I 

116TH CONGRESS 

1ST SESSION H. R. 206 

To amend the small business laws to create certain requirements with respect 

to the SBIR and STTR program, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 3, 2019 

Mr. ROUDA introduced the following bill; which was referred to the Committee 

on Small Business, and in addition to the Committee on Science, Space, 

and Technology, for a period to be subsequently determined by the 

Speaker, in each case for consideration of such provisions as fall within 

the jurisdiction of the committee concerned 

A BILL 

To amend the small business laws to create certain requirements with respect to the SBIR and STTR program, 

and for other purposes. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Encouraging Small 

5 Business Innovation Act’’. 


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1 SEC. 2. INCLUSION OF TESTING AND EVALUATION IN THE 

2 DEFINITION OF RESEARCH AND DEVELOP3 MENT. 

4 Section 9(e)(5) of the Small Business Act (15 U.S.C. 

5 638(e)(5)) is amended— 

6 (1) by redesignating subparagraphs (A), (B), 

7 and (C) as clauses (i), (ii), and (iii), respectively 

8 (and conforming the margins accordingly); 

9 (2) by striking ‘‘means any activity which is’’ 

10 and inserting the following: ‘‘means— 

11 ‘‘(A) any activity which is—’’; and 

12 (3) in clause (iii), as so redesignated, by adding 

13 ‘‘and’’ after the semicolon at the end; and 

14 (4) by adding at the end the following new sub15 paragraph: 

16 ‘‘(B) any testing or evaluation in connec17 tion with such an activity;’’. 

18 SEC. 3. INCLUSION OF SMALL BUSINESS INVESTMENT COM19 PANIES IN SBIR AND STTR. 

20 Section 9 of the Small Business Act (15 U.S.C. 638) 

21 is amended— 

22 (1) by striking ‘‘or private equity firm invest23 ment’’ each place such term appears and inserting 

24 ‘‘private equity firm, or SBIC investment’’; 

25 (2) by striking ‘‘or private equity firms’’ and in26 serting ‘‘private equity firms, or SBICs’’; 


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1 (3) in subsection (e)— 

2 (A) in paragraph (12)(B), by striking 

3 ‘‘and’’ at the end; 

4 (B) in paragraph (13)(B), by striking the 

5 period at the end and inserting ‘‘; and’’; and 

6 (C) by adding at the end the following new 

7 paragraph: 

8 ‘‘(14) the term ‘SBIC’ means a small business 

9 investment company as defined in section 103 of the 

10 Small Business Investment Act of 1958.’’; and 

11 (4) in the heading for subsection (dd), by strik12 ing ‘‘OR PRIVATE EQUITY FIRMS’’ and inserting 

13 ‘‘PRIVATE EQUITY FIRMS, OR SBICS’’. 

14 SEC. 4. CALCULATION OF LEVERAGE OF SMALL BUSINESS 

15 INVESTMENT COMPANIES THAT INVEST IN 

16 SBIR OR STTR PARTICIPANTS. 

17 Section 303(b)(2) of the Small Business Investment 

18 Act of 1958 (15 U.S.C. 683(b)(2)) is amended by adding 

19 at the end the following new subparagraph: 

20 ‘‘(E) INVESTMENTS IN SBIR AND STTR

21 PARTICIPANTS.— 

22 ‘‘(i) IN GENERAL.—Subject to clause 

23 (ii), in calculating the outstanding leverage 

24 of a company for purposes of subpara25 graph (A), the Administrator shall exclude 


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1 the amount of any investment made in a 

2 SBIR or STTR participant, if such invest3 ment is made in the first fiscal year after 

4 the date of enactment of this subparagraph 

5 or any fiscal year thereafter by a company 

6 licensed during the applicable fiscal year. 

7 ‘‘(ii) LIMITATIONS.— 

8 ‘‘(I) AMOUNT OF EXCLUSION.— 

9 The amount excluded under clause (i) 

10 for a company shall not exceed 33 

11 percent of the private capital of that 

12 company. 

13 ‘‘(II) MAXIMUM INVESTMENT.— 

14 A company shall not make an invest15 ment in any one SBIR or STTR par16 ticipant in an amount equal to more 

17 than 20 percent of the private capital 

18 of that company. 

19 ‘‘(III) OTHER TERMS.—The ex20 clusion of amounts under clause (i) 

21 shall be subject to such terms as the 

22 Administrator may impose to ensure 

23 that there is no cost (as that term is 

24 defined in section 502 of the Federal 

25 Credit Reform Act of 1990 (2 U.S.C. 


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1 661a)) with respect to purchasing or 

2 guaranteeing any debenture involved. 

3 ‘‘(iii) DEFINITIONS.—In this subpara4 graph, the term ‘SBIR or STTR partici5 pant’ means a small business concern that 

6 receives contracts or grants pursuant to 

7 section 9 of the Small Business Act.’’. 

8 SEC. 5. ENCOURAGING PARTICIPATION IN THE MENTOR9 PROTEGE PROGRAM. 

10 Section 9 of the Small Business Act (15 U.S.C. 638) 

11 is amended by adding at the end the following: 

12 ‘‘(tt) ENCOURAGING PARTICIPATION IN THE MEN13 TOR-PROTEGE PROGRAM.—The Administrator shall pro14 vide an increase to the past performance rating of any 

15 small business concern that has participated in the SBIR 

16 or STTR program that serves as a mentor under section 

17 45 to a small business concern that seeks to participate 

18 in the SBIR or STTR program.’’. 

19 SEC. 6. ANNUAL MEETING FOR FEDERAL AGENCIES WITH A 

20 SBIR OR STTR PROGRAM. 

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

22 Act (15 U.S.C. 638), as amended by section 3, is further 

23 amended by adding at the end the following new sub24 section: 

25 ‘‘(uu) ANNUAL MEETING.— 


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1 ‘‘(1) IN GENERAL.—The head of each Federal 

2 agency required to have a program under this sec3 tion (or a designee) and the Administrator (or a des4 ignee) shall meet annually to discuss methods— 

5 ‘‘(A) to improve the collection of data 

6 under this section; 

7 ‘‘(B) to improve the reporting of data to 

8 the Administrator under this section; 

9 ‘‘(C) to make the application processes for 

10 programs under this section more efficient; and 

11 ‘‘(D) to increase participation in the pro12 grams under this section. 

13 ‘‘(2) REPORTING.—Not later than 60 days after 

14 the date on which an annual meeting required under 

15 paragraph (1) is held, the Administrator shall sub16 mit to the Committee on Small Business and Entre17 preneurship of the Senate, and the Committee on 

18 Small Business and the Committee on Science, 

19 Space, and Technology of the House of Representa20 tives, a report on the findings of such meeting and 

21 recommendations on how to implement changes to 

22 programs under this section.’’. 

23 (b) FUNDING FOR ANNUAL MEETING.—Section 

24 9(mm)(1) of the Small Business Act (15 U.S.C. 

25 638(mm)(1)) is amended— 


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1 (1) in subparagraph (I), by striking the ‘‘and’’ 

2 at the end; 

3 (2) in subparagraph (J), by striking the period 

4 at the end and inserting ‘‘; and’’; and 

5 (3) by adding at the end the following new sub6 paragraph: 

7 ‘‘(K) the annual meeting required under 

8 subsection (uu).’’. 

9 SEC. 7. INCREASING PARTICIPATION OF UNDERSERVED 

10 POPULATIONS IN THE SBIR AND STTR PRO11 GRAMS. 

12 (a) IN GENERAL.—Section 9(mm)(2) of the Small 

13 Business Act (15 U.S.C. 638(mm)(2)) is amended to read 

14 as follows: 

15 ‘‘(2) OUTREACH AND TECHNICAL ASSIST16 ANCE.—A Federal agency participating in the pro17 gram under this subsection shall use a portion of the 

18 funds authorized for uses under paragraph (1) to 

19 carry out the policy directive required under sub20 section (j)(2)(F) and to increase the participation of 

21 States with respect to which a low level of SBIR 

22 awards have historically been awarded.’’. 

23 (b) CONFORMING AMENDMENT.—Section 9(mm)(6) 

24 of the Small Business Act (15 U.S.C. 638(mm)(6)) is 

25 amended by striking ‘‘paragraph (2)(A) and any use of 


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1 the waiver authority under paragraph (2)(B)’’ and insert2 ing ‘‘paragraph (2)’’. 

Æ 


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