IIB 

116TH CONGRESS 

1ST SESSION H. R. 206 

IN THE SENATE OF THE UNITED STATES 

JANUARY 15, 2019 

Received; read twice and referred to the Committee on Small Business and 

Entrepreneurship 

AN ACT 

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, 


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1 SECTION 1. SHORT TITLE. 

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

3 Business Innovation Act’’. 

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

5 DEFINITION OF RESEARCH AND DEVELOP6 MENT. 

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

8 638(e)(5)) is amended— 

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

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

11 (and conforming the margins accordingly); 

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

13 and inserting the following: ‘‘means— 

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

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

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

17 (4) by adding at the end the following new sub18 paragraph: 

19 ‘‘(B) any testing or evaluation in connec20 tion with such an activity;’’. 

21 SEC. 3. INCLUSION OF SMALL BUSINESS INVESTMENT COM22 PANIES IN SBIR AND STTR. 

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

24 is amended— 


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1 (1) by striking ‘‘or private equity firm invest2 ment’’ each place such term appears and inserting 

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

4 (2) by striking ‘‘or private equity firms’’ and in5 serting ‘‘private equity firms, or SBICs’’; 

6 (3) in subsection (e)— 

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

8 ‘‘and’’ at the end; 

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

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

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

12 paragraph: 

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

14 investment company as defined in section 103 of the 

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

16 (4) in the heading for subsection (dd), by strik17 ing ‘‘OR PRIVATE EQUITY FIRMS’’ and inserting 

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

19 SEC. 4. CALCULATION OF LEVERAGE OF SMALL BUSINESS 

20 INVESTMENT COMPANIES THAT INVEST IN 

21 SBIR OR STTR PARTICIPANTS. 

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

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

24 at the end the following new subparagraph: 


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1 ‘‘(E) INVESTMENTS IN SBIR AND STTR

2 PARTICIPANTS.— 

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

4 (ii), in calculating the outstanding leverage 

5 of a company for purposes of subpara6 graph (A), the Administrator shall exclude 

7 the amount of any investment made in a 

8 SBIR or STTR participant, if such invest9 ment is made in the first fiscal year after 

10 the date of enactment of this subparagraph 

11 or any fiscal year thereafter by a company 

12 licensed during the applicable fiscal year. 

13 ‘‘(ii) LIMITATIONS.— 

14 ‘‘(I) AMOUNT OF EXCLUSION.— 

15 The amount excluded under clause (i) 

16 for a company shall not exceed 33 

17 percent of the private capital of that 

18 company. 

19 ‘‘(II) MAXIMUM INVESTMENT.— 

20 A company shall not make an invest21 ment in any one SBIR or STTR par22 ticipant in an amount equal to more 

23 than 20 percent of the private capital 

24 of that company. 


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1 ‘‘(III) OTHER TERMS.—The ex2 clusion of amounts under clause (i) 

3 shall be subject to such terms as the 

4 Administrator may impose to ensure 

5 that there is no cost (as that term is 

6 defined in section 502 of the Federal 

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

8 661a)) with respect to purchasing or 

9 guaranteeing any debenture involved. 

10 ‘‘(iii) DEFINITIONS.—In this subpara11 graph, the term ‘SBIR or STTR partici12 pant’ means a small business concern that 

13 receives contracts or grants pursuant to 

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

15 SEC. 5. ENCOURAGING PARTICIPATION IN THE MENTOR16 PROTEGE PROGRAM. 

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

18 is amended by adding at the end the following: 

19 ‘‘(tt) ENCOURAGING PARTICIPATION IN THE MEN20 TOR-PROTEGE PROGRAM.—The Administrator shall pro21 vide an increase to the past performance rating of any 

22 small business concern that has participated in the SBIR 

23 or STTR program that serves as a mentor under section 

24 45 to a small business concern that seeks to participate 

25 in the SBIR or STTR program.’’. 


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

2 SBIR OR STTR PROGRAM. 

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

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

5 amended by adding at the end the following new sub6 section: 

7 ‘‘(uu) ANNUAL MEETING.— 

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

9 agency required to have a program under this sec10 tion (or a designee) and the Administrator (or a des11 ignee) shall meet annually to discuss methods— 

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

13 under this section; 

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

15 the Administrator under this section; 

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

17 programs under this section more efficient; and 

18 ‘‘(D) to increase participation in the pro19 grams under this section. 

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

21 the date on which an annual meeting required under 

22 paragraph (1) is held, the Administrator shall sub23 mit to the Committee on Small Business and Entre24 preneurship of the Senate, and the Committee on 

25 Small Business and the Committee on Science, 

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1 tives, a report on the findings of such meeting and 

2 recommendations on how to implement changes to 

3 programs under this section.’’. 

4 (b) FUNDING FOR ANNUAL MEETING.—Section 

5 9(mm)(1) of the Small Business Act (15 U.S.C. 

6 638(mm)(1)) is amended— 

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

8 at the end; 

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

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

11 (3) by adding at the end the following new sub12 paragraph: 

13 ‘‘(K) the annual meeting required under 

14 subsection (uu).’’. 

15 SEC. 7. INCREASING PARTICIPATION OF UNDERSERVED 

16 POPULATIONS IN THE SBIR AND STTR PRO17 GRAMS. 

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

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

20 as follows: 

21 ‘‘(2) OUTREACH AND TECHNICAL ASSIST22 ANCE.—A Federal agency participating in the pro23 gram under this subsection shall use a portion of the 

24 funds authorized for uses under paragraph (1) to 

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1 section (j)(2)(F) and to increase the participation of 

2 States with respect to which a low level of SBIR 

3 awards have historically been awarded.’’. 

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

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

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

7 the waiver authority under paragraph (2)(B)’’ and insert8 ing ‘‘paragraph (2)’’. 

Passed the House of Representatives January 14, 

2019. 

Attest: KAREN L. HAAS, 

Clerk. 


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