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40–854 PDF 2008

FULL COMMITTEE MARKUP OF

H.R. 5819, THE SBIR/STTR

REAUTHORIZATION ACT

COMMITTEE ON SMALL BUSINESS 

UNITED STATES HOUSE OF 

REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

SECOND SESSION

APRIL 17, 2008

Serial Number 110-85

Printed for the use of the Committee on Small Business

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/house 

HOUSE COMMITTEE ON SMALL BUSINESS 

NYDIA M. VELA ́ ZQUEZ, New York, Chairwoman 

HEATH SHULER, North Carolina 

CHARLIE GONZA ́ LEZ, Texas 

RICK LARSEN, Washington 

RAUL GRIJALVA, Arizona 

MICHAEL MICHAUD, Maine 

MELISSA BEAN, Illinois 

HENRY CUELLAR, Texas 

DAN LIPINSKI, Illinois 

GWEN MOORE, Wisconsin 

JASON ALTMIRE, Pennsylvania 

BRUCE BRALEY, Iowa 

YVETTE CLARKE, New York 

BRAD ELLSWORTH, Indiana 

HANK JOHNSON, Georgia 

JOE SESTAK, Pennsylvania 

BRIAN HIGGINS, New York 

MAZIE HIRONO, Hawaii 

STEVE CHABOT, Ohio, Ranking Member 

ROSCOE BARTLETT, Maryland 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

BILL SHUSTER, Pennsylvania 

MARILYN MUSGRAVE, Colorado 

STEVE KING, Iowa 

JEFF FORTENBERRY, Nebraska 

LYNN WESTMORELAND, Georgia 

LOUIE GOHMERT, Texas 

DAVID DAVIS, Tennessee 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida

MICHAEL DAY, Majority Staff Director 

ADAM MINEHARDT, Deputy Staff Director 

TIM SLATTERY, Chief Counsel 

KEVIN FITZPATRICK, Minority Staff Director

STANDING SUBCOMMITTEES 

Subcommittee on Finance and Tax

MELISSA BEAN, Illinois, Chairwoman 

RAUL GRIJALVA, Arizona 

MICHAEL MICHAUD, Maine 

BRAD ELLSWORTH, Indiana 

HANK JOHNSON, Georgia 

JOE SESTAK, Pennsylvania 

VERN BUCHANAN, Florida, Ranking 

BILL SHUSTER, Pennsylvania 

STEVE KING, Iowa

Subcommittee on Contracting and Technology

BRUCE BRALEY, IOWA, Chairman 

HENRY CUELLAR, Texas 

GWEN MOORE, Wisconsin 

YVETTE CLARKE, New York 

JOE SESTAK, Pennsylvania 

DAVID DAVIS, Tennessee, Ranking 

ROSCOE BARTLETT, Maryland 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

MARY FALLIN, Oklahoma

(II) 

Subcommittee on Regulations, Health Care and Trade

CHARLES GONZA ́ LEZ, Texas, Chairman 

RICK LARSEN, Washington 

DAN LIPINSKI, Illinois 

MELISSA BEAN, Illinois 

GWEN MOORE, Wisconsin 

JASON ALTMIRE, Pennsylvania 

JOE SESTAK, Pennsylvania 

LYNN WESTMORELAND, Georgia, Ranking 

BILL SHUSTER, Pennsylvania 

STEVE KING, Iowa 

MARILYN MUSGRAVE, Colorado 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida

Subcommittee on Urban and Rural Entrepreneurship

HEATH SHULER, North Carolina, Chairman 

RICK LARSEN, Washington 

MICHAEL MICHAUD, Maine 

GWEN MOORE, Wisconsin 

YVETTE CLARKE, New York 

BRAD ELLSWORTH, Indiana 

HANK JOHNSON, Georgia 

JEFF FORTENBERRY, Nebraska, Ranking 

ROSCOE BARTLETT, Maryland 

MARILYN MUSGRAVE, Colorado 

DAVID DAVIS, Tennessee

Subcommittee on Investigations and Oversight

JASON ALTMIRE, PENNSYLVANIA, Chairman 

CHARLIE GONZA ́ LEZ, Texas 

RAUL GRIJALVA, Arizona 

MARY FALLIN, Oklahoma, Ranking 

LYNN WESTMORELAND, Georgia

(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page

Vela ́zquez, Hon. Nydia M. ....................................................................................... 1

Chabot, Hon. Steve .................................................................................................. 2

Graves, Hon. Sam .................................................................................................... 3

APPENDIX 

Prepared Statements: 

Vela ́zquez, Hon. Nydia M. ....................................................................................... 8

Chabot, Hon. Steve .................................................................................................. 10

Graves, Hon. Sam .................................................................................................... 11

(V) 

(1)

FULL COMMITTEE MARKUP OF 

H.R. 5819, THE SBIR/STTR 

REAUTHORIZATION ACT 

Thursday, April 17, 2008

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC. 

The Committee met, pursuant to call, at 12:52 p.m., inRoom 

1539, Longworth House Office Building, Hon. Nydia M. Vela ́zquez 

[Chair of the Committee] Presiding. 

Present: Representatives Vela ́zquez, Shuler, Grijalva, Bean, 

Cuellar, Lipinski, Altmire, Braley, Clarke, Ellsworth, Johnson, 

Sestak, Hirono, Chabot, Bartlett, Graves, Akin, Musgrave, Davis 

and Buchanan. 

OPENING STATEMENT OF CHAIRWOMAN VELA ́ ZQUEZ 

Chairwoman VELA ́ ZQUEZ. I am pleased to call this afternoon’s 

markup to order. 

Today, the Committee will address legislation that will modernize and reauthorize the Small Business Innovation Research 

and Small Business Technology Transfer programs. These programs, which help spur innovation and job creation throughout the 

country, were last updated 8 years ago. 

Research conducted by SBIR and STTR awardees have helped 

address our country’s most important research and development 

challenges. This includes strengthening our national security and 

our public health infrastructure. 

The continued success of the SBIR and STTR program is dependent on three primary issues: First, the program must remain highly 

competitive. Second, applicants and awardees must have access to 

financing of all types, including venture capital. Small firms must 

not be penalized for accepting the investment they need to advance 

their R&D efforts. Third, more needs to be done to bring these 

breakthrough products to the market. We must promote greater 

commercialization in these initiatives. 

The reauthorization legislation that we will mark up today is an 

important step toward securing the future success of these important programs. We have worked closely with our colleagues on the 

Committee on Science and Technology. To this end, we have taken 

the legislation they marked up yesterday afternoon and incorporated it into the consolidated bill before us today. We have also 

included amendments from Representatives Wilson and Smith that 

were adopted in the Science Committee’s markup yesterday. 

2

The most notable legislative changes to the programs are increases in the set-asides for both SBIR and STTR. These will allow 

more firms to participate in Federal R&D activities. This is especially important for SBIR, where we raised the set-aside level from 

2.3 to 3 percent. 

The bill also raises award sizes but places substantial notification and reporting requirements on agencies seeking to exceed 

these limits. This will ensure that jumbo awards are being reviewed and overseen. 

Perhaps most importantly, the legislation restores the 2003 eligibility rules, permitting small businesses with venture capital investment to qualify for SBIR awards. This is not a ground-breaking 

change. We are simply reinstating the policies that were in place 

up to 2003. We have done so in a balanced manner and included 

important safeguards and protections. 

Small businesses are the focus of this policy. A single venture 

capital firm cannot own a majority of an SBIR awardee, nor can 

they have a majority of seats on its board of directors. In addition, 

limitations are placed on the venture capital company, including its 

size and its control by larger corporations. Overall, this once again 

gives entrepreneurs, not Washington bureaucrats, the final say on 

how their company should be financed. 

H.R. 5819 takes steps to develop the next generation of small research firms. It will do so by providing resources to increase SBIR 

and STTR applications from rural areas and from those owned by 

women, service-disabled veterans and minorities, as recommended 

by Congressman Cuellar. 

It makes resources available that small businesses need to transition SBIR-funded research from the laboratory to the marketplace. This includes making commercialization a priority and supplying the resources for transition assistance program expertise, 

mentoring activities and the facilitation of key business partnerships. 

H.R. 5819 will enable more small research companies to advance 

innovations that have made our economy so diverse and vibrant. It 

has the support of the Biotech Industry organization and the National Venture Capital Association. 

In passing this bill, we will ensure that SBIR and STTR awards 

remain competitive from top-notch research and produce cuttingedge breakthroughs. Doing so will continue to help create high-paying jobs, reduce our trade deficit and emphasize the importance of 

math and science education to America’s students. 

I will now like to yield to Ranking Member Chabot for his opening remarks. 

OPENING STATEMENT OF MR. CHABOT 

Mr. CHABOT. Thank you, Madam Chairwoman. 

Good afternoon. Thank you all for being here as we mark up legislation to reauthorize the Small Business Innovation Research 

program and the Small Business Technology Transfer program, or 

SBIR and STTR programs respectively. 

These two programs are an example of highly successful Federal 

initiatives to encourage economic growth and innovation within the 

small business community by assisting in the funding that is critVerDate 0ct 09 2002 10:40 May 07, 2008 Jkt 033615 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 G:\CLERK SB-LD\HEARINGS\TRANSCRIPTS\40854.TXT LEANN
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ical to the start-up and development stages of small business companies. Not only does it spur growth in individual companies, the 

program stresses the importance of this Committee’s and the entire 

Federal Government’s commitment to expand and diversify research opportunities to small business. 

Small businesses drive innovation. It is of the utmost importance 

that we continue to foster growth in this segment of our economy. 

This is especially important in the new world economy where the 

technology and technological advantage the United States has had 

on the rest of the world is not as large, unfortunately, as it used 

to be. 

It is said that nobody has a patent on good new ideas. While that 

is true, it can be difficult for a small company with limited resources to take that idea and manufacture it into a product or process. Programs like SBIR and STTR provide a bridge between product conception and marketability, a bridge of vital importance for 

innovative ideas to become reality. The new technologies and discoveries that come out of this program go a long way toward keeping our competitive edge in the world marketplace. The SBIR and 

STTR programs are the kind of public-private partnership that is 

essential to the continued growth of our economy. 

The legislation we have before us goes a long way toward 

strengthening these two programs. Among other things, the legislation requires greater oversight by agency heads and better reporting of information to Congress. The bill also increases the maximum award sizes to allow grant winners greater ability to develop 

their new technologies and provides agencies even greater flexibility to administer their programs. 

That said, I believe the bill is, of course, not perfect. Compromises have been made by both parties in both committees with 

jurisdiction. The Chairwoman and I have continued to work together, along with our staffs, who have also I think worked very 

closely together this year and last year in a strong, bipartisan manner in an effort to craft a bill that truly represents a victory for 

American small businesses; and I thank her for that. I would request that, as she has done since the beginning of Congress, that 

the Chairwoman continue to work with us as this bill moves forward through the process. 

Again, I thank everyone for being here today, the members, the 

Chairwoman and everyone here, and I yield back the balance of my 

time. 

Chairwoman VELA ́ ZQUEZ. Thank you, Mr. Chabot. 

Now I would like to recognize the regional co-sponsor of the legislation, Mr. Graves, for a statement on this legislation. 

OPENING STATEMENT OF MR. GRAVES 

Mr. GRAVES. Thank you, Chairwoman Vela ́zquez and Ranking 

Member Chabot. I appreciate you giving me an opportunity to 

make just a few comments on the SBIR reauthorization. 

As you know, the Small Business Administration provides startup funding to small businesses in a variety of ways. One such program is the Small Business Innovation Research program, the 

SBIR program, which allocates a specific percentage of all Federal 

research and development of grant monies to small business appliVerDate 0ct 09 2002 10:40 May 07, 2008 Jkt 033615 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 G:\CLERK SB-LD\HEARINGS\TRANSCRIPTS\40854.TXT LEANN
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cants. The program allows for cutting-edge, innovative research 

that may not in its earliest stages attract funding from other 

sources. 

American innovation is what drives this country, and the SBIR 

program helps stimulate innovation. Creating an environment that 

will keep American innovation in the forefront of the global market 

is a priority of mine, and I am very confident this bill will help 

meet those goals. I strong believe in the SBIR program and what 

it does for small businesses. Thank you for helping me remove barriers to participation in this program, and I look forward to its passage. Thank you. 

Chairwoman VELA ́ ZQUEZ. Thank you. 

Are there any other members that wish to be recognized for the 

purpose of making a statement on the legislation? 

The Committee now moves to consideration of the bill H.R. 5819. 

The clerk will report the title of the bill.

The CLERK. To amend the Small Business Act to improve the 

Small Business Innovation Research, SBIR, program and the Small 

Business Technology Transfer, STTR, program, and for other purposes.

Chairwoman VELA ́ ZQUEZ. I ask unanimous consent that the bill 

in its entirety be open for amendments at this time. Does any 

member seek recognition for the purpose of offering an amendment? 

The Chair recognizes herself for the purpose of offering an 

amendment. I have an amendment at the desk. The clerk will report the amendment. 

The CLERK. Strike title II of the bill and insert the following. 

Chairwoman VELA ́ ZQUEZ. I ask unanimous consent that the 

amendment be considered as read. Without objection, so ordered.

Chairwoman VELA ́ ZQUEZ. The amendment under consideration 

reflects feedback we have received from the House Science and 

Technology Committee. The amendment is a technical correction 

that clarifies the role corporate-owned venture capital companies 

can play when investing in SBIR-eligible companies. 

Under current law, corporate-owned venture capital companies 

can invest in SBIR eligible companies. The amendment clarifies 

that this is still the case under Section 201 of H.R. 5819 and sets 

up the structure governing this investment. As a safeguard against 

potential abuse, the amendment limits both the ownership percentage and the number of corporate-owned venture capital firms that 

can invest in an SBIR-eligible company. 

The amendment was developed in conjunction with and is supported by Mr. Chabot. I urge adoption of the amendment. 

Are there any other members who seek to be recognized on the 

amendment? 

Mr. CHABOT. Madam Chair, move to strike the last word. 

Chairwoman VELA ́ ZQUEZ. Without objection.

Mr. CHABOT. Thank you, Madam Chair. I will be very brief. 

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I want to just reiterate what the Chairwoman just said, that the 

minority and majority staffs worked together very closely on this, 

as we did as well, and also with Chairman Wu to resolve this issue; 

and I think we have done it in a reasonable and straightforward 

way which allows us to make sure that the interests of small businesses are protected. And I want to commend you for working together in a bipartisan manner on this amendment and the entire 

bill. 

I yield back.

Chairwoman VELA ́ ZQUEZ. The same goes with the Ranking Member Chabot for the collaboration and the understanding and the 

willingness to work together and, particularly, both staffs from the 

majority and minority and also the Science and Technology Committee. 

Are there any other members who seek to be recognized on the 

amendment? 

Seeing no members seeking recognition, the question is on the 

amendment offered by Ms. Vela ́zquez. All those in favor, say aye. 

All those opposed, no. 

The ayes have it. The amendment is adopted. 

Are there any other amendments? 

Seeing no amendments, the question is on passing and reporting 

the bill H.R. 5819 as amended. All those in favor, say aye. All those 

opposed, say no. 

In the opinion of the Chair, the ayes have it. 

The clerk will call the roll.

The CLERK. Ms. Vela ́zquez. 

Ms. VELA ́ ZQUEZ. Aye. 

The CLERK. Ms. Vela ́zquez votes aye. 

Mr. Shuler. 

Mr. SHULER. Aye. 

The CLERK. Mr. Shuler votes aye. 

Mr. Gonzalez. 

[no response.] 

The CLERK. Mr. Larsen. 

[No response.] 

The CLERK. Mr. Grijalva. 

Mr. GRIJALVA. Aye. 

The CLERK. Mr. Grijalva votes aye. 

Mr. Michaud. 

[no response.] 

The CLERK. Ms. Bean. 

Ms. BEAN. Aye. 

The CLERK.

Ms. Bean votes aye. 

Mr. Cuellar. 

Mr. CUELLAR. Aye. 

The CLERK. Mr. Cuellar votes aye. 

Mr. Lipinski. 

Mr. LIPINSKI. Aye. 

The CLERK. Mr. Lipinski votes aye. 

Ms. Moore. 

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[no response.] 

The CLERK. Mr. Altmire. 

Mr. ALTMIRE. Aye. 

The CLERK. Mr. Altmire votes aye. 

Mr. Braley. 

Mr. BRALEY. Aye. 

The CLERK. Mr. Braley votes aye. 

Ms. Clarke. 

Ms. CLARKE. Aye. 

The CLERK. Ms. Clarke votes aye. 

Mr. Ellsworth. 

Mr. ELLSWORTH. Aye. 

The CLERK.Mr. Ellsworth votes aye. 

Mr. Johnson. 

Mr. JOHNSON. Aye. 

The CLERK. Mr. Johnson votes aye. 

Mr. Sestak.

Mr. SESTAK. Aye. 

The CLERK. Mr. Sestak votes aye. 

Ms. Hirono. 

Ms. Hirono. Aye. 

The CLERK. Ms. Hirono votes aye. 

Mr. Higgins. 

[no response.] 

The CLERK. Mr. Chabot. 

Mr. Chabot. Aye. 

The CLERK. Mr. Chabot votes aye. 

Mr. Bartlett.

Mr. BARTLETT. Aye. 

The CLERK. Mr. Bartlett votes aye. 

Mr. Graves. 

Mr. GRAVES. Aye. 

The CLERK. Mr. Graves votes aye. 

Mr. Akin. 

Mr. AKIN. Aye. 

The CLERK. Mr. Akin votes aye. 

Mr. Shuster. 

[no response.] 

The CLERK. Mrs. Musgrave. 

Mrs. MUSGRAVE. Aye. 

The CLERK. Mrs. Musgrave votes aye. 

Mr. King. 

[no response.] 

The CLERK. Mr. Fortenberry. 

[no response.] 

The CLERK. Mr. Westmoreland. 

[no response.] 

The CLERK. Mr. Gohmert. 

[no response.] 

The CLERK. Mr. Davis.

Mr. DAVIS. Aye. 

The CLERK. Mr. Davis votes aye. 

Ms. Fallin. 

[no response.] 

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The CLERK. Mr. Buchanan. 

Mr. BUCHANAN. Aye. 

The CLERK. Mr. Buchanan votes aye.

Chairwoman VELA ́ ZQUEZ. The clerk will report the vote.

The CLERK. 20 ayes, no noes.

Chairwoman VELA ́ ZQUEZ. The ayes have it. H.R. 5819 is adopted 

and ordered reported as amended. 

I ask unanimous consent that the Committee be authorized to 

correct section numbers, punctuation and cross references and to 

make all the necessary technical and conforming corrections on the 

bills considered today. Without objection so ordered. 

This markup is adjourned. Thank you. 

[Whereupon, at 1:10 p.m., the Committee was adjourned.]

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