Commercializing on Small Business Innovation Act of 2016

To reauthorize and improve the Small Business Innovation Research Program and the Small Business Technology Transfer Program, and for other purposes. 1. Short title This Act may be cited as the Commercializing on Small Business Innovation Act of 2016 2. Extension of termination dates (a) SBIR Section 9(m) of the Small Business Act ( 15 U.S.C. 638(m) 2017 2022 (b) STTR Section 9(n)(1)(A) of the Small Business Act ( 15 U.S.C. 638(n)(1)(A) 2017 2022 (c) Administrative funding Section 9(mm)(1) of the Small Business Act ( 15 U.S.C. 638(mm)(1) 2017 2022 3. Required expenditure amounts (a) SBIR Section 9(f)(1) of the Small Business Act ( 15 U.S.C. 638(f)(1) (1) in subparagraph (H), by striking the and (2) in subparagraph (I), by striking and each fiscal year thereafter, (3) by inserting after subparagraph (I) the following new subparagraphs: (J) not less than 3.46 percent of such budget in fiscal year 2018; (K) not less than 3.72 percent of such budget in fiscal year 2019; (L) not less than 3.98 percent of such budget in fiscal year 2020; (M) not less than 4.24 percent of such budget in fiscal year 2021; and (N) not less than 4.50 percent of such budget in fiscal year 2022 and each fiscal year thereafter, . (b) STTR Section 9(n)(1)(B) of the Small Business Act ( 15 U.S.C. 638(n)(1)(B) (1) in clause (iv), by striking the and (2) in clause (v), by striking for fiscal year 2016 and each fiscal year thereafter. for each of fiscal years 2016 and 2017; (3) by adding at the end the following new clauses: (vi) 0.50 percent for each of fiscal years 2018 and 2019; (vii) 0.55 percent for each of fiscal years 2020 and 2021; and (viii) 0.60 percent for fiscal year 2022 and each fiscal year thereafter. . 4. Reporting requirements (a) Annual report to Congress Section 9(b)(7) of the Small Business Act ( 15 U.S.C. 638(b)(7) to report not less than annually to submit a report not later than December 31 of each year (b) Annual reports to the Administrator required to be submitted not later than March 30 of each year Section 9 of the Small Business Act ( 15 U.S.C. 638 (1) in subsection (g)(9), by striking make an annual report not later than March 30 of each year, submit a report (2) in subsection (i)(1), by striking shall report annually to the Small Business Administration shall, not later than March 30 of each year, submit a report to the Small Business Administration that includes (3) in subsection (j)— (A) in paragraph (1)(E), by striking simplified, standardized, and timely annual report not later than March 30 of each year, a simplified and standardized report (B) in paragraph (3)(C), by striking to require agencies to report to the Administration, not less frequently than annually, all instances in which an to require each agency, not later than March 30 of each year, to submit a report to the Administration on all instance in which the (4) in subsection (o)(10), by striking submit an annual report not later than March 30 of each year, submit a report (5) in subsection (y)(6)(C), by striking submit not later than March 30 of each year, submit (6) in subsection (dd)(4)(A), by striking and submit and, not later than March 30 of each year, submit (7) in subsection (gg)(6), by striking include in the annual include, not later than March 30 of each year, a (8) in subsection (ii) by inserting , not later than March 30 of each year, shall (9) in subsection (mm)(6), by inserting , not later than June 30 of each year, shall (10) in subsection (nn)(3)(A)— (A) by striking an annual a (B) by inserting , not later than March 30 of each year, shall (11) in subsection (ss), by striking October 1, 2013, and annually thereafter, March 30 of each year, (c) Failure to report administrative funds Section 9(mm) of the Small Business Act ( 15 U.S.C. 638(mm) (7) Failure to report administrative funds (A) In general Not later than March 30 following each fiscal year for which funds are authorized to be used by a Federal agency under paragraph (1), the Federal agency shall submit a report to the Administrator that identifies how the Federal agency used such funds during such fiscal year. (B) Failure to submit a report If a Federal agency fails to submit a report required under subparagraph (A), paragraph (1) shall not apply to such Federal agency unless— (i) such report is submitted; and (ii) such Federal agency submits an additional report to the Administrator that identifies how such Federal agency plans to ensure timely reporting under this paragraph. . 5. Indexing awards for inflation Section 9 of the Small Business Act ( 15 U.S.C. 638 (1) in subsection (j)(2)— (A) by striking subparagraph (D); (B) by redesignating subparagraphs (E) through (I) as subparagraphs (D) through (H), respectively; and (C) in subparagraph (H), as so redesignated, by striking subparagraph (H) subparagraph (G) (2) in subsection (p)(2)(B)— (A) in clause (vii), by adding and (B) in clause (viii), by striking and (C) by striking clause (ix); (3) in subsection (gg)(3), by striking awards under subsection (j)(2)(D) or (p)(2)(B)(ix). awards under subsection (tt)(2). (4) by adding at the end the following new subsection: (tt) Awards under Phase I and Phase II adjusted for inflation (1) Phase I awards An award for Phase I of an SBIR or STTR program may not exceed $150,000. (2) Phase II awards An award for Phase II of an SBIR or STTR program may not exceed $1,000,000. (3) Adjustment for inflation The Administrator shall adjust the dollar amounts under paragraphs (1) and (2) for inflation in accordance with section 1908 of title 41, United States Code. . 6. Requirements for insertion incentives Section 9(y)(5) of the Small Business Act ( 15 U.S.C. 638(y)(5) is authorized to shall 7. Clarification of eligibility of certain small businesses (a) SBIR Section 9(j) of the Small Business Act ( 15 U.S.C. 638(j) (4) Modification to clarify eligibility of certain small businesses Not later than 180 days after the date of the enactment of the Commercializing on Small Business Innovation Act of 2016, the Administrator shall modify the policy directives issued pursuant to this subsection to clarify that the small business concerns described in subparagraphs (B), (C), and (D) of section 3(p)(3) are eligible to receive awards under the SBIR program. . (b) STTR Section 9(p) of the Small Business Act ( 15 U.S.C. 638(p) (4) Modification to clarify eligibility of certain small businesses Not later than 180 days after the date of the enactment of the Commercializing on Small Business Innovation Act of 2016, the Administrator shall modify the policy directives issued pursuant to this subsection to clarify that the small business concerns described in subparagraphs (B), (C), and (D) of section 3(p)(3) are eligible to receive awards under the STTR program. . 8. Commercialization Assistance Pilot Program Section 9 of the Small Business Act ( 15 U.S.C. 638 (uu) Commercialization Assistance Pilot Programs (1) Pilot programs implemented (A) In general Except as provided in subparagraph (B), not later than one year after the date of the enactment of Commercializing on Small Business Innovation Act of 2016, a covered agency shall implement a commercialization assistance pilot program to award eligible entities with a second sequential SBIR award. (B) Exception If the Administrator determines that a covered agency has a program that is sufficiently similar to a commercialization assistance pilot program, such agency shall not be required to implement a commercialization assistance pilot program under subparagraph (A). (C) Percent of agency funds A covered agency may not use more than 5 percent of its total SBIR budget for awards under the commercialization assistance pilot program. (D) Termination The commercialization assistance pilot programs shall terminate on September 30, 2022. (2) Matching Requirement (A) In general The Administrator shall require as a condition of any award made to an eligible entity under a commercialization assistance pilot program, that a matching amount (excluding any fees collected from recipients of such assistance) equal to the amount of such award be provided from an eligible third-party investor, before the end of the commercialization assistance pilot program award. (B) Ineligible funding An eligible entity may not use funding from ineligible sources to meet the matching requirement of subparagraph (A). (3) Award (A) Size of award An award under this subsection may not exceed the limitations in subsection (aa)(1). (B) Timing Awards provided under the commercialization assistance pilot program shall be distributed during the Phase II award period of the recipient eligible entity. (4) Application In order to be selected to receive a second sequential SBIR award under a commercialization assistance pilot program, an eligible entity shall submit to the covered agency implementing such pilot program— (A) an application at such time, in such manner, and containing such information as the covered agency may require; and (B) the source and amount of the matching funding required under paragraph (2). (5) Use of Funds The funds awarded under a commercialization assistance pilot program may only be used for research and development activities that build on the eligible entity’s Phase II program and catalyze acceleration towards commercialization. (6) Determination of recipients In determining which applicants receive awards under the commercialization assistance pilot program, the head of a covered agency shall consider— (A) the extent to which the supplemental funds awarded under the pilot program could aid the applicant commercialize its research; (B) whether the proposed plan provides a sound approach for establishing technical feasibility that could lead to commercialization; (C) whether the proposed activity reflect changes to the Phase II commercialization plan that further improves the chances of conversion of research in order to provide societal benefits; (D) whether the small business concern has progressed satisfactorily in the Phase II activity to justify additional funding; (E) the expectations of the third-party funding; and (F) the likelihood that the third-party funded activity will lead to commercial and societal benefit. (7) Evaluation Report Not later than 3 years after the date of the enactment of Commercializing on Small Business Innovation Act of 2016, the Comptroller General of the United States shall submit to the Committee on Science, Space, and Technology and the Committee on Small Business of the House of Representatives and the Committee on Small Business and Entrepreneurship of the Senate an evaluative report that includes— (A) a summary of the activities of the commercialization assistance pilot programs; (B) a detailed compilation of results achieved by the commercialization assistance pilot programs, including the number of small business concerns that received awards under the pilot program; (C) the rate at which the recipients under the pilot program commercialized their research; (D) the growth in employment and revenue of companies that participated in the pilot program; (E) a comparison of commercialization success of pilot program participants and recipients of a non-matching sequential Phase II award; (F) demographic information such as ethnicity and geographic location of participant companies; (G) an accounting of the funds used at each participating agency in the pilot program; (H) a distribution of third-party funding by source; (I) an analysis of the program’s effectiveness at each participating agency; and (J) recommendations for improvement to the pilot program, in the case that Congress were to make it permanent. (8) Definitions For purposes of this subsection: (A) Covered agency The term covered agency (B) Eligible entity The term eligible entity (C) Eligible third-party investor The term eligible third-party investors (D) Ineligible sources The term ineligible sources (i) The awardee’s internal research and development funds. (ii) Funding in forms other than cash such as in-kind or other intangible assets. (iii) Funding from the owners of the eligible entity, or the family members or affiliates of such owners. (iv) Funding attained through loans or other forms of debt obligations. . 9. Increased underserved population participation waiver removed (a) In general Section 9(mm)(2) of the Small Business Act ( 15 U.S.C. 638(mm)(2) (2) Outreach and technical assistance A Federal agency participating in the program under this subsection shall use a portion of the funds authorized for uses under paragraph (1) to carry out the policy directive required under subsection (j)(2)(F) and to increase the participation of States with respect to which a low level of SBIR awards have historically been awarded. . (b) Conforming amendment Section 9(mm)(6) of the Small Business Act ( 15 U.S.C. 638(mm)(6) (A) and any use of the waiver authority under paragraph (2)(B) December 16, 2016 The Committee on Science, Space, and Technology

Summary: Commercializing on Small Business Innovation Act of 2016 (Sec. 2) This bill amends the Small Business Act to reauthorize for FY2017-FY2022 both the Small Business Innovation Research (SBIR) Program and the Small Business Technology Transfer (STTR) Program. The Small Business Administration (SBA) shall continue through FY2022 to permit each federal agency to use up to 3% of its SBIR program funds to assist the agency in its required SBIR or STTR program's administration and related activities. (Sec. 3) The bill also increases the percentages of required agency expenditures with small business concerns under these programs for each of those fiscal years. (Sec. 4) The bill revises SBIR and STTR annual reporting requirements to establish deadline dates. The SBA's annual report to Congress on these programs shall be due by December 31 of each year. Federal agency annual reports to the SBA on their SBIR or STTR program shall be due by March 30. The SBA must report annually to Congress by June 30 on the use of SBIR program funds by federal agencies for specified purposes in the Act. (Sec. 5) SBA policy directives shall index SBIR and STTR awards for inflation. As under current law, an award for: (1) Phase I of an SBIR or STTR program may not exceed $150,000, and (2) Phase II of such program may not exceed $1 million. The SBA shall continue to adjust these dollar amounts for inflation. (Sec. 6) This bill requires the Department of Defense (which under current law is already authorized) to create insertion incentives under the Department of Defense Commercialization Readiness Program for any contract with a value of at least $100 million to: establish goals for the transition of Phase III technologies in subcontracting plans, and require a prime contractor on such a contract to report the number and dollar amount of contracts entered into by that prime contractor for Phase III SBIR or STTR projects. (Sec. 7) The SBA shall modify its policy directives to make clear that HUBZone small business concerns owned and controlled by Alaska Native Corporations, owned by Indian tribal governments, and owned by Native Hawaiian Organizations are eligible to receive SBIR and STTR awards. (Sec. 8) Any federal agency required to have an SBIR program (covered agency) shall implement a commercialization assistance pilot program (CAPP) through FY2022 to award eligible entities with a second sequential SBIR award, unless the agency already has a program sufficiently similar to CAPP. A covered agency may spend up to 5% of its total SBIR budget for CAPP awards, to be distributed during the recipient's Phase II award period. Such awards may only be used for research and development activities that build on the eligible entity's Phase II program and catalyze acceleration towards commercialization. The SBA shall require as a condition of any CAPP award that an equal matching amount (excluding any fees collected from recipients of such assistance) be provided from an eligible third-party investor before the end of the CAPP award. An eligible entity may not use funding from ineligible sources to meet this matching requirement. The term: "eligible entity" means a small business concern that has received a Phase II award and a Phase II sequential award from the covered agency to which such entity is applying for a second sequential SBIR award; "eligible third-party investor" means a small business concern other than the eligible entity, a venture capital firm, an individual investor, a non-SBIR federal, state, or local government, or any combination; and "ineligible sources" means the awardee's internal research and development funds, funding in forms other than cash such as in-kind or other intangible assets, funding from the owners of the eligible entity, or the family members or affiliates of such owners, or funding attained through loans or other forms of debt obligations. (Sec. 9) The bill eliminates the authority of an agency to request a waiver of the requirement to use a portion of SBIR funds for outreach efforts to increase the participation of: social and economically disadvantaged small business concerns and certain woman-owned small business concerns, and states in which a low level of SBIR awards have historically been awarded.