. global leadership is threatened. As the members of this Committee know, China is set to overtake the U.S. in R&D spending 

as soon as 2020. 

Madam Chairwoman, I look forward to hearing from our panel 

of witnesses today, who are all experts in their own right, and who 

represent federal agencies and research universities, about these 

and other issues. 

Thank you, and yield back. 

[The prepared statement of Chairman Smith follows:] 
14 
15 
16 

Chairwoman COMSTOCK. Thank you, Mr. Smith, and I now recognize the Ranking Member of the full Committee for a statement, 

Ms. Johnson. 

Ms. JOHNSON. Thank you very much, and good morning. I’d like 

to thank you, Madam Chair, for holding this hearing today to examine the Small Business Innovation Research program and the 

Small Business Technology Transfer programs and related technology transfer issues, and I’d like also to thank the Chairman of 

the full Committee for ensuring that Science Committee members 

have the opportunity to weigh in on reauthorization of these important programs. 

The United States has long been a nation that nurtures innovation. The number of small businesses has grown by 49 percent 

since 1982, and today’s 28 million small businesses make up 54 

percent of all U.S. sales. The invigorating startup culture we have 

seen for the last decade and a half has contributed to this growth 

and has given us extraordinary economic and social benefits. 

The first SBIR program was at the National Science Foundation 

and was started in the mid-1970s to support small high-tech firms’ 

ability to compete for federal R&D grants. This program grew to 

a government-wide program in 1982. Today the program receives 

approximately $2.2 billion from funds set-aside from the federal research and development budget. The SBIR and STTR programs are 

funded from a set-aside from agencies’ extramural R&D budgets. 

They are the only R&D programs that are funded in this market. 

While stability and continuity in the programs are important goals, 

the SBIR and STTR programs are just one tool in a much larger 

R&D toolbox that agencies draw from to meet their missions. 

The SBIR and STTR programs were last authorized from fiscal 

years 2012 through 2017. During that time, the programs grew by 

30 percent. In addition, the 2011 reauthorization introduced many 

new requirements and flexibilities for the agencies. 

Before we reauthorize the programs, it is the responsibility of 

this Committee to review how the new policies introduced in the 

last reauthorization have been implemented, how well the programs are achieving their goals and how they might continue to 

improve, and how the programs fit into the larger federal research 

and development enterprise. Our job on the Science Committee is 

to help ensure the health and sustainability of this entire enterprise. 

One particular issue I hope our witnesses can address is women 

and minority participation. According to the National Academies, 

agencies are doing well in all of the main goals of the SBIR and 

STTR programs except for participation in innovation by economically and socially disadvantaged groups. I have spent my entire political career working on increasing female and minority participation in STEM starting in the early 1970s, I might add. I’m glad to 

say that we are not doing much better—I’m sad to say that we are 

not doing much better today than when I started. 

SBIR cannot solve disparities created earlier in the pipeline. 

However, we know that women and minorities receive less encouragement and support to become entrepreneurs. I’d like to hear from 

our witnesses today how agencies can help address this disparity 

through the SBIR and STTR programs. 
17 

I thank the witnesses for being here today and I look forward to 

their comments and recommendations for future legislation. 

Thank you, Madam Chair, and I yield back the balance of my 

time. 

[The prepared statement of Ms. Johnson follows:] 
18 
19 
20 

Chairwoman COMSTOCK. Thank you. 

And now let me introduce our witnesses. Our first witness today 

is Dr. Pramod Khargonekar, Assistant Director for the Directorate 

of Engineering at the National Science Foundation. He was appointed to serve as Assistant Director in March 2013. In this role, 

he leads the Engineering Directorate with an annual budget of 

more than $900 million, which funds engineering research and development and education, cultivates an innovation ecosystem, and 

develops next-generation engineers. He previously served as Deputy Director of Technology at ARPA–E at the U.S. Department of 

Energy and served as the Dean of the College of Engineering at the 

University of Florida. He received his bachelor’s degree at the Indian Institute of Technology-Bombay and a master’s in mathematics and a doctorate in electrical engineering from the University of Florida-Gainesville. 

Our second witness today is Dr. Michael Lauer, Deputy Director 

of Extramural Research at the National Institutes of Health. In 

this role, Dr. Lauer serves as the principal scientific leader and advisor to the Director of the NIH on all matters relating to the substance, quality and effectiveness of the NIH Extramural Research 

program and administration. Prior to joining NIH, he served as a 

Division Director at the National Heart, Lung and Blood Institute 

as a Board-Certified Cardiologist. He received education and training at Albany Medical College, Harvard Medical School, and Harvard School of Public Health. 

Our third witness today is Dr. Patricia Dehmer, Deputy Director 

for Science Programs in the Office of Science at the Department of 

Energy. The Office of Science supports research at 300 colleges and 

universities nationwide, at DOE laboratories, and at other private 

institutions. She has served in a number of positions at DOE where 

she began her scientific career as a postdoctoral fellow at Argonne 

National Laboratory. She received a bachelor of science degree in 

chemistry from the University of Illinois and a Ph.D. in chemical 

physics from the University of Chicago in 1972. 

Our final witness today is Ms. Jilda Garton, Vice President for 

Research and General Manager at Georgia Tech Research Corporation at Georgia Institute of Technology. She is responsible for financial and business affairs including licensing of intellectual property created at Georgia Tech. She directs the activities of the Office 

of Sponsored Programs, the Office of Research Integrity Assurance, 

and the Office of Industry Engagement. Ms. Garton currently 

serves on the Board of the University-Industry Demonstration 

Partnership and co-chairs the UIDP’s Contracts Accords Working 

Group. She has a B.A. in biology from Vanderbilt University and 

an M.S. in zoology from Louisiana State University. 

I now recognize Dr. Khargonekar for five minutes to present his 

testimony. 

TESTIMONY OF DR. PRAMOD KHARGONEKAR, 

ASSISTANT DIRECTOR, 

NATIONAL SCIENCE FOUNDATION 

Mr. KHARGONEKAR. Good morning, Chairwoman Comstock, 

Ranking Member Lipinski, Chairman Smith, Ranking Member 

Johnson, Committee members. Thank you for this opportunity to 
21 

testify regarding the Small Business Innovation Research and 

Small Business Technology Transfer programs at the National 

Science Foundation. My name is Pramod Khargonekar. I am the 

Assistant Director for Engineering at National Science Foundation. 

The SBIR/STTR program at NSF is managed within the Division 

of Industrial Innovation and Partnerships and the Directorate for 

Engineering. 

While NSF’s primary mission is to advance the frontiers of 

science and engineering through basic research, the SBIR/STTR 

program is an integral part of the NSF strategy to stimulate innovation and address societal needs. This is achieved through the 

commercialization of results of fundamental research. We fund 

small businesses at very early stages when the technology risk is 

high and before the private sector is normally willing to invest. 

Since the NSF is not the ultimate customer of resulting innovations, the NSF SBIR/STTR research topics are designed to address 

existing and emerging needs of the U.S. marketplace and the Nation as a whole. For example, NSF SBIR research brought about 

Symantec, which is now a global leader in cybersecurity. It was 

founded in 1982 by Gary Hendrix, who was funded by an NSF 

SBIR grant. Qualcomm, a world leader in wireless communications 

and computing technologies, also received NSF SBIR funding during the 1980s in its early years as a small business. Its co-founder, 

Irwin Jacobs, recently stated, and I quote, ‘‘With one of the grants, 

we developed some of the first chips we did at Qualcomm, if not 

the first. Of course, making chips for cell phones is now about 2/ 

3 of our revenue today, and that was the base.’’ 

In the last four decades, NSF has been continuously innovating 

and exploring new approaches to stimulating small business-based 

technological innovations and commercialization. In 1998, NSF 

SBIR introduced a new supplemental program called Phase IIB. It 

is a platform to stimulate NSF-funded active Phase II grantees to 

attract additional private-sector funding for further technology 

commercialization. 

In addition to providing funding in varying stages, we also assist 

awardees by providing them with experiential entrepreneurial education based in part on the NSF Innovation Corps, or I–Corps program. I–Corps helps entrepreneurs and their small businesses understand market needs and customers, thus increasing their 

chances of successful commercialization of new technologies. 

Another program closely related to I–Corps is the Accelerating 

Innovation Research, or AIR. We frequently find that NSF-funded 

researchers apply for AIR grants first before pursuing I–Corps 

training. We are seeing strong interactions between these programs 

and our SBIR/STTR program where researchers with NSF-funded 

fundamental research advance to AIR first, then go through I– 

Corps, and then pursue SBIR/STTR funding. This pathway is getting strong and working extremely well. 

We also many other translational research programs which complement our significant investments in fundamental scientific and 

engineering research. 

SBIR and STTR are vital components of NSF’s agenda to enable 

commercialization of technology stemming from basic research. We 
22 

at NSF take great pride in having pioneered the SBIR program 

concept and continue to innovate to expand its impact. 

Recently, there have been proposals to increase the set-aside percentages for SBIR/STTR whose ultimate effect will be to apportion 

a greater amount of the NSF research budget to the SBIR/STTR 

program. 

NSF is the lead agency for the support of basic research at our 

Nation’s universities. Our budget for basic research has been flat 

during this decade, and any further diminution will reduce the 

very discoveries that our country needs to remain an economic 

powerhouse and a global leader. We do support future growth in 

SBIR/STTR programs but urge that such growth be enabled 

through an overall budget increase for NSF. 

NSF strongly supports a permanent reauthorization of SBIR/ 

STTR and recommends that the annual set-aside percentages for 

the programs be maintained at fiscal year 2017 levels. 

Lastly, I should note that NSF participated in interagency process to detail principles all the SBIR/STTR agencies can support for 

reauthorization, which include permanent reauthorization, growth 

in program through overall extramural research growth, and maintaining flexibility. 

Madam Chairwoman, this concludes my testimony. On behalf of 

the National Science Foundation, the SBIR/STTR program, and our 

awardees, I want to thank you for this opportunity to highlight a 

program that provides small businesses with the means to keep 

America on the forefront of innovation and stimulate U.S. economic 

growth. We greatly appreciate the opportunity to work with you on 

reauthorizing SBIR and STTR. Thank you. 

[The prepared statement of Mr. Khargonekar follows:] 
23 
24 
25 
26 
27 

Chairwoman COMSTOCK. Thank you. 

Now we’ll hear from Dr. Lauer. 

TESTIMONY OF DR. MICHAEL LAUER, 

DEPUTY DIRECTOR, 

NATIONAL INSTITUTES OF HEALTH 

Dr. LAUER. Good morning. Chairwoman Comstock, Ranking 

Member Lipinski, and members of the Subcommittee, it is an honor 

to appear before you today to talk about how the SBIR and STTR 

programs fit within the overall context of the NIH research portfolio. 

NIH has been advancing our understanding of health and disease for more than a century. Scientific and technological breakthroughs generated by NIH-supported research are behind many of 

the improvements our country has enjoyed in public health. Many 

recent breakthroughs stem from our Nation’s commitment from investing in basic research, which lays the foundation for advances 

in disease diagnosis, and prevention and is generally not supported 

by the private sector. 

NIH supports a broad research portfolio that includes basic 

science, translational science, clinical research, and populationbased research at universities, academic health centers, and small 

businesses. Like any other investment portfolio, the key to success 

is diversity, which maximizes the likelihood that we will come up 

with transformative cures. 

It is important to remember that many years and financial resources are necessary to bring medical innovations into the practice 

of medicine. It has been estimated that it takes 11 to 14 years and 

approximately $2.6 billion to bring a new drug to market. 

While basic science lays the foundation for advancing our knowledge about the nature and behavior of living systems, this knowledge must then be applied and translated and later approved 

through the regulatory system before patients can benefit. The 

small business community benefits form all of the formative research supported by NIH. 

Among the 11 federal departments and agencies that participate 

in the SBIR and STTR programs, the NIH is the second largest 

funder. Examples of the types of research that we support include 

but are not limited to drug discovery, medical devices, biosensors, 

nanotechnology, imaging, and bioengineering. A successful example 

of a technology developed through our programs is Lift Labs’ 

Liftware, which creates stabilizing technologies to help people with 

essential tremor and Parkinson’s disease. 

Our programs have grown significantly with the increases provided by the 2011 Reauthorization. Between fiscal years 2011 and 

2016, the NIH budget increased by about 4.5 percent, while our 

SBIR and STTR budgets increased approximately 30 percent, or six 

times as much. 

We are grateful for the financial and human resources support 

provided through the administrative fund pilot authority. We have 

used this authority to bolster and diversify our program outreach 

efforts, reaching more than 24,000 individuals from all states in 

the past several years, including 940 women-owned and 650 socially and economically disadvantaged small businesses. Through 
28 

these and other efforts, we anticipated increased applications from 

these groups in the future, further diversifying the programs. 

The NIH strongly supports the SBIR and STTR programs. For 

decades, these programs have served as vital sources of federal 

funding for innovative American small businesses. The program 

should be permanently reauthorized to provide us all with muchneeded long-term certainty. 

However, future growth in SBIR and STTR programs should be 

realized through overall extramural budget increases for each 

agency. For example, the Congress provided NIH with a $2 billion 

increase this past year, which meant that our SBIR and STTR 

budget increased by 12.4 percent from the previous year, nearly 

twice the agency’s increase. 

Scholars have noted that the biomedical research enterprise now 

suffers from hypercompetitiveness with increasing numbers of researchers competing against each other for relatively fewer available dollars. Historically, NIH success rates have been about one 

in three, and they are now down to less than one in five. We are 

concerned that dedicating an ever-increasing proportion of NIH’s 

extramural research dollars to these two specific programs would 

threaten the diversity of the research portfolio, a portfolio that succeeds precisely because it is so diverse. In our judgment, it would 

be more effective for overall R&D budgets to increase so all programs benefit. 

Furthermore, it is imperative that NIH and other federal agencies participating in the program be provided with the resources 

necessary for effective administration, oversight and outreach as 

well as reasonable flexibility on award size and sequencing consistent with the diverse needs of small businesses in different industries and technology areas. 

This concludes my statement. Thank you for your attention, and 

I look forward to answering any questions you may have. 

[The prepared statement of Dr. Lauer follows:] 
29 
30 
31 
32 
33 
34 
35 
36 
37 
38 

Chairwoman COMSTOCK. Thank you, and we’ll now hear from Dr. 

Dehmer. 

TESTIMONY OF DR. PATRICIA DEHMER, 

DEPUTY DIRECTOR FOR SCIENCE PROGRAMS, 

OFFICE OF SCIENCE, DEPARTMENT OF ENERGY 

Dr. DEHMER. Thank you, Chairman Comstock, Ranking Member 

Lipinski, Chairman Smith and Ranking Member Johnson from the 

full Committee, and members of the subcommittee. My name is Pat 

Dehmer, and I am the Deputy Director of the Department of Energy’s Office of Science, where I oversee all of the science programs. 

The DOE SBIR/STTR Program Office is one of nine reporting to 

me. 

The Office of Science has managed the Department’s SBIR/STTR 

programs since the formation of SBIR in 1982. We work with the 

six science outlay programs in the Office of Science with four applied energy technology offices, with the Office of Environmental 

Management, and with the Office of Defense Nuclear Nonproliferation with in the National Nuclear Security Administration. These 

12 offices together contribute about $200 million annually to SBIR/ 

STTR, and the Office of Science is about 2/3 of this funding. 

Since its establishment as a separate agency within the Department of Energy, the Advanced Research Projects Agency-Energy, or 

ARPA–E, has managed its own small SBIR program, about $8 million annually, with initial awards in 2012. 

During the past few years, we have experimented with some new 

approaches, some resulting directly from the Reauthorization Act of 

2011, which I’ll talk about in a moment. But first I want to mention one other program. In 2013, we began something called the 

Technology Transfer Opportunities, or TTOs, as part of our funding 

opportunity announcements. TTOs enable small business to use 

technology that has been developed using DOE funding at our national laboratories or at universities. TTOs awardees are assigned 

rights by the institution owning the technology to perform R&D on 

the technology during Phase I or Phase II grants. In addition, the 

research institute provides the awardee with a no-cost, six-month 

option to license the technology. 

In 2015, 10 Phase I and two Phase II TTO awards were made, 

representing technologies from Michigan State University and from 

four of our Department of Energy National Laboratories. When the 

2013 cohort, the first cohort completes, we will begin an assessment of the outcomes of this particular experiment. 

I’d like to turn now to some important features of the 2011 Reauthorization Act, particularly as they might relate to your consideration of the forthcoming reauthorization. The 2011 Reauthorization 

Act created a pilot program that allowed agencies to use up to 

three percent of SBIR program funds to improve the administration 

of these programs. DOE used from .6 to .9 percent of program 

funds annually for some very important improvements. 

First is the improvement in our award timelines. By adding 

small amounts of funding to accelerate the development of our new 

Office of Science-wide web-based grants management system and 

introducing a few process changes, we were able to reduce the time 

from the close of a solicitation to Phase I actual awards by a factor 
39 

of two from eight months to four months. That’s a very substantial 

improvement, and the opportunity to have this flexibility was critical to us. 

A second thing that we did with this authorization was an important outreach activity. We created a Phase 0 assistance program to 

help under represented small businesses apply for SBIR/STTR 

funding. In this program, we target applications from states with 

historically low SBIR/STTR submissions and from women and minority-owned businesses across the Nation. The Phase 0 assistance 

program helps awardees with letter-of-intent writing, Phase I proposal preparation, review and submission, training and mentoring, 

communications and market research, technology advice, and consulting on areas of intellectual property. In just three funding opportunity announcements, we received more than 500 applications 

for the Phase 0 assistance program and we provided services to 165 

participants. Again, we plan to assess the effectiveness of this after 

a year or so of this program being in operation. 

The Reauthorization Act of 2011 also permitted us to make sequential Phase II awards. These awards permit us to fund additional R&D to complete Phase II research if necessary and to assist 

with transition to commercialization. In 2015, 17 percent of our 

Phase II awards were sequential Phase II awards. 

As you think about the reauthorization in 2017, we’d like to take 

this opportunity to present our thoughts. We strongly support permanent reauthorization to provide federal agencies with long-term 

certainty and stability. We strongly support the existing flexibilities provided on award size and sequencing and, for example, that 

helped us innovate and begin the Phase II assistance pilot program 

and, finally, like my colleagues, we support maintaining the SBIR/ 

STTR set-asides at the 2017 levels, which represent more than a 

30 percent increase over the fiscal year 2011 level. 

Thank you very much for the opportunity to talk to you. I appreciate the Committee’s interest in this important topic, and I will be 

happy to answer your questions. 

[The prepared statement of Dr. Dehmer follows:] 
40 
41 
42 
43 
44 
45 
46 

Chairwoman COMSTOCK. Thank you, and I now recognize Ms. 

Garton. 

TESTIMONY OF DR. JILDA D. GARTON, 

VICE PRESIDENT FOR RESEARCH 

AND GENERAL MANAGER, 

GEORGIA TECH RESEARCH CORPORATION 

Ms. GARTON. Good morning, Chairwoman Comstock, Ranking 

Member Lipinski, Chairman Smith, and members of the Subcommittee. My name is Jilda Diehl Garton, and I serve as the Vice 

President for Research and General Manager of Georgia Technology Research Corporation at Georgia Tech. 

Georgia Tech is a comprehensive public university with more 

than 25,000 undergraduate and graduate students. We reported 

more than $765 million in research expenditures in 2015 with research funding from a variety of federal and non-federal sponsors. 

Private industry sponsors about 13 percent of the total research activity at Georgia Technology, and includes several dozen SBIR and 

STTR subcontracts. And we do a little tech transfer at Georgia 

Tech. Georgia Tech is among the top 25 universities in the number 

of U.S. patents granted in 2014, and over the past five years, 81 

companies have been formed based on Georgia Tech technologies. 

SBIR and STTR programs are important to universities because 

these are important to our technology transfer ecosystems. America’s universities create amazing new inventions every day. My own 

institution will receive about 350 invention disclosures this year 

alone. As creators and stewards of these inventions, we have an obligation to make them available to the public in the form of new 

products, new drugs, new assistive technologies and new services. 

University technology transfer works with the private sector to 

move technologies from the laboratory into companies that can develop them, invest in them, and commercialize them. It’s this ecosystem that we want to develop. 

Universities value the SBIR and STTR programs, and we generally support their permanent reauthorization at their current setaside levels, and that’s because these are important parts of that 

ecosystem. 

In thinking about how to discuss our experiences with the SBIR 

and STTR programs, I thought it might be helpful to offer an example that illustrates how the SBIR program in particular interacts with other parts of the innovation ecosystem on my campus to 

support new ventures that are trying to bring new technologies 

onto market. I’ve given you a couple of examples also in my written 

testimony including one woman-owned company. 

Pindrop is an Atlanta-based company that markets a way to 

combat telecommunications fraud through something they call 

acoustic fingerprinting. The technology resulted from Department 

of Defense-funded research that was conducted by a professor in 

the College of Computing and to students. The invention was 

closed to GTRC in 2010 and licensed to a new company in 2011. 

Pindrop’s management participated in and was mentored by Georgia Tech’s NSF I–Corps program. We’re very proud to have been 

one of those original three nodes. 
47 

The company went on to work with our SBIR assistance office, 

which helps companies that are formed in our environment reach 

out and identify opportunities in SBIR and STTR programs at various agencies and prepare proposals and submit them in a way 

that will help them get funded. Pindrop won one of those SBIR 

awards, and went on to develop their technology, and in January 

2016, Pindrop received Series C investment from Google Finance. 

They’re on their way to being a major company in this space. 

Pindrop’s story shows how development inside the university 

readied the technology for the marketplace and de-risked it. SBIR 

funds increased the likelihood that the company would become successful. As it developed its technology, it became more attractive 

for private-sector investment. Pindrop’s story also demonstrates 

how long it takes and how much investment is actually needed. 

You’ve asked us for advice in areas of potential improvement as 

you consider the reauthorization of these programs, and I would be 

remiss if I did not point out that Pindrop would not have been possible without basic research. As the federal investment in research 

and development conducted at U.S. universities is constrained, it’s 

important to acknowledge that funding basic science and engineering has to be a priority because that’s what fills the pipeline of discoveries that feed the innovation ecosystem. 

Universities are interested in seeking balance. If I have one 

thing to offer for your consideration, it would be to focus on the 

overall fiscal budgets for the research funding agencies and ensure 

robust investment in basic and applied research to support the 

highest quality peer-reviewed research. 

It remains the case that there’s a funding gap that sometimes 

prevents universities from moving new discoveries and technology 

into the marketplace. Accordingly, members of the higher education community have recommended creating the SBIR program 

that would focus on commercialization that we often call Phase 

zero. These awards could be used by universities to engage in 

prototyping, mentoring, and supporting market readiness initiatives. 

Finally, I would like to suggest that we could all benefit from additional information about the federal SBIR and STTR funding. Dr. 

Lauer and Dr. Dehmer have talked about a number of efforts at 

their agencies to analyze the success rates of the programs and 

how the companies perform after award. These objective measures 

of performance and indicators of performance would be very welcome. 

I’d like to thank the Subcommittee for the opportunity to provide 

our insights from the university perspective on the important question of reauthorization of the programs, and I look forward to answering your questions. 

[The prepared statement of Ms. Garton follows:] 
48 
49 
50 
51 
52 
53 
54 
55 

Chairwoman COMSTOCK. Thank you. 

I now recognize myself for five minutes for questions. 

I guess this is a question to all of you. How do we measure success with the SBIR and STTR programs? Is it things like job 

growth, employment growth, patents? How do you judge it and 

what are you looking at? 

Dr. KHARGONEKAR. I mean, that’s an excellent question, and the 

National Academies study does talk quite a bit about metrics for 

success of the SBIR/STTR programs. We look at it as a program 

as a whole, which is really aimed at taking discovery in the lab to 

the real world, and we also think about I–Corps and other innovation programs as part of the overall ecosystem. 

So in that regard, it’s Phase II, Phase IIB funding which really 

makes it possible for the company’s technology to become a realworld company with employment and revenues, and there the numbers are quiet encouraging. The vast majority of Phase IIB companies go on to become very successful companies and have revenues 

many years out into the future. We also look at intellectual property generated by these companies, and probably most importantly, 

it’s the people because the people who go through these experiences 

then go on and start new companies throughout their careers. So 

I think one has to look at the whole system and look at the metrics 

from that point of view. 

Chairwoman COMSTOCK. And I know a lot of you had used the 

word ‘‘ecosystem’’ which I think is very important, how we create 

that innovative ecosystems so with our universities, with our businesses, and how do we get that ecosystem, you know, getting the 

input from the private sector too so as we’re investing in these 

things, there’s sort of a leveraging factor that gives it that extra 

oomph to start doing things. You know, how do you all see that 

playing out in what you’re doing? 

Dr. LAUER. So for NIH-funded research, there are some additional components of the ecosystem that are important for success 

metrics, and those would include moving products on to clinical 

trials, getting them through the regulatory system, working with 

CMS and other payers to see whether or not a product once eventually successful will be reimbursed in clinical practice, and then also 

working with professional societies to realize the incorporation of 

new technologies into standard clinical practice. 

Chairwoman COMSTOCK. Good point. Thank you. 

Dr. DEHMER. Well, we’ve had quite a bit of experience over the 

last five to ten years of looking at success of non-traditional research programs. We started something many years ago called the 

Energy Frontier Research programs, and how do we measure their 

success? We do it in part by the standard metrics of counting publications, licenses, things like tech transfer and how many small 

businesses and industries are involved. In reality, it’s an extremely 

topic to measure success of non-traditional research and development programs. Not only have I been involved with that, but for 

the past five years I’ve been involved with measuring success of 

programs that do STEM workforce development training, very difficult. 

So one of the things that we’ve done actually in the last year is 

bring a new person into the SBIR/STTR program, a Ph.D. re-
56 

searcher, whose function is going to be to look at how we measure 

success and to follow on with some of the programs that we’ve 

started and that the traditional SBIR or STTR programs do. 

Chairwoman COMSTOCK. Thank you. 

Ms. GARTON. One of the ways that we look at measuring the success of our technology transfer efforts is to look at whether or not 

our patents or our licensed intellectual properties are being utilized 

at various points after they’ve either been protected by patent or 

licensed under other circumstances and ensuring that those technologies are still being used at three, five and seven years after the 

license, and I think that’s one of the measures rather than counting the numbers of patents per se but looking at whether or not 

those technologies are being used by the private sector and being 

used to either do additional research or being used and incorporated into new products and services, so looking at whether or 

not the intellectual property we’re creating is being used is one of 

the important metrics for success both of the university technology 

transfer but also of the SBIR receiving company because it will 

itself begin generating intellectual property and we want to see if 

that’s being used as well. 

Chairwoman COMSTOCK. So I’m running a little over my time but 

I did want to give a shout out to my local technological community, 

the Northern Virginia Technology Council. It’s very good at working with all of our technology companies but they also highlight 

emerging companies and doing things like that and they’re very 

good at publicizing it within communities, and that in turn kind of 

helps get more support there. Are we seeing that utilized too, having the kind of leverage there that—or maybe since my time is up 

I’ll just ask, is there any way that we can have others such as, you 

know, NVTC in my community that is very good at it but maybe 

I’d recommend, you know, others to use that as a model because 

I think they’re particularly helpful in highlighting the whole ecosystem, and that’s what they’re all about is that ecosystem and 

supporting it. They support STEM education. They support the 

emerging companies. They exist by virtue of a lot of support from 

the big companies but really, everyone in it is driving the ecosystem, and I know they work a lot with their universities too, so 

looking at that as a model, I just throw that out because they’re 

a great group for us to work with. 

I’m recognizing Ms. Johnson. We’re going out of order here so 

Ms. Johnson can have her questioning, and thank you. 

Ms. JOHNSON. Thank you very much. 

I’d like each of you to respond to the forth statutory purpose of 

SBIR and STTR programs is to foster participation in innovation 

and entrepreneurship with socially and economically disadvantaged 

persons. The National Academies have consistently found that 

agencies are struggling to achieve this. My concern over the years 

has been integrating these populations. It’s now become of more 

concern because that’s our growing population in this country, and 

I’m concerned that a lot of our brain power is not being utilized. 

So could you comment on what you’re doing or whether it’s difficult or what we could do to attract that population more? 

Dr. KHARGONEKAR. So I think that’s a really excellent and difficult question. We at NSF are very focused on this topic. Our lat-
57 

est initiative, NSF Includes, which is a Foundation-wide initiative, 

is aimed exactly at attracting women, underrepresented minorities, 

people with disabilities, people from low socioeconomic status, into 

science and engineering fields. In addition, in the SBIR program, 

this has been a really major area of focus and concern. As you correctly noted, the progress has been quite slow. 

There are several things we are doing. One of the ways in which 

we use our administrative fee is for very strong outreach programs 

with our program officers and there is a group of program officers 

whose full-time job it is to run our SBIR/STTR, go out to these 

communities in terms of outreach. The Phase 0 program at NSF, 

it has two objectives, one of which is explicitly to reach out to 

women and underrepresented minorities in terms of forming companies. 

So this remains a major priority for the Foundation, for the SBIR 

program, and we would love to see faster and more—and stronger 

progress, and we will continue to work on this problem until we 

achieve success. Thank you. 

Ms. JOHNSON. Thank you. 

Dr. LAUER. Thank you, Congresswoman. This is a very high priority for NIH. On an NIH-wide level, we’ve set up an Office of 

Workforce Diversity, which his specifically focused on this. The National Institutes of Minority Health has—is expanding its RO–1 

program. The—some of the institutes like the NHLBI have actually 

set up specific units that are devoted to increasing our profile in 

disparities research, and then within SBIR, we also are engaged in 

using administrative funds for extensive outreach efforts. The 

Phase 0 programs are also an opportunity to bring in previously 

disadvantaged groups into the fold and increase the likelihood of 

their success. 

Ms. JOHNSON. Thank you. 

Dr. DEHMER. Well, thank you for that question. In the Department of Energy, we have a particular challenge with women and 

underrepresented minorities because the work that we do is primarily physical sciences, and the pipeline for bringing those folks 

into physical sciences has never been cracked to the extent that I 

would like to see it. And by the way, my own personal time with 

this goes back to yours in the 1970s. 

Within the SBIR/STTR program, we’re doing several things. 

We’re definitely increasing our outreach to everyone as my colleagues have mentioned, and one of the reasons we’ve started the 

Phase 0 assistance program, which is somewhat different than the 

other Phase 0 programs described, is specifically to target women 

and socially and economically disadvantaged persons. It’s a huge 

challenge in the physical sciences. You know, I’ve observed in my 

own career, which dates back to the early 1970s, thanks to my bio, 

which didn’t expunge the date of my Ph.D., I can remember when 

I was a student and my colleagues, who were women and minorities, talked of quotas for medical school and other kinds of professional schools, very small quotas, in the few percents, not double 

digits. Today, medical schools graduate 50 percent women. Veterinary schools graduate nearly 100 percent women. But the physical 

sciences have not kept pace at all with that. So that’s one of the 

things the Department of Energy is particularly keen to crack, and 
58 

we’ve done so both in the core research programs and our workforce development programs and in our SBIR/STTR programs. 

Ms. JOHNSON. Thank you. 

Ms. GARTON. Georgia Tech as a public institution really takes its 

mission in economic development in Georgia very seriously. We 

have what we call the Enterprise Innovation Institute, which has 

a number of offices. The Advanced Technology Development Center 

is one of the oldest university-based incubators in the country, and 

it is open to companies from our entire area. Within EII, we also 

have the SBIR assistance office, which helps small businesses identify SBIR and STTR opportunities, learn about the programs, and 

learn how to apply to those programs, so that is an office that’s 

available to support all companies that are created in the environment access SBIR and STTR funding. We also operating the Manufacturer Extension Partnership, which helps businesses in Georgia 

become more competitive and sustainable. 

Ms. JOHNSON. Thank you very much. My time’s expired. 

Chairwoman COMSTOCK. Thank you, and I now recognize Mr. 

Westerman for five minutes. 

Mr. WESTERMAN. Thank you, Madam Chair, and thank you to 

the witnesses for sharing with us today. 

Ms. Garton, you shared the success story of Pindrop, and I appreciate your testimony because it gives us a real-life example that 

makes it easier to understand the importance of research. 

Bill Gates once said—who is obviously one of the great 

innovators of our time. He said that governments will always play 

a big part in solving big problems. They set public policy and are 

uniquely able to provide the resources to make sure solutions reach 

everyone who needs them. They also fund basic research, which is 

a crucial component of the innovation that improves life for everyone. 

Having an engineering background and sitting on this Committee, I’ve really enjoyed getting to go see where this research is 

being done. I made a trip out to the Berkeley National Research 

Lab and I saw some very exciting research there in biofuels and 

creating economical methods to use our bioresources to make all 

kinds of fuels and chemicals. I saw some innovative research with 

nanotechnology with a material that it’s envisioned that if you 

could create a filter out of this material, you could essentially clean 

the entire stack emissions from a coal-fired plant, very exciting 

stuff. 

In my home state, the institutions of higher learning are doing 

some neat research. The University of Arkansas Institute for Nanoscience and Engineering Technology, just amazing some of the 

things that they are doing. 

What I would like to ask you, we’ve talked about some success 

stories but could you share with us maybe one exciting new innovation that’s on the horizon that’s taking place at your organizations 

and how close are we to seeing those become reality, and I’ll start 

with you, Dr. Khargonekar. 

Dr. KHARGONEKAR. I think one of the areas that we are very excited about in the Engineering Directorate is our focus on advanced 

manufacturing. First of all, historically, NSF has made pioneering 

contributions in that area. The whole 3D printing industry came 
59 

out of NSF-funded research in the 1980s. In recent years, last two 

or three years, we’ve been investing in cyber manufacturing that 

will shape the factories of the future by leveraging cyber technologies, communications, computation, networks and things of 

that nature. We are investing in cellular biomanufacturing, so as 

cells become therapies, how do we manufacture those? So we are 

sort of creating basic research in manufacturing of cells. 

And a third area we are making some very exciting investments 

is in scalable nanomanufacturing, so we invested a lot of funds in 

nanotechnology and nanoscience, and the question we are asking 

is, how will we manufacture the products at scale and at cost. So 

one example is, we funded some research that will use roll-to-roll 

printing as a way to manufacture this product, which if it works 

will be extremely cost-effective and produce products that will have 

big impacts. So these are some of the examples that we are very 

excited about. 

Mr. WESTERMAN. Thank you. 

Dr. Lauer? 

Dr. LAUER. Thank you, Congressman. This is a very exciting 

time for biomedical research, and two themes are high throughput 

technologies and big data, so looking at complex systems and taking advantage of current exploding information technologies. 

So some examples include three-dimensional mapping of neurons 

within the central nervous system in health and disease, quantification of DNA and gene sequencing technologies, drug screens 

for rare diseases, there are literally millions of political compounds 

that could be effective for diseases, and we’re now being able to figure out ways in which we could identify potentially beneficial targets in a short period of time. 

And then another interesting one from a different side, from a 

purely clinical side, would be the incorporation of patient-reported 

outcomes into electronic health records. 

Mr. WESTERMAN. Thank you. 

Dr. DEHMER. Well, in preparing for this hearing, I looked at a 

number of examples of outcomes from SBIR investments. I don’t 

see them all because I don’t look at them day to day, but one of 

them struck me as extremely important, and that is a small company in Lansing, Michigan, near Michigan State University called 

Niowave Incorporated. They received a number of SBIR/STTR 

awards over the last ten years or so to build superconducting linear 

accelerators, which sounds kind of techy, but one of the things that 

they did in 2015, they produced Molybdenum-99, Moly-99, by 

fissioning uranium using one of the superconducting linear accelerators. So the decay product of Moly-99 is Technetium-99, and 

that’s used in 30 million diagnostic imaging procedures annually. 

The United States has no production of Moly-99. It’s all imported. 

And so Niowave is going to begin, I hope, in a couple of years, 2016 

or 2017, producing Moly-99 using this linear accelerator technology. If so, it would be a remarkable achievement. So that’s the 

one that struck me as potentially the most impactful. 

Ms. GARTON. Well, as you can imagine, at Georgia Tech there are 

technologies emerging all over the place. As with Dr. Dehmer, it’s 

hard to keep up with all of them. A couple of the areas where we 

really see the next technologies emerging that we’re all going to be 
60 

talking about in 5 or ten years or areas like cell-based manufacturing where we’re beginning to be able to reduce these technologies to practical application. Some of the numbering technologies for carbon sequestration, similar to the examples that you 

cited, are probably going to go a long way toward helping us deal 

with controlling the emissions out of our carbon-producing factories 

and other sources of carbon in the atmosphere. And there’s other 

technologies that are closer to the market like our new drug delivery technologies that will allow us to deliver vaccines across the 

world using delivery methods that don’t require refrigeration and 

can be self-administered. So there’s technologies that are emerging 

all across the spectrum that are just waiting to burst out there. 

Mr. WESTERMAN. Thank you. 

Thank you, Madam Chair, for indulging a little extra time. I 

yield back. 

Chairwoman COMSTOCK. Thank you. 

I now recognize Mr. Lipinski. 

Mr. LIPINSKI. Thank you. I mentioned in my opening that early 

returns show that Innovation Corps, I–Corps teams have shown 

more success in the SBIR program. So I wanted to ask the witnesses what they could tell us about what they have seen or their 

thoughts moving forward, and I’ll start with Dr. Lauer because I 

know that you are using—you are making I–Corps available to 

SBIR grantees at NIH. 

Dr. LAUER. Yes. Thank you, Congressman. So, so far 38 companies have gone through the I–Corps program. We’ve had two cohorts. Our next cohort is kicking off on June 19th with 21 companies, and we’re planning an additional two cohorts in 2017, and 

what we would say so far, it’s still too early on in the program to 

talk about long-term outcomes but the responses have been quite 

positive. Over 90 percent of the participants have considered the 

experience to be worthwhile or excellent, and we’ve seen some interesting examples. One is a company called Cross Life Technologies, which is working on diagnostic tests for viruses like dengue, and some of the work that they’re doing may also apply to 

Zika as well. 

Mr. LIPINSKI. Thank you. 

Dr. Khargonekar, do you have anything to add to that? I know 

you mentioned where that sort of fits in what a lot of researchers 

will do. 

Mr. KHARGONEKAR. So we have been very excited about the I– 

Corps program. It is having tremendous impact on the research 

community. We constantly hear that those who have gone through 

the program are transformed by the experience and they think 

about their research quite differently than they did before. We are 

partnering with a number of federal agencies to share what we 

have learned about I–Corps including NIH and DOE but many others. We are also scaling it nationally. We have—has plans for up 

to eight to nine nodes, and 71 sites and 230 teams. The State of 

Ohio has adopted I–Corps methodology. So we feel that there is 

tremendous opportunity for the Nation to take the learning from 

I–Corps and the program that NSF has pioneered and really make 

it available to all scientists and engineers who want to take part 

in it. 
61 

Mr. LIPINSKI. Ms. Garton, do you have anything to add about 

how I–Corps can help those SBIR grantees? 

Ms. GARTON. I believe the I–Corps program actually is a good entree to entrepreneurship for a lot of faculty and graduate students 

who have an invention and are trying to think about a way to commercialize it. So the I–Corps program really does provide that entree for those individuals who are developing the technology in the 

direction of creating a startup company and launching it, so I think 

that’s a very good way to pull people into the program that leads 

to SBIR funding. And so I really view that as a piece of the continuum of the development of technologies. 

One of the most exciting things I think I’ve seen really comes out 

of the Pindrop example where we have a laboratory that successfully launched a startup company, developed it through the I– 

Corps program, received SBIR funding, and then went on to be successful in the private sector. The graduate students who are coming along as the next cohort of students in that laboratory are 

bringing invention disclosures forward. They’ve got philanthropic 

funding and other funding that they’re taking advantage of, and 

they’re going to be your next I–Corps cohort, so you’ve created an 

example that others can follow. 

Mr. LIPINSKI. And Dr. Dehmer, I know you—the National Labs 

don’t have I–Corps but something very similar, Lab Corps. Have 

you seen the impact of this, or what do you hope to be the impact? 

Ms. DEHMER. Well, actually, we’re also a participant in I–Corps. 

Early on, the Office of Energy Efficiency and Renewable Energy, 

which is one of the largest contributors to SBIR, signed a one year 

MOU with NSF to participate in I–Corps. They subsequently extended that to five years, and they’ve been sending cohorts to that 

for the past few years. That same office also began Lab Corps, and 

it’s my understanding that it’s been very well received and very 

popular with the laboratory scientists. So yes, we’re part of both I– 

Corps and Lab Corps. 

Mr. LIPINSKI. Very quickly, another connected subject. Ms. 

Garton, NSF has come out with a solicitation to continue funding 

for the I–Corps nodes. I’m glad that this is continuing. However, 

it’s noteworthy that the solicitation—in the solicitation, the funding 

for nodes drops to a small fraction of its original amount by the 

fifth year of the award. I understand the idea is that other sources 

of funding for the nodes will step in as federal funding declines. I 

have some concerns about this. I was wondering what your 

thoughts were on this. Has Georgia Tech identified other sources 

of funding for its node that could step in if federal support declines? 

Ms. GARTON. We certainly would endeavor to work in that direction is that is the direction for the program, and I would have to 

get back with you specifically and talk with the folks that are developing the proposal about specific sources of funding that have 

been identified. Maybe I could take that question for later, but we 

would certainly—if those are—if that’s the direction we want to go, 

that’s what we will try to do, but it will be a challenge. 

Mr. LIPINSKI. Thank you. 

I’m way over time. I yield back. Thank you. 

Chairwoman COMSTOCK. Thank you. 
62 

I now recognize Mr. Palmer. 

Mr. PALMER. Thank you, Madam Chairman. 

Mr. Khargonekar, the idea for the Small Business Innovation Research is to fund innovative technologies that the private sector 

may not be inclined to fund, in other words, address the problem 

of underinvestment in R&D. Is the program serving this purpose 

of it is focusing on proposals that are based on commercial viability, technical merit, or an agency’s agendas? 

Dr. KHARGONEKAR. So the NSF SBIR program is very much focused on technology risk, very early stage where there is a discovery or invention that has some commercial potential but it’s 

very far from being worthy of private-sector investment. So that’s 

where we come in and put funding to the Phase I, Phase II, Phase 

IIB to be sequenced to see if the technology risk can be reduced or 

even eliminated, and once that happens, private sector feels more 

comfortable coming in because that risk has been removed, so I 

would say absolutely. Our investments have been very much focused on reducing the technology risk and making the technology 

more mature so that private sector at that point can come in and 

scale the technology and commercialize it. 

Mr. PALMER. But are any of these grants grants or research dollars the private sector would have provided? Are you displacing private-sector investment? 

Dr. KHARGONEKAR. In my opinion, no. I mean, I think a great example of that is our Phase IIB programs. Let’s say you are an inventor or a discoverer. You come up with something. You go 

through the Phase I and Phase II. In Phase IIB, we require a twoto-one match, so it’s only at that point that the private sector is 

brought in—the private sector feels that they can come in but the 

risk has been reduced substantially, and so I don’t think it’s displacing the private sector, at least at NSF because we are at such 

early stage of the technology creation. 

Mr. PALMER. Is any of it driven more by an agency’s agenda? 

And Dr. Lauer, you can respond to that as well. 

Dr. LAUER. Thank you, Congressman. There has been some work 

that’s been done looking at whether or not NIH support is crowding 

out private investments, and we’d be happy to share some of that 

with you in follow-up, but it seems that most people are concluding 

that the answer is no and that the work that NIH is supporting 

is indeed work that otherwise would not have been supported by 

private sector. 

Our primary goal is to enhance our understanding of the knowledge of living systems and then apply that knowledge to improve 

health and reduce burdens of disease. That’s our agenda, and as 

best as we can tell, we’re meeting that. 

Mr. PALMER. Thank you. 

Dr. Dehmer, are any of the grants primarily determined by the 

Department of Energy’s agenda or are they strictly looking at the 

research or the project? 

Dr. DEHMER. The way that we determine topical areas that are 

funding opportunity announcements is—— 

Mr. PALMER. Can you get a little closer to the microphone? 

Dr. DEHMER. The way that we determine the topical areas for 

the funding opportunity announcements is by going out to all of the 
63 

programs and having them suggest the topical areas and the subtopics that we put out in the FOAs. I can’t speak to all of the subtopics but certainly in the Office of Science, there are a number of 

topics that probably the private sector wouldn’t be investing in in 

the very early stages. 

Mr. PALMER. This is a question for all of you. The Inspectors 

General at federal agencies seem to identify and pursue instances 

of fraud and abuse in these programs with a fairly high degree of 

regularity. Are there facets of the programs that seem to invite 

wrongdoing? Are there identifiable characteristics that you look for 

for bad-apple applicants? Is there a way to vet these applicants to 

avoid fraud? 

Dr. KHARGONEKAR. We at NSF certainly are very focused on this 

and try to do our very, very best to make sure that the amount of 

fraud is as minimal as possible. We have an extensive process of 

vetting the companies and looking at the financials and making 

sure that these are legitimate businesses with accounting and so 

on and so forth, so we can give you more detail about the process 

we follow at NSF to ensure that our recipients are worthy companies. 

Dr. LAUER. I would say the same. Our SBIR grants go through 

the same rigorous vetting and review and oversight as all the 

grants at NIH. 

Dr. DEHMER. Yeah, I’ll echo that. I actually engaged in a discussion on this with the Director of the SBIR/STTR programs office 

just this week, and it’s a complicated topic. We’d be happy to get 

back to you on that if you like. 

Mr. PALMER. What I’d like to know, Madam Chairman, in these 

cases where there have been abuses of the program, what our remedies are, if there’s any effort to recover this, because we are talking about oversight over taxpayer money —— 

Chairwoman COMSTOCK. Okay. Thank you. 

Mr. PALMER. —without—— 

Chairwoman COMSTOCK. We’re going to have votes here at 11:15 

to 11:30 so I’m going to have to move on. 

I now recognize Ms. Bonamici. 

Ms. BONAMICI. Thank you, Chair Comstock and Ranking Member 

Lipinski, for holding this hearing. 

To our witnesses, the SBIR and STTR programs have helped universities and small businesses not only in my State of Oregon but 

of course across the country. TomegaVax is one example, an Oregon Health Science University-based startup that’s received funding from the programs. They are developing vaccines and 

immunotherapies for chronic and recurring viral infections and 

they’re now based on this research recruiting the first human volunteers for a clinical trial on a promising HIV vaccine. So great 

programs, but I had a conversation recently with our institutions 

of higher education and some innovative small businesses, and a 

couple things came up, and I’m going to ask you about those. 

First, I heard about a woman who has a Ph.D. in cancer biology, 

decided not to go back to work after her kids were born because 

science funding is complicated and tenuous. I also heard from a 

small business—a creative small business owner, very innovative, 

who said that they don’t even look at the SBA for funding because 
64 

application process is complicated and time-consuming. This is 

someone who’s a patent attorney with an MBA, so if it’s not userfriendly to somebody like that, the first issue is, what is being done 

to address the complication and the, I guess, tenuous nature of 

science funding in general? 

The second issue that came up that I’ll ask you to address is the 

funding gap between Phase I and Phase II, and we heard about up 

to 6 to 9 months can go by between Phase I and Phase II, and if 

it’s a small business with just a couple of employees, they don’t 

know what to do for that time, and they’re really—it’s really killing 

some efforts and what could be some very innovative products. 

So I guess I’ll start with Dr. Khargonekar, if you could discuss 

the whole process and how complicated it is and uncertain and the 

funding gap, please, between Phase I and Phase II. Thank you. 

Mr. KHARGONEKAR. So the Phase I/Phase II gap has been a significant focus for the Foundation. Prior to 2015, we added a Phase 

IB supplement to Phase I grantees so that they would have some 

additional dollars so that the gap could be addressed to some extent, but in 2015 and 2016, we made a significant change. We did 

several things. We increased the Phase I duration to 12 months. 

We increased the Phase I amount to $225,000 from 150 so that 

gives you more dollars and longer runway. And then we changed 

the deadlines so that you can submit the Phase II grant after 8 

months of Phase I start so that allows—it doesn’t completely eliminate the gap but it allows it to be much smaller than it has traditionally been. 

And I’ll add one final point. We rely a lot on the Phase I interim 

report to know if the technology is really viable because we want 

to be responsible stewards of taxpayer dollars. So with these 

changes and making sure that the Phase I interim report guides 

us in terms of the Phase II decision, we feel that we have taken 

a number of steps that would address the funding gap that you 

point out, and it’s an area that we will continue to work on. 

Ms. BONAMICI. Thank you. 

Dr. Lauer? 

Dr. LAUER. Thank you, Congressman. We do recognize that it 

takes too long for applications to be processed and so beginning 

about a year ago, we made a number of administrative steps to 

streamline the SBIR application process, and we hope to have some 

promising metrics available for you before too long. 

Regarding the Phase I/Phase II gap, we have a mechanism called 

Fast Track where one can apply for combined Phase I/Phase II at 

the same time. The idea is that if you meet certain metrics through 

Phase I, you automatically move into Phase II, and that has been 

growing. It’s now—about 25 percent of our Phase II programs go 

through Fast Track, go straight from Phase I to Phase II. 

Ms. BONAMICI. Great. Thank you. 

Ms. DEHMER. We’ve done similar things to what’s just been described. We have a fast track program, and we’ve made a number 

of changes in how the awards are handled to reduce the gap. Also, 

in terms of the complications of application, we’ve tried using a 

new electronic application system to streamline that somewhat, 

and as I mentioned in my own testimony, we reduced the time 

from the close of the FOA to the actual award by a factor of two, 
65 

and so we’re trying very hard to make things easier for the applicants. 

Ms. BONAMICI. Thank you. 

Ms. Garton? 

Ms. GARTON. Well, we don’t—Georgia Tech as a university is not 

a direct recipient of SBIR funds, so the funding gap is less obvious 

to us. But in our subcontracting practices, we certainly do notice 

the discontinuity between Phase I and Phase II and try to work 

with our SBIR companies that are funding us under subcontracts 

to support their proposal efforts. 

Ms. BONAMICI. And are you sensing the same sort of discouragement that I heard from a couple of people in this conversation 

about it’s so complicated and tenuous? And for the record, I was 

not in Congress when the Budget Control Act passed, not part of 

the sequestration and those, you know, across-the-board budget 

cuts, but are things getting better out there or—— 

Ms. GARTON. It is very, very tough on the basic science side. The 

pay lines are such that it is very hard for faculty to get their basic 

and applied research programs funded, and that’s really the balance part of the question. Do we have enough funding going into 

overall research programs, and what are the pay lines? It is very 

difficult. I think Dr. Lauer talked about it in his testimony. 

Ms. BONAMICI. He did. We got that message clearly in Dr. 

Lauer’s testimony. 

Ms. GARTON. And yes, we are—— 

Ms. BONAMICI. Thank you. 

My time is expired. I yield back. Thank you, Madam Chair. 

Chairwoman COMSTOCK. Thank you. 

I now recognize Mr. LaHood for five minutes. 

Mr. LAHOOD. Thank you, Madam Chair, and I want to thank the 

witnesses for being here today and your testimony. I want to take 

a brief moment just to highlight the impact of the SBIR program 

in my home state of Illinois. The SBIR program is an important 

source of investment in new technology for the State of Illinois. 

Since the program’s inception, Illinois has received over $600 million in SBIR funding, creating thousands of new jobs, new products 

and new services. 

As others have mentioned, the recent National Academy reports 

on the SBIR and STTR program in the civilian agency side a very 

strong record of commercialization and return on investment as 

well as strong linkages to the university and basic R&D infrastructure within the country, which is clearly evident in the State of Illinois. 

With the past successes of this program in mind, as we look to 

reauthorization of SBIR and STTR, what top recommendation 

would each of you make for improving the SBIR and STTR programs to more efficiently and effectively promote innovation and 

job creation? Doctor? 

Dr. KHARGONEKAR. Yes. So we support permanent reauthorization. We support maintaining the flexibility in the program. That 

I think has been very, very important, at least for the National 

Science Foundation, to maximize the value to society and to the 

taxpayer of SBIR-funded research. Those are some of the top rec-
66 

ommendations that I would make is maintaining the flexibility in 

the SBIR program. 

Mr. LAHOOD. Thank you. 

Dr. LAUER. Yes, I would echo that flexibility, which is especially 

important to biomedical research because of the additional challenges of getting a product into clinical practice. We also strongly 

encourage the continuation and strengthening of Phase zero, and 

the administrative support. 

Dr. DEHMER. Absolutely. I echo that completely. The flexibility, 

the option to have a small fraction of the budget for administrative 

support are the key things that we would recommend. 

Ms. GARTON. I agree. I think the flexibility that the agencies 

have, the ability to continue to expand the Phase 0 sorts of pilots 

and make those more generally available, and to maintain the setasides at their current levels would be my major recommendations. 

Mr. LAHOOD. Thank you for that. 

In terms of measuring success or the metrics used to do that 

under both SBIR and STTR, can you comment a little bit on how 

you measure success in those two programs? 

Dr. KHARGONEKAR. So as I described earlier, we think of SBIR/ 

STTR as part of a portfolio that connects discovery in the lab, invention in the lab, with real-world commercialization. So it’s a 

piece of an ecosystem involving Innovation Corps program that we 

talked about earlier in this testimony as well as many of our research centers—ERCs, RUCRCs, science and technology centers. In 

terms of success, one has to look at ultimately formation of companies, creation of new technologies, and I really emphasize people. 

I mean, ultimately it’s people who go through these programs, they 

become lifelong contributors and inventors and discoverers that 

will add to the economic competitiveness of the Nation. So I would 

look at people who are changed by these programs. 

Mr. LAHOOD. Thank you. 

Dr. LAUER. I would say in addition to the traditional metrics for 

biomedical research, we would consider two important factors. One 

is incorporation into clinical practice; does it actually benefit real 

patients in the real world. And then the second is, some of our 

SBIR work goes into developing tools for research researchers can 

use to advance science, and we have seen examples where tools 

have led to advances in knowledge that otherwise could not have 

happened. 

Mr. LAHOOD. Thanks. 

Dr. DEHMER. One of the things that we’ve done in our STEM 

education—science, technology, engineering and mathematics— 

workforce development is to set up systems that will track students, participants over a long period of time and enable us to look 

at outcomes five, 10 and more years down the road, and I think if 

you really want to do these kinds of assessments properly, you 

can’t look at short-term outputs; you have to look at the long term. 

And so those would be my recommendations. 

Mr. LAHOOD. Thanks. 

Ms. GARTON. And I think one of the major purposes of the SBIR 

and STTR programs is to help universities, at least from our perspective, is to help us get the research results, the things that come 

out of our laboratories, into the marketplace so that the public can 
67 

benefit from them. So I look at whether or not the technologies that 

we create and we launch through these companies are actually 

being used and are they available to the public. 

Mr. LAHOOD. Thank you. 

Those are all my questions, Madam Chair. Thank you. 

Chairwoman COMSTOCK. Thank you. 

And I now recognize Ms. Clark for 5 minutes. 

Ms. CLARK. Thank you, Chairwoman Comstock and Ranking 

Member Lipinski, for this hearing, and thank you to all of our witnesses today. We are delighted to have you, and I think your testimonies have underscored the immense value of the SBIR and 

STTR in making sure we’re taking that research out of the labs 

and into the private sector. We’re very grateful for you being here. 

Dr. Dehmer, I’d like to go back to a program that you mentioned, 

which is the Phase 0 assistance program. As we see women increasingly—we’re up to 30 percent of women who are owning their 

own businesses, and it’s one of the fastest growing sectors, but 

we’re not where we should be, especially with women of color, and 

I wondered, as one of the primary focuses of these programs is to 

encourage participation women and minority-owned businesses, I 

wondered if you could go into a little more detail on how the Phase 

0 program benefits businesses that may be submitting a proposal 

for the first time and how you see the Phase 0 encouraging women 

and minority-owned businesses. 

Ms. DEHMER. Well, so there’s two parts to that. The first is outreach to women and minority-owned businesses, and we’re working 

hard to increase our outreach through various mechanisms, 

through physically getting on the road, through webinars and so 

forth, and the second is enabling people through small investments 

to be better prepared to write successful SBIR grants for the first 

time, and I think that’s very important. This actually goes beyond 

just SBIR. This goes to enabling people who have never submitted 

a research grant to be able to do it successfully, and so our Phase 

0 program—there’s many different Phase 0 programs so they’re not 

all the same. But ours specifically provides people with help in 

navigating the federal system, the application system, and giving 

them help in letter-of-intent writing. If you don’t write a good letter 

of intent for the programs, you’re out right away, at least in some 

of the research programs, how to write a Phase I proposal, how it 

gets reviewed, how you’re going to submit it, communication and 

marketing research, technology advice and so forth. 

So what I’ve personally observed with young people submitting 

proposals for the research programs, and that applies to first-time 

applicants to SBIR, is that they will need help navigating the federal system and learning the basics of how to do something successfully, and frequently they aren’t successful just because they 

don’t know. 

Ms. CLARK. Do you know how many Phase 0 program participants have been successful in securing SBIR or STTR awards? 

Ms. DEHMER. Yeah. So it’s—so it’s a new program, and the only 

thing we know so far is that the success rate for people who have 

been through the Phase 0 program is about the same as the success rate for others, and at first blush, you might think that that 

wouldn’t be the case because the people submitting for the first 
68 

time would be less successful. But I think it’s actually going to take 

a lot more statistical analysis with control groups and so forth to 

know for a fact that the Phase 0 program is helping, but we do 

know that the success rate is about the same for first-time applicants who have been—or for recent applicants who have been 

through the Phase 0 program compared to those who do not. 

Ms. CLARK. Thank you. 

And Dr. Lauer, the National Academies 2015 assessment of the 

SBIR/STTR at NIH found that women and minority participation 

is ‘‘low and declining.’’ Are you aware of any changes or approaches 

that are being taken at NIH to address this problem? 

Dr. LAUER. Congresswoman, yes. We are aware with the finding 

in the NAS report and we are quite concerned about that as well. 

Our SBIR office is engaged in a number of outreach efforts, which 

I mentioned specifically in my opening testimony. We’re also looking, similar to my colleague here, at how the Phase 0 programs can 

help, and we’d be happy to follow up with some more details. 

Ms. CLARK. Thank you very much. 

And just very generally, Dr. Khargonekar, have you seen the discrepancy between NSF’s overall funding level increases and the 

SBIR/STTR funding? Has that had an effect on NSF’s mission? 

Mr. KHARGONEKAR. I mean, I think what it has done is, since the 

growth in our basic research budget has not been as strong, it has 

reduced the amount of funding we have available for funding over 

core research programs in all areas of science and engineering, and 

that’s the reason why we are saying that let’s not increase the setaside percentages as a way to increase the SBIR/STTR program, 

let’s grow the entire research budget, which allows SBIR/STTR to 

grow. So yes, it has had impact. 

Ms. CLARK. And I agree with you. I think we need to increase 

the pie, not reallocate the slices. 

But thank you all. Thank you for your testimony and your work, 

and I yield back. 

Chairwoman COMSTOCK. I now recognize Mr. Tonko for 5 minutes. 

Mr. TONKO. Thank you, Madam Chair. 

I for one am excited that we’re holding this hearing today because I very strongly believe that reauthorization of the SBIR/ 

STTR program is of the utmost importance. In fact, it should be 

broadened and extended and enhanced. I so much believe in it. 

This program has proven to be one of the most successful federal 

programs for technological innovation in our history, delivering 

more than 70,000 patents and valuable innovations in agriculture 

and defense and energy, health sciences, homeland security, space 

transportation and other fields. You can’t get better results than 

that. 

Through Phase I and Phase II, SBIR countless jobs have been 

created in the capital region of New York that I represent. It is 

through programs such as SBIR that my district has developed the 

underpinnings of support for a boom in high-technology innovation 

and economic development. I would cite International Electronic 

Machines Corporation in Troy as a stellar example of all of that. 

Let me begin with Dr. Lauer. The 2011 reauthorization allows 

NIH, DOD and the Department of Education to conduct a pilot pro-
69 

gram to allow a small business to receive a Phase II without having received a Phase II award, also known as the Direct to Phase 

II pilot. I have some concern that allowing companies to skip Phase 

I would shut out some small businesses from competing for SBIR 

award funding. Can you elaborate, Doctor, on Direct to Phase II 

funding and efforts to prevent marginalization of some small businesses out there? 

Dr. LAUER. Thank you, Congressman. I think part of the reasoning for that is that we’ve observed that it’s rare that a project 

goes from Phase 0, Phase I, Phase II, Phase IIB and then final approval and marketing. The process in the real world is not that linear, and often there are, for example, two Phase II awards that ultimately lead to development of a product. So the idea of Direct to 

Phase II was to consider other pathways by which a product may 

eventually make it. 

Mr. TONKO. So there shouldn’t be a risk of marginalization? 

Dr. LAUER. Well, we certainly don’t want that to happen, and 

that, I think, gets to the point that a number of your colleagues 

have made, which is that we have to track metrics very carefully, 

and that we are doing. 

Mr. TONKO. Okay. I appreciate that. 

The research and development of technologies in the biotech 

field, the energy sector, as well as other technology areas require 

large investments of capital in the range of hundreds of thousands 

if not to millions of dollars. The 2011 reauthorization provides increased flexibility to agencies in the amount of funding they award 

to small businesses under SBIR. 

Additionally, I’m informed that the timeline for innovation does 

not necessarily fit neatly into the Phase I, Phase II and Phase III 

approach used by our SBIR program. The last reauthorization also 

allows agencies more flexibility to structure the funding award at 

their discretion. So I would ask each of our witnesses, how have 

each of your, you know, agencies or sections, your divisions, implemented these new flexibilities? 

Mr. KHARGONEKAR. As I mentioned earlier in this testimony, we 

certainly have used the flexibility. For example, we’ve increased 

the Phase I award size. We have increased the duration of Phase 

I. We have increased the Phase II and Phase IIB sizes. We have 

used Phase IIB to attract more private-sector funding through the 

two-to-one match requirement. So if you want to get Phase II funding from NSF, private sector has to come in with the two-to-one— 

twice the amount that NSF would provide. So we certainly have 

used the flexibility that have been afforded to us to increase the 

overall impact of taking discovery and invention and commercializing it to the real world. 

Mr. TONKO. Thank you, Dr. Khargonekar. 

And Dr. Lauer? 

Dr. LAUER. So at NIH, two examples would be the Phase IIB 

awards as well as the bridge awards, which the National Cancer 

Institute has implemented, and these awards enable up to three 

years of funding, a million dollars a year, and this is particularly 

important when you’re trying to move a product into clinical trials. 

Mr. TONKO. Thank you. And Dr. Dehmer? 
70 

Ms. DEHMER. Yeah. I think you’ve heard a lot of examples from 

me in DOE and from my colleagues. I think the bottom line here 

is that increased flexibility enables an agency to do experiments 

that are targeted at the kinds of small businesses that the agency 

wants to develop, and without that flexibility that allows experiments, you simply are going to be locked into a structure which 

may not fit everyone. I’ve observed in my own research career and 

in my management career at DOE watching several groups of the 

same kind that are funded at very different places evolve in different ways because we allow them the freedom to evolve, and 

what you find are best practices and innovation, and that then can 

be ported from one group to another. So the flexibility to allow experimentation is extremely critical in this program, and the 2011 

authorization, which provided that, was terrific. 

Mr. TONKO. Thank you. 

And Ms. Garton? 

Ms. GARTON. The flexibility that the agencies are using helps our 

companies. The companies that we create follow a non-linear path, 

as somebody just said. It really is variable across a sector and 

across the technology development pathway because things come 

up in the development of those technologies, and having that flexibility to have a second Phase II, to have bridge funding, that’s really critical for those companies because that gives them flexibility. 

Mr. TONKO. Well, I think harnessing the intellect of this Nation 

in the midst of an innovation economy is an awesome assignment. 

You’re doing that and doing it very well. 

And with that, Madam Chair, I yield back. 

Chairwoman COMSTOCK. Thank you, and I’d like to thank the 

witnesses today, and thank you for your passion, for your important work, and the importance of basic research and our role in 

that, and really appreciate your support for the innovation economy 

and how we’re going to do that, and I did note that we have a number of students here. Are these students that we have? If you’re a 

student, raise your hand. Great. It’s been very nice to have students here, and I hope you appreciate all the good work that’s 

going on here, and see a lot of the support, and if you’re science 

students and STEM students in any of those fields, we are definitely interested in making sure you stay in those fields. We need 

you in those fields, and these are the leaders that you’ll want to 

be watching over the years and hopefully joining. 

So thank you, students, for being here today, and again, thank 

our witnesses for all they do in this very innovative and exciting 

field, and we are now adjourned. 

[Whereupon, at 11:22 a.m., the Subcommittee was adjourned.] 
(71) 

Appendix I 

ANSWERS TO POST-HEARING QUESTIONS
72 

ANSWERS TO POST-HEARING QUESTIONS

Responses by Dr. Pramod Khargonekar 
73 
74 
75 
76 
77 
78 
79 
80 

Responses by Dr. Michael Lauer 
81 
82 
83 
84 
85 
86 
87 
88 

Responses by Dr. Patricia Dehmer 
89 
90 
91 
92 
93 
94 
95 
96 
97 
98 
99 
100 
101 
102 
103 
104 
105 

Responses by Dr. Jilda D. Garton 
106 

Æ