I 116th CONGRESS 1st Session H. R. 3774 IN THE HOUSE OF REPRESENTATIVES July 16, 2019 Mr. Baird (for himself, Ms. Stevens , Mr. Burchett , and Mr. Crow ) 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 Act to improve the Small Business Innovation Research program and Small Business Technology Transfer program, and for other purposes.

1. Short title; table of contents (a) Short title This Act may be cited as the The Small Business Innovation Research and Small Business Technology Transfer Improvements Act of 2019 . (b) Table of contents The table of contents for this Act is as follows: Sec. 1. Short title; table of contents. Sec. 2. Requiring insertion incentives. Sec. 3. Additional SBIR and STTR technology insertion reporting requirement. Sec. 4. Encouraging innovation in United States manufacturing. Sec. 5. Encouraging innovation in cybersecurity. Sec. 6. Compliance of Phase III awards with competitive procedures. Sec. 7. Procurement center representatives and other acquisition personnel in the SBIR and STTR programs. Sec. 8. Increased outreach requirements. Sec. 9. Annual meeting. Sec. 10. Establishing the Civilian Agency Commercialization Readiness Program. Sec. 11. Commercialization assistance pilot programs. Sec. 12. Phase 0 Proof of Concept Partnership Pilot Program. Sec. 13. Reporting requirements. Sec. 14. SBIR Phase flexibility. 2. Requiring 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 . 3. Additional SBIR and STTR technology insertion reporting requirement Section 9(y)(6) of the Small Business Act ( 15 U.S.C. 638(y)(6) ) is amended— (1) in subparagraph (B), by striking and at the end; (2) in subparagraph (C)(iii), by striking the period at the end and inserting ; and ; and (3) by adding at the end the following new subparagraph: (D) not later than 120 days after the date of the enactment of this subparagraph, and not later than December 31 of each year thereafter, submit to the Committee on Science, Space, and Technology and the Committee on Small Business of the House of Representatives, and to the Committee on Small Business and Entrepreneurship of the Senate, a report describing the goals set under subparagraph (A) and the incentives used or created under subparagraph (B). . 4. Encouraging innovation in United States manufacturing Section 9 of the Small Business Act ( 15 U.S.C. 638 ) is amended by adding at the end the following new subsection: (uu) Encouraging innovation in United States manufacturing In carrying out this section, the Administrator shall— (1) ensure that, in selecting small business concerns to participate in SBIR or STTR programs under this section, Federal agencies give high priority to small manufacturing companies and other small business concerns engaged in or planning to engage in manufacturing research and development for the purpose of developing and producing new products and technologies in the United States; and (2) include in the annual report to Congress under subsection (b)(7) a determination of whether the priority described in paragraph (1) is being carried out. . 5. Encouraging innovation in cybersecurity Section 9 of the Small Business Act ( 15 U.S.C. 638 ), as amended by section 4, is further amended by adding at the end the following new subsection: (vv) Encouraging innovation in cybersecurity In carrying out this section, the Administrator shall— (1) ensure that, in selecting small business concerns to participate in SBIR or STTR programs under this section, Federal agencies engaged in cybersecurity research give high priority to small business concerns that are engaged in cybersecurity research and development, for the purpose of developing and implementing technology services and products to strengthen the security of United States Government and private computer systems, including software, hardware, and portable devices; and (2) include in the annual report to Congress under subsection (b)(7) a determination of whether the priority described in paragraph (1) is being carried out. . 6. Compliance of Phase III awards with competitive procedures Section 9(r)(4) of the Small Business Act ( 15 U.S.C. 638(r)(4) ) is amended by inserting as direct follow-on awards issued without further competition after developed the technology . 7. Procurement center representatives and other acquisition personnel in the SBIR and STTR programs (a) Definition of senior procurement executive Section 9(e) of the Small Business Act ( 15 U.S.C. 638(e) ) is amended— (1) in paragraph (12)(B), by striking and at the end; (2) in paragraph (13)(B), by striking the period at the end and inserting ; and ; and (3) by adding at the end the following new paragraph: (14) the term senior procurement executive means an official designated under section 1702(c) of title 41, United States Code, as the senior procurement executive of a Federal agency participating in a SBIR or STTR program. . (b) Inclusion of senior procurement executives in SBIR and STTR (1) In general Section 9(b) of the Small Business Act ( 15 U.S.C. 638(b) ) is amended— (A) in paragraph (8), by striking and at the end; (B) in paragraph (9), by striking the period at the end and inserting ; and ; and (C) by adding at the end the following new paragraph: (10) to coordinate, where appropriate, with the senior procurement executive of the relevant Federal agency to assist small business concerns participating in a SBIR or STTR program with commercializing research developed under such a program before such small business concern is awarded a contract from such Federal agency. . (2) Technical amendment Section 9(b)(3) of the Small Business Act ( 15 U.S.C. 638(b)(3) ) is amended by striking and at the end. (c) Modifications relating to procurement center representatives and other acquisition personnel (1) SBIR amendment 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) Modifications relating to procurement center representatives Upon the enactment of this paragraph, the Administrator shall modify the policy directives issued pursuant to this subsection to require procurement center representatives (as described in section 15(l)) to coordinate with the appropriate contracting officer or SBIR program officer, and the appropriate Director of Small and Disadvantaged Business Utilization established pursuant to section 15(k) for the agency letting the contract, to assist small business concerns participating in the SBIR program, particularly in Phase III. The procurement center representatives shall coordinate with the appropriate contracting officer and the appropriate Director of the Office of Small and Disadvantaged Business Utilization established pursuant to section 15(k) for the agency letting the contract. . (2) STTR amendment Section 9(p)(2) of the Small Business Act ( 15 U.S.C. 638(p)(2) ) is amended— (A) in subparagraph (E)(ii), by striking and at the end; (B) in subparagraph (F), by striking the period at the end and inserting a semicolon; and (C) by adding at the end the following new subparagraph: (G) procedures to ensure that procurement center representatives (as described in section 15(l))— (i) coordinate with the appropriate contracting officer or STTR program officer, and the appropriate Director of Small and Disadvantaged Business Utilization established pursuant to section 15(k) for the agency letting the contract, to assist small business concerns participating in the STTR program, particularly in Phase III; and (ii) coordinate with the appropriate contracting officer and the appropriate Director of the Office of Small and Disadvantaged Business Utilization established pursuant to section 15(k) for the Federal agency letting the contract in providing the assistance described in clause (i); and . (d) Amendment to duties of procurement center representatives Section 15(l)(2) of the Small Business Act ( 15 U.S.C. 644(l)(2) ) is amended— (1) in subparagraph (I), by striking and at the end; (2) by redesignating subparagraph (J) as subparagraph (L); and (3) by inserting after subparagraph (I) the following new subparagraphs: (J) coordinate with the appropriate contracting officer or SBIR or STTR program officer, and the appropriate Director of Small and Disadvantaged Business Utilization established pursuant to section 15(k) for the agency letting the contract, to assist small business concerns participating in a SBIR or STTR program under section 9 with Phase III; (K) coordinate with the appropriate contracting officer and the appropriate Director of the Office of Small and Disadvantaged Business Utilization established pursuant to subsection (k) for the agency letting the contract; and . (e) Amendment to the duties of the Director of Small and Disadvantaged Business Utilization for Federal agencies Section 15(k) of the Small Business Act ( 15 U.S.C. 644(k) ) is amended— (1) in paragraph (19), by striking and at the end; (2) in paragraph (20), by striking the period at the end and inserting a semicolon; and (3) by adding at the end the following new paragraphs: (21) shall coordinate with the appropriate contracting officer of SBIR or STTR program officer to assist small business concerns participating in a SBIR or STTR program under section 9 with researching applicable solicitations for the award of a Federal contract (particularly with the Federal agency that has a funding agreement (as defined under section 9) with the concern) to market the research developed by such concern under such SBIR or STTR program; and (22) shall provide technical assistance to small business concerns participating in a SBIR or STTR program under section 9 to submit a bid for an award of a Federal contract, including coordination with procurement center representatives and the appropriate senior procurement executive for the agency letting the contract. . 8. Increased outreach requirements (a) In general (1) SBIR amendment Section 9(j) of the Small Business Act ( 15 U.S.C. 638(j) ), as amended by section 8, is further amended by adding at the end the following new paragraph: (5) Increased outreach requirements Upon the enactment of this paragraph, the Administrator shall modify the policy directives issued pursuant to this subsection to require outreach efforts to increase the participation in technological innovation under the SBIR programs among individuals conducting research at minority institutions (as defined in section 365(3) of the Higher Education Act of 1965) and Hispanic-serving institutions (as defined in section 502(a)(5) of such Act). . (2) STTR amendment Section 9(p)(2) of the Small Business Act ( 15 U.S.C. 638(p)(2) ), as amended by section 8, is further amended by adding at the end the following new subparagraph: (H) procedures for outreach efforts to increase the participation in technological innovation under the SBIR programs among individuals conducting research at minority institutions (as defined in section 365(3) of the Higher Education Act of 1965) and Hispanic-serving institutions (as defined in section 502(a)(5) of such Act). . (b) Funding for outreach Section 9(mm)(1) of the Small Business Act ( 15 U.S.C. 638(mm)(1) ) is amended— (1) in subparagraph (I), by striking the and at the end; (2) in subparagraph (J), by striking the period at the end and inserting a semicolon; and (3) by adding at the end the following new subparagraph: (K) the outreach efforts described under subsections (j)(4) and (p)(2)(G); and . 9. Annual meeting (a) In general 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: (ww) Annual meeting (1) In general The head of each Federal agency required to have a program under this section (or a designee) and the Administrator (or a designee) shall meet annually to discuss methods— (A) to improve the collection of data under this section; (B) to improve the reporting of data to the Administrator under this section; (C) to make the application processes for programs under this section more efficient; and (D) to increase participation in the programs established under this section. (2) Report Not later than 60 days after the date on which an annual meeting required under paragraph (1) is held, the Administrator shall submit to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business and the Committee on Science, Space, and Technology of the House of Representatives, a report on the findings of such meeting and recommendations on how to implement changes to programs under this section. . (b) Funding for annual meeting Section 9(mm)(1) of the Small Business Act ( 15 U.S.C. 638(mm)(1) ) as amended by section 9, is further amended by adding at the end the following new subparagraph: (L) the annual meeting required under subsection (vv). . 10. Establishing the Civilian Agency Commercialization Readiness Program Section 9(gg) of the Small Business Act ( 15 U.S.C. 638(gg) ) is amended— (1) by amending the subsection heading to read as follows: Civilian Agency Commercialization Readiness Program ; (2) in paragraph (1), by inserting to establish a Civilian Agency Commercialization Readiness Program for civilian agencies after the covered Federal agency ; (3) in paragraph (2)(A)— (A) by striking establish a pilot program and inserting establish a Civilian Agency Commercialization Readiness Program under this subsection ; and (B) by striking the pilot program and inserting such Civilian Agency Commercialization Readiness Program ; (4) in paragraphs (3) and (4), by striking a pilot program each place such term appears and inserting a Civilian Commercialization Readiness Program ; (5) in paragraph (6), by striking the pilot program and inserting a Civilian Agency Commercialization Readiness Program ; (6) by striking paragraph (7) and redesignating paragraph (8) as paragraph (7); and (7) in paragraph (7) (as so redesignated), by amending subparagraph (B) to read as follows: (B) the term Civilian Agency Commercialization Readiness Program means each program established under paragraph (1). . 11. Commercialization assistance pilot programs Section 9 of the Small Business Act ( 15 U.S.C. 638 ), as amended by section 10, is further amended by adding at the end the following new subsection: (xx) 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 this subsection, a covered agency shall implement a commercialization assistance pilot program, under which an eligible entity may receive a subsequent Phase II SBIR award. (B) Exception If the Administrator determines that a covered agency has a program that is sufficiently similar to the commercialization assistance pilot program established under this subsection, such covered agency shall not be required to implement a commercialization assistance pilot program under this subsection. (2) Percent of agency funds The head of each covered agency may allocate not more than 5 percent of the funds allocated to the SBIR program of the covered agency for the purpose of making a subsequent Phase II SBIR award under the commercialization assistance pilot program. (3) Termination A commercialization assistance pilot program established under this subsection shall terminate on September 30, 2024. (4) Application To be selected to receive a subsequent Phase II SBIR award under a commercialization assistance pilot program, an eligible entity shall submit to the covered agency implementing such pilot program an application at such time, in such manner, and containing such information as the covered agency may require, including— (A) an updated Phase II commercialization plan; and (B) the source and amount of the matching funding required under paragraph (5). (5) Matching funding (A) In general The Administrator shall require, as a condition of any subsequent Phase II SBIR award made to an eligible entity under this subsection, that a matching amount (excluding any fees collected by the eligible entity receiving such award) equal to the amount of such award be provided from an eligible third-party investor. (B) Ineligible sources An eligible entity may not use funding from ineligible sources to meet the matching requirement of subparagraph (A). (6) Award A subsequent Phase II SBIR award made to an eligible entity under this subsection— (A) may not exceed the limitation described under subsection (aa)(1); and (B) shall be disbursed during Phase II. (7) Use of funds The funds awarded to an eligible entity under this subsection may only be used for research and development activities that build on eligible entity’s Phase II program and ensure the research funded under such Phase II is rapidly progressing towards commercialization. (8) Selection In selecting eligible entities to participate in a commercialization assistance pilot program under this subsection, the head of a covered agency shall consider— (A) the extent to which such award could aid the eligible entity in commercializing the research funded under the eligible entity’s Phase II program; (B) whether the updated Phase II commercialization plan submitted under paragraph (4) provides a sound approach for establishing technical feasibility that could lead to commercialization of such research; (C) whether the proposed activities to be conducted under such updated Phase II commercialization plan further improve the likelihood that such research will provide societal benefits; (D) whether the small business concern has progressed satisfactorily in Phase II to justify receipt of a subsequent Phase II SBIR award; (E) the expectations of the eligible third-party investor that provides matching funding under paragraph (5); and (F) the likelihood that the proposed activities to be conducted under such updated Phase II commercialization plan using matching funding provided by such eligible third-party investor will lead to commercial and societal benefit. (9) Evaluation Report Not later than 3 years after the date of the enactment of this subsection, 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, a report including— (A) a summary of the activities of commercialization assistance pilot programs carried out under this subsection; (B) a detailed compilation of results achieved by such commercialization assistance pilot programs, including the number of eligible entities that received awards under such programs; (C) the rate at which each eligible entity that received a subsequent Phase II SBIR award under this subsection commercialized research of the recipient; (D) the growth in employment and revenue of eligible entities that is attributable to participation in a commercialization assistance pilot program; (E) a comparison of commercialization success of eligible entities participating in a commercialization assistance pilot program with recipients of an additional Phase II SBIR award under subsection (ff); (F) demographic information, such as ethnicity and geographic location, of eligible entities participating in a commercialization assistance pilot program; (G) an accounting of the funds used at each covered agency that implements a commercialization assistance pilot program under this subsection; (H) the amount of matching funding provided by eligible third-party investors, set forth separately by source of funding; (I) an analysis of the effectiveness of the commercialization assistance pilot program implemented by each covered agency; and (J) recommendations for improvements to the commercialization assistance pilot program. (10) 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 under an SBIR program and an additional Phase II SBIR award under subsection (ff) from the covered agency to which such small business concern is applying for a subsequent Phase II SBIR award. (C) Eligible third-party investor The term eligible third-party investor means a small business concern other than an 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 eligible entity’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. (E) Subsequent Phase II SBIR award The term subsequent Phase II SBIR award means an award granted to an eligible entity under this subsection to carry out further commercialization activities for research conducted pursuant to an SBIR program. . 12. Phase 0 Proof of Concept Partnership Pilot Program Section 9(jj) of the Small Business Act ( 15 U.S.C. 638(jj) is amended— (1) in paragraph (1)— (A) by striking The Director of the National Institutes of Health and inserting Each covered agency head ; and (B) by striking the Director and inserting each covered agency head ; (2) by amending subparagraph (A) of paragraph (2) to read as follows: (A) the term covered agency head means the Director of the National Institutes of Health, the Director of the National Science Foundation, the Administrator of the National Aeronautics and Space Administration and the Secretary of Energy; ; (3) in paragraph (4)— (A) in subparagraph (A), by striking The Director and inserting Each covered agency head ; and (B) in subparagraph (B), by striking the Director shall consider, in addition to any other criteria the Director and inserting each covered agency head shall consider, in addition to any other criteria the appropriate covered agency head ; and (4) in paragraph (6), by striking The Director and inserting Each covered agency head . 13. 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 report to SBA and the Office of Science and Technology Policy Section 9(g)(9) of the Small Business Act ( 15 U.S.C. 638(g)(9) ) is amended— (1) by striking make an annual report and inserting not later than March 30 of each year, submit a report ; and (2) by striking and the Office of Science and Technology Policy and inserting , the Office of Science and Technology Policy, 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 . 14. SBIR Phase flexibility Section 9(cc) of the Small Business Act ( 15 U.S.C. 638(cc) ) is amended by striking During fiscal years and all that follows through may each provide and inserting During fiscal years 2020 through 2024, all agencies participating in the SBIR program may provide .