IB Union Calendar No. 687 114th CONGRESS 2d Session H. R. 4783 [Report No. 114–705, Part I] IN THE HOUSE OF REPRESENTATIVES March 17, 2016 Mr. Chabot (for himself and Ms. Velázquez ) 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 July 25, 2016 Reported from the Committee on Small Business Strike out all after the enacting clause and insert the part printed in italic July 25, 2016 Referral to the Committee on Science, Space, and Technology extended for a period ending not later than December 16, 2016 December 16, 2016 The Committee on Science, Space, and Technology discharged; committed to the Committee of the Whole House on the State of the Union and ordered to be printed For text of introduced bill, see copy of bill as introduced on March 17, 2016 A BILL 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) ) is amended by striking 2017 and inserting 2022 . (b) STTR Section 9(n)(1)(A) of the Small Business Act ( 15 U.S.C. 638(n)(1)(A) ) is amended by striking 2017 and inserting 2022 . (c) Administrative funding Section 9(mm)(1) of the Small Business Act ( 15 U.S.C. 638(mm)(1) ) is amended by striking 2017 and inserting 2022 . 3. Required expenditure amounts (a) SBIR Section 9(f)(1) of the Small Business Act ( 15 U.S.C. 638(f)(1) ) is amended— (1) in subparagraph (H), by striking the and at the end; (2) in subparagraph (I), by striking and each fiscal year thereafter, and inserting a semicolon; and (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) ) is amended— (1) in clause (iv), by striking the and at the end; (2) in clause (v), by striking for fiscal year 2016 and each fiscal year thereafter. and inserting for each of fiscal years 2016 and 2017; ; and (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) ) is amended by striking to report not less than annually and inserting 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 ) is amended— (1) in subsection (g)(9), by striking make an annual report and inserting 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 and inserting 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 and inserting not later than March 30 of each year, a simplified and standardized report ; and (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 and inserting 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 and inserting not later than March 30 of each year, submit a report ; (5) in subsection (y)(6)(C), by striking submit and inserting not later than March 30 of each year, submit ; (6) in subsection (dd)(4)(A), by striking and submit and inserting and, not later than March 30 of each year, submit ; (7) in subsection (gg)(6), by striking include in the annual and inserting include, not later than March 30 of each year, a ; (8) in subsection (ii) by inserting , not later than March 30 of each year, after shall ; (9) in subsection (mm)(6), by inserting , not later than June 30 of each year, after shall ; (10) in subsection (nn)(3)(A)— (A) by striking an annual and inserting a ; and (B) by inserting , not later than March 30 of each year, after shall ; and (11) in subsection (ss), by striking October 1, 2013, and annually thereafter, and inserting 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) ) is amended by adding at the end the following new paragraph: (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 ) is amended— (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) and inserting subparagraph (G) ; (2) in subsection (p)(2)(B)— (A) in clause (vii), by adding and at the end; (B) in clause (viii), by striking and at the end; and (C) by striking clause (ix); (3) in subsection (gg)(3), by striking awards under subsection (j)(2)(D) or (p)(2)(B)(ix). and inserting awards under subsection (tt)(2). ; and (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 amended by striking is authorized to and inserting 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) ) is amended by adding at the end the following new paragraph: (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) ) is amended by adding at the end the following new paragraph: (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 ), as amended by section 5, is further amended by adding at the end the following new subsection: (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 means a Federal agency required to have an SBIR program. (B) Eligible entity 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. (C) Eligible third-party investor The term eligible third-party investors 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 thereof. (D) Ineligible sources The term ineligible sources means the following: (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) ) is amended to read as follows: (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) ) is amended by striking (A) and any use of the waiver authority under paragraph (2)(B) .

December 16, 2016 The Committee on Science, Space, and Technology discharged; committed to the Committee of the Whole House on the State of the Union and ordered to be printed