Science and Technology Innovation Act of 2008

Madam Chairman, I yield myself as much time as I may consume.

Madam Chairman, this year, we celebrate Small Business Week in the face of harsh realities that come with an economic downturn. But it is important to remember that the Nation's 26 million entrepreneurs have always led America's way to economic recovery and sustained growth. That was the case during the last slowdown, when the technology sector--led by small startups--provided the foundation for the booming economy of the 1990s. It can be true again today.

Over the past decades, research conducted by entrepreneurs in the Small Business Innovation Research and the Small Business Technology Transfer programs has bolstered every area of American life. The important contributions of these small research firms span such varied disciplines as national security, energy efficiency, and public health infrastructure.

The measure that is before the House today reauthorizes SBIR and STTR. Together, the programs make up the largest government-wide R&D initiative, and they can help us emerge from weak economic times yet again. Just as importantly, the reauthorization will ensure these successful programs continue to spur innovation and job growth, while keeping America at the forefront of the global marketplace.

The last time these programs were reauthorized, the Internet was in its infancy, and the term ``Google'' was an obscure mathematical concept. Today, the Internet is a part of everyday life, and Google is one of the best known and largest companies on the planet.

Our legislation modernizes SBIR/STTR. It ensures small firms can contribute to our country's most pressing research and development challenges. The bill recognizes that, while many good ideas come from large companies and universities, it is American small businesses who are our primary source of innovation. These entrepreneurs, not just Boeing or MIT, develop the type of products and services that meet the needs of the new economy.

H.R. 5819 allows small businesses to continue bringing their critically important ideas from the laboratory to the marketplace. The bill also offers targeted resources for technical assistance and ensures small firms are not discriminated against because of their business model or type of financing.

Last, but not least, H.R. 5819 increases the number of SBIR and STTR applications from rural areas. It also promotes participation by small businesses that are owned by women, service disabled veterans and minorities.

Moreover, this reauthorization enables a greater number of small research companies to advance the sort of innovation that saves lives. As a result, dozens of patient groups support the bill. They include the ALS and Alpha-1 Associations, the Caring Voice Coalition, the Coalition of Heritable Disorders of Connective Tissue, the Cystic Fibrosis Foundation, the National Organization for Rare Disorders, Parent Project Muscular Dystrophy and the Tuberous Sclerosis Alliance.

The same holds true for a broad array of business groups, representing everything from the agricultural sector to energy and technology organizations. This diverse group of supporters includes the American Electronic Association, the Biotechnology Industry Organization, the Association for Manufacturing Technology, the U.S. Hispanic Chamber of Commerce, and the U.S. Women's Chamber of Commerce.

Madam Chairman, in passing this legislation, we will ensure the SBIR and STTR awards remain competitive from top-notch research and continue to produce cutting-edge breakthroughs.

There is no better way to celebrate Small Business Week than to support the work of entrepreneurs. That is especially true when it means saving lives, creating high-paying jobs for Americans, reducing our trade deficit, and getting our economy back on track.

I urge my colleagues to join with me and Mr. Chabot in celebrating Small Business Week by voting for this important measure.

Madam Chairman, I reserve the balance of my time.

I yield to the gentleman from Texas (Mr. Cuellar), a member of the Small Business Committee, for 3 minutes.

Madam Chairman, I am very pleased to yield 3 minutes to the gentleman from Pennsylvania (Mr. Sestak), vice president of the Small Business Committee.

Madam Chairman, I would like to inquire how much time is remaining on each side, each committee.

Madam Chairman, I would like to yield 2 minutes to the gentleman from Pennsylvania (Mr. Altmire), who is the chairman of the Subcommittee on Investigations and Oversight.

Madam Chairman, I would like to yield to the gentlewoman from Ohio (Mrs. Jones) for 2 minutes.

(Mrs. JONES of Ohio asked and was given permission to revise and extend her remarks.)

Madam Chairman, I have no further requests for time.

I yield myself the balance of my time.

Madam Chairman, the gentleman from Alaska comes here and laments about high energy prices. But when he had a chance to vote against price gouging, he voted ``no.'' When he had a chance to vote about long-term alternative energy and conservation, he voted ``no.'' So don't come to the floor and tell us the need to deal with the energy crisis in this Nation, because I can tell you that talk is fine. But when it comes to real solutions, you vote ``no.''

So, Madam Chairman, let's go to the issue at hand. It's just really sad that the minority decided to make SBIR and STTR an innocent bystander on this debate. Let me say that there is no other nation on Earth where a person's dreams of service and innovation can be translated so effectively into a brand of success that yields both wealth and concrete benefits to society. That distinctly American tradition of entrepreneurship, of cutting edge and ideas and service to society, is what Small Business Week is all about. It is also the core of H.R. 5819.

I want to thank Chairman Gordon and Ranking Member Hall, Mr. Wu and Mr. Ehlers from the Science and Technology Committee, as well as my own ranking member, Mr. Chabot, for their work on this important legislation. I am particularly grateful for Mr. Chabot's input on this legislation, and I think that our collaboration has produced a better product for our Nation's small businesses.

I also want to recognize the staff members on both committees for their tireless work. A special thank you goes to Bill Maguire on Small Business Committee Democratic staff; Michael Day, and to Joe Hartz on Mr. Chabot's side of the aisle, and Kevin Fitzpatrick. I also would like to acknowledge Melissa Shannon from the Speaker's office. On the Science and Technology Committee I would like to recognize the Democratic staff, Mike Quear; from Mr. Wu's staff, Dennis Worden; and from Mr. Graves' personal office, Paul Sass.

Most of all, I would like to thank the men and women of America's small business. It is their efforts that continue to make our Nation great. They keep us moving forward, no matter what challenges arise, and they deserve our support and respect.

Once again, I urge my colleagues to join me in celebrating Small Business Week by voting ``yes'' on this important legislation.

Madam Chairman, while not opposed to the amendment, I ask unanimous consent to claim the time in opposition.

I thank Congressman Boswell and Congresswoman Sutton for their amendment and their efforts to improve the bill. This amendment encourages applications from economically distressed areas and helps ensure the competitive research proposal submitted from companies in this area will receive valuable early stage funding. The amendment will strengthen the SBIR program, and has the potential to spur entrepreneurship and create jobs in distressed areas.

Now, Madam Chairman, I will yield to the gentlewoman from Ohio (Ms. Sutton), a cosponsor of the amendment, such time as she may consume.

Madam Chairman, I will yield to the gentleman from Ohio for any comments that he may have.

Madam Chairman, if the gentleman from Iowa is prepared to yield back, we are prepared to accept the amendment.

Madam Chairman, I thank the gentleman from Iowa and the gentlewoman from Ohio for their work on this legislation. I urge adoption of the amendment.

I yield back the balance of my time.

I appreciate the gentleman's tireless leadership with respect to Federal funding for research and development. It was the gentleman's bill that reauthorized the SBIR program 8 years ago, and he is, therefore, well aware that the amount of Federal research budgets that go to America's small research companies is extremely limited. The fact that innovative small firms have such limited access to Federal research dollars is a problem for our country, and I want to work with the gentleman from Michigan to find a solution that will address this problem.

That said, I understand the gentleman's point of view, and I am going to accept the amendment. As the reauthorization process goes forward, I trust that just as we work in a collaborative, bipartisan manner on the Small Business Committee, that you and I can work together to increase the amount of Federal research dollars available to small firms without raising concerns about the country's critical research priorities.

I would now like to yield to the gentleman from Ohio for any comments that he might have.

Madam Chairman, if the gentleman is prepared to yield

back, we are prepared to accept the amendment.

Madam Chairman, I just would like to thank Mr. Ehlers for his commitment. I look forward to our working together to address the issue of the limited resources.

With that, I am prepared to accept the amendment.

I yield back the balance of my time.

I thank the gentleman for his amendment and his effort to improve this bill. The amendment requires Federal agencies to notify unsuccessful applicants to the SBIR program that they can request an explanation of the reasons their application was not funded. This amendment is likely to be a useful clarification to those small firms who are applying to revise their proposals in order to reapply.

I would now yield to the gentleman from Ohio (Mr. Chabot) for any comments that he might have.

Madam Chairman, if the gentleman from Pennsylvania is prepared to yield back, we are prepared to accept the amendment.

I want to thank the gentleman from Utah for yielding and for his amendment and his efforts to improve the bill. Since the Republicans today are so concerned about energy crisis and gasoline prices, this is an opportunity to start addressing this issue.

With gasoline at $4 a gallon and the evidence concerning global climate change mounting, the importance of research in the area of clean energy sources is increasingly clear. The amendment recognizes that technologies which can improve energy efficiency and reduce carbon emissions are a critical national research priority. As such, the amendment will give priority to SBIR and STTR applications that address clean energy research topics. I support this amendment and I urge adoption of this amendment.

Madam Chairman, I thank the gentlewoman from Arizona for her amendment and for her efforts to improve this bill.

Small businesses awarded SBIR grants from the Federal Government should create jobs and pay appropriate and applicable taxes in the United States. This amendment will ensure this is the case. It is an important clarification for Federal agencies providing SBIR funds.

I would yield to the gentleman from Ohio for any comments that he might have.

We are going to accept the amendment and support the amendment.

I yield back the balance of my time.

Madam Chairman, while I am not opposed to the amendment, I ask unanimous consent to claim the time in opposition.

Madam Chairman, I thank the gentleman from Missouri for his amendment and his efforts to improve the bill. Mr. Graves has been a leader in our committee on many issues, and I appreciate his efforts to improve this legislation.

This amendment clarifies the availability of venture capital to small companies. It makes sure that we do not end up disqualifying any current participant in the SBIR program.

Madam Chairman, I yield to the gentleman from Oregon (Mr. Wu).

I yield to the gentleman from Missouri for an answer.

Madam Chairman, I am prepared to accept the amendment.

I yield to the gentleman from Michigan.

Reclaiming my time, Mr. Ehlers, I understand your concern. But I will say that at a time when we are facing an economic crisis in our country where so many small businesses have been impacted because of the lack of access to capital and the credit crunch, this is the time when this amendment makes sense.

We are allowing for small businesses and SBIR companies across the country to have the ability to secure venture capital so they can continue to provide innovation and the new technologies that are so needed in our economy.

I reserve the balance of my time.

We are prepared to accept the amendment, and I yield back the balance of my time.

I thank the gentlewoman from California for her amendment and her efforts to improve this bill. H.R. 5819 directs Federal agencies to establish initiatives by which agencies encourage partnerships between SBIR awardees and prime contractors, venture capital firms and larger businesses. The purpose of these partnerships is to help awardees progress toward phase III of the SBIR program.

The amendment highlights the significant role that business incubators can play for small firms as they work to commercialize their research. It is completely appropriate for Federal agencies to acknowledge business incubators as valuable partners with SBIR awardees.

I yield to the gentleman from Missouri for any comments he may have.

Madam Chairman, we are prepared to accept the amendment, and I yield back the balance of my time.

Madam Chairman, I really thank the gentlewoman for her amendment and her efforts to improve this bill.

The amendment requires Federal agencies to give priority to SBIR and STTR applications submitted by veterans. During a time when our country is at war, it is particularly appropriate to prioritize SBIR applications submitted by our veterans. And I support this amendment.

I would like to yield to the gentleman from Missouri for any comments that he might have.

Yes, I will.

Madam Chairman, I yield back the balance of my time, and I accept the amendment.

Madam Chairman, while not opposed to this amendment, I ask unanimous consent to claim the time in opposition.

Madam Chairman, I just simply want to say thank you to the gentlelady from Ohio for her sensitivity and commitment to our veterans at a time of war, and for working to perfect this legislation.

I have no opposition to this amendment. I am prepared to accept the amendment.

I yield to the gentleman from Ohio (Mr. Chabot).

Madam Chairman, I thank the gentleman from Georgia for his amendment and his efforts to improve this bill.

The amendment establishes a grant program for minority institution with the purpose of increasing the number of SBIR and STTR applications submitted by companies owned by minorities. The participation of women- owned and minority-owned companies in the SBIR program continues to be at unacceptably low levels. The Barrow amendment--along with the provisions of H.R. 5819, that reauthorize the FAST program--seeks to address this challenge. It does this by funding outreach efforts to encourage and support more applicants by companies owned by minorities.

I now will yield to the gentleman from Ohio for any comments that he might have.

With that, I will accept the amendment.

I yield back the balance of my time.

Madam Chairman, I want to take the opportunity to thank the gentlewoman from West Virginia for her efforts to improve this bill. The amendment directs the SBIR advisory boards established under H.R. 5819 to include in their annual report to Congress the number and the dollar amount of SBIR awards made to small businesses and controlled by service-disabled veterans. This is valuable data that Congress should have. Moreover, the collection of this data is likely to encourage Federal agencies to redouble their efforts to publicize the SBIR programs to service-disabled veterans.

I now would like to yield to the gentleman from Ohio (Mr. Chabot) for any comments he might have.

Madam Chairman, we're prepared to accept the amendment, and I urge adoption of the amendment.

I yield back the balance of my time.

Madam Chairman, as the designee of Mr. Carney of Pennsylvania, I offer an amendment.

Madam Chairman, small business development centers, which are accredited for their technology services, are particularly well-positioned to provide support for companies preparing SBIR applications. It is appropriate that FAST grant applications that incorporate the services of those SBDCs that are accredited for technology services should be viewed favorably by the SBA.

The amendment will ensure that the Small Business Administration includes this preference in the grant selection criteria it develops for the FAST program.

I support this amendment.

I yield time to the gentleman from Pennsylvania (Mr. Carney).

I am prepared to accept the amendment, and I yield back the balance of my time.

I thank the gentlewoman from New York for her amendment and for her efforts to improve the legislation. The amendment requires that at least one veteran small business owner must serve on the SBIR Advisory Board that H.R. 5819 establishes in section 104. These boards are meant to provide small firms with an avenue to communicate with Federal agencies about the SBIR program.

The intention of the amendment is to help ensure that agencies are as responsive as possible to the unique needs of small research companies and to veteran-owned small firms in particular.

I support this intention.

I would yield to the gentleman from Ohio for any comments that he might have.

Madam Chairman, I urge the adoption of the amendment.

I yield back the balance of my time.

Madam Chairman, as the designee of Mr. Walz of Minnesota, I offer an amendment.

Madam Chairman, the amendment directs the administrator of the Small Business Administration to consult with the Secretary of Veterans Affairs to develop an initiative that publicizes the SBIR programs to veterans returning from service. The amendment will direct the SBA and the VA to work together to encourage veterans to apply for SBIR grants.

Many of the veterans returning from service are highly skilled and highly trained in technical fields. The amendment will draw on this pool of talent and increase the number of veterans applying for SBIR awards. Our efforts such as this will strengthen the SBIR program, especially the Department of Defense's SBIR program.

I urge adoption of this amendment.

I reserve the balance of my time.

Madam Chairman, I yield to the gentleman from Vermont (Mr. Welch).

Reclaiming my time, you have my commitment to monitor Federal agencies' efforts to award grants to small firms. And as this legislation moves forward, we will work with you to identify ways that agencies are properly studying and making available opportunities for small businesses.

Madam Chairman, I urge adoption of the Walz amendment I am offering on his behalf.

I yield back the balance of my time.

Madam Chairman, I thank the gentlemen for their amendment and their efforts to improve the bill. It is only appropriate that the recipients of Federal grants like the SBIR and STTR programs should be majority owned and controlled by individuals who are citizens of or permanent resident aliens in the United States. The amendment would clarify this requirement.

I support this amendment, but it is important to recognize that we cannot solve our country's immigration challenges on a piecemeal basis. This is an important amendment and reminds us that comprehensive immigration reform is good for America's national and economic security.

I now yield to the gentleman from Ohio for any comments that he may have.

Madam Chairman, I am prepared to accept the amendment.

I yield back the balance of my time.

Madam Chairman, I rise in support of H.R. 5819, the Small Business Innovation Research and Small Business Technology Transfer Programs Reauthorization Act.

These two programs are highly successful Federal initiatives designed to encourage economic growth and innovation within the small business community by assisting with the funding that is critical at the startup and developmental stages of a small company. Not only do they spur growth in individual companies, the programs stress the importance of the Small Business Committee's and the entire Federal Government's commitment to expand and diversify research opportunities for small businesses.

Created in 1982, the SBIR program offers competition-based awards to stimulate technological innovation among small private sector businesses while providing government agencies with new, cost- effective, technical and scientific solutions to meet their diverse needs. This program is not only critical to the unique needs of each of the participating Federal agencies but also to our national economy. Small businesses renew the U.S. economy by introducing new products and lower cost methods of doing business, sometimes with substantial economic benefits. They play a key role in introducing technologies to the market, often responding quickly to new market opportunities. Some of our Nation's greatest technological innovations were originated by small business owners tinkering in their workshops, including two very famous Ohioans, the Wright brothers.

Our committee worked very hard to produce the legislation we have before us today. We held several hearings on

this topic over the last few months inviting the Small Business Administration, SBIR and STTR program managers from Federal agencies, various small businesses, and academics to discuss this program's successes and consider amendments that would improve it. I am happy to say that a great many of the ideas presented to the committee have found their way into this legislation.

For example, the bill requires agencies with an annual SBIR program of $50 million or more a year to create an SBIR advisory board to review the program quarterly and recommend improvements. We found throughout the course of our work that there is simply not enough hard evidence available to effectively measure the success or failure of the programs. Several of our witnesses touched on this subject, and the National Academy of Sciences mentioned it in its congressionally mandated study of the SBIR program.

The bill also states that agencies required to have an SBIR advisory board must complete an evaluation of the competitive SBIR proposals within specific time frames. This is important to ensure that potential awardees are reviewed promptly and effectively. Given the complexity and time-consuming nature of awarding an SBIR grant award application, it can be very difficult to plan your business' future without knowing its fate for months at a time.

The legislation also increases the size of maximum awards to allow grant winners greater ability to develop their new technologies and provides agencies even greater flexibility to administer the programs. The award levels have not been raised or adjusted for inflation in 16 years. Several of our witnesses commented that the levels, particularly for phase I, offer very little wiggle room.

Additionally, I believe this legislation finds an appropriate balance on the issues of venture capital companies' funding of SBIR participants. I would like to thank the gentleman from Missouri (Mr. Graves) for all of his hard work on this issue. Mr. Graves has been a champion on this matter for years and has consistently worked to find a solution that balances funding the best science with maintaining the integrity of the program's goals of helping small businesses. I understand Mr. Graves will be offering a perfecting amendment during this proceeding that effectively strikes this balance, and I would urge Members on both sides of this aisle to support the amendment.

I would also like to thank the gentlelady from New York and chairwoman of our committee, Ms. Velazquez, and her staff for working in such a strong bipartisan manner with me and other members of our committee and with our staff on this legislation. But this is nothing new. The gentlelady has consistently sought my input and Republican members on the committee's input on various bills that we reported out of the committee and how they should be crafted. Although we may not always agree on every issue or there may be philosophical undertones, the spirit of working together in an effort to produce legislation that truly helps American small businesses always prevails, and I congratulate and commend the gentlelady for doing that.

Again, I urge my colleagues to vote for this legislation.

I reserve the balance of my time.

Madam Chairman, I yield 2 minutes to the gentleman from Georgia (Mr. Westmoreland).

Madam Chairman, I yield the gentleman an additional minute.

Madam Chairman, we will reserve the balance of our time.

Madam Chairman, I reserve the balance of my time.

Madam Chairman, we have been told we have Don Young, who is on his way here; so we're not prepared to close. But if time runs out, then it runs out.

Madam Chairman, I yield myself such time as I may consume.

Obviously we are still waiting for Mr. Young to speak. If he gets here, he gets here; if he doesn't, he doesn't.

I would like to, first of all, again commend the gentlewoman from New York for her cooperation and once again putting together a bipartisan effort here. And we both agree that both of these programs should be continued and have great value; so I would encourage my colleagues to support it.

Without Mr. Young's being here and not having spoken to him ahead of time and knowing exactly what he wanted to talk about, I would guess what he wanted to talk about had to do with the fact that energy is a huge problem in this country and some of it is because we have handcuffed ourselves and we are far too reliant upon foreign sources of energy from the Middle East, from some of the most unstable parts of the world, from Nigeria, from Venezuela. And for that reason, we're seeing gas prices at all-time highs, approximately $3.50 per gallon, and it's hurting an awful lot of our constituents, my constituents in Cincinnati and other members of the driving public all over this country. And one of the principal reasons is we are too reliant upon foreign sources of energy. We also haven't built an oil refinery.

I would be happy to yield to the gentleman.

Reclaiming my time, I thank the gentleman for interposing his points of view.

But as I was saying, Madam Chairman, I think one of the principal reasons we are seeing these high energy prices is because we are far too reliant upon foreign sources of energy. We have put off-limits an area which is in Mr. Young's State, in Alaska, ANWR. It's an area that not many people go to, although the photographs that you see of it make it look like it's nothing but flowers and animals and that it's a very lovely area, and I'm sure it is lovely in certain parts of the year. But the bottom line is by putting that 16 to 18 billion barrels of oil off-limits, we have to buy more oil from other countries, and that's one of the things that drives up the cost.

Another part of considerable oil reserves that we have put off-limits is in the Outer Continental Shelf. Now compared to 16 to 18 billion barrels of oil in ANWR, we have, we think, 83 to 86 billion barrels of oil and huge amounts of natural gas. And as long as we put those areas off-limits, it means we have to buy oil from somewhere else. It puts OPEC in a position where they can turn the spigot down somewhat or not increase it to take care of not only our needs but the needs of a growing environment in India and in China and those areas; so the price goes up as a result of that.

The other problem is we haven't built an oil refinery in this country since 1976. We make it virtually impossible for that to happen. We had over 300 oil refineries 30 years ago. We're down to 148, so fewer than half the number of oil refineries. That's another big problem. And I think those are the types of problems that Mr. Young would have in all likelihood spoken about.

Madam Chairman, I see that Mr. Young has entered, so I will at this point yield such time as he may consume to the gentleman from Alaska (Mr. Young).

(Mr. YOUNG of Alaska asked and was given permission to revise and extend his remarks.)

Madam Chairman, I yield back the balance of my time.

I thank the chairwoman for yielding.

We have no objection to the gentleman's amendment and would commend him for offering it.

I thank the gentlewoman for yielding.

I would just comment that we appreciate the chairwoman's willingness to work with the gentleman in accepting his amendment. We would be happy to be part of that conversation. We appreciate your cooperation.

I thank the chairwoman for yielding.

We have no opposition to the gentleman's amendment. We appreciate his effort to add to the positive things which we need to do to move towards solving this energy crisis we find ourselves in.

Madam Chairman, although I am not opposed to the gentleman's amendment, I would like to claim the time in opposition.

Madam Chairman, I would like to yield such time as he may consume to the gentleman from North Carolina (Mr. Hayes).

Reclaiming my time, do I have any time remaining, Madam Chairman?

I yield my remaining time to the gentleman from Michigan (Mr. Ehlers).

I thank the chairwoman for yielding.

We have no objection to the gentlewoman's amendment.

I thank the gentleman for yielding, and I rise in support of the amendment offered by the gentleman from Missouri (Mr. Graves). This is a good amendment that I feel strikes the appropriate balance on the issue of venture capital companies' funding of SBIR participants.

One of the guiding principles that we focused on as we worked on the legislation was the premise that we ought to be funding the best science. By allowing the amounts of venture capital investment in SBIR applicants that are prescribed by this amendment, we are not only ensuring that we are funding the best science, but also maintaining the program's goal of helping small businesses.

The gentleman from Missouri has been a leader on this issue for years, and I applaud his efforts on our committee and throughout the House to find a solution for this issue. And it is a balance here. You can make arguments on both sides, but I think what he has tried to do is to do something that is fair to small businesses and also have the best science.

I thank the gentleman for yielding, and thank him for his leadership on this issue.

Madam Chairman, we have no opposition.

I thank the gentlelady for yielding. We have no opposition to the gentleman's amendment.

I thank the gentlelady for yielding.

I support the gentlelady's amendment, and I would commend her for looking out for the interest of service-disabled veterans in this country, a group of people who have clearly earned the respect and the gratitude that they are entitled to. Thank you for offering the amendment.

Madam Chairman, although I am not in opposition, I will claim the time in opposition.

Madam Chairman, I won't take that time. I just want to commend the gentleman for offering the amendment. We have no opposition.

I yield back the balance of my time.

I thank the chairwoman for yielding, and I want to commend the gentlelady for offering her amendment, and we support it.

Madam Chairman, I rise to claim the time in opposition, even though we're not opposed to the amendment.

The Acting CHAIRWOMAN. Without objection, the gentleman from Ohio is recognized for 5 minutes.

We would commend the gentleman for offering the amendment.

I yield back the balance of my time.

I thank the chairwoman for yielding.

We have no objections.

Madam Chairman, I yield myself such time as I may consume.

The Small Business Innovation Research (SBIR) program and the Small Business Technology Transfer (STTR) program both were created to stimulate technological innovation, encourage the use of small businesses to meet Federal research and development needs, and increase private sector commercialization of innovations developed from Federal research and development. I believe both programs have been very successful and should be continued, and, on that basis, I support the legislation before us, although I disagree with some aspects of it.

The Science and Technology Committee has a long standing interest in promoting innovation and development by small businesses. Through these two competitive programs, the Small Business Administration is charged with ensuring that the Nation's small innovative businesses are a significant part of the Federal Government's research and development efforts. Currently, 11 Federal departments participate in the SBIR program, including the Departments of Agriculture, Defense, Commerce, Education, Energy, Health and Human Services, Homeland Security, and Transportation, as well as the Environmental Protection Agency, the National Aeronautics Space Administration, and the National Science Foundation. Of these 11, five departments also participate in the STTR program, awarding $200 billion to small high-tech businesses.

The original legislation for SBIR was developed based on the Small Business Innovation Research program of the National Science Foundation. The NSF program was designed to encourage proposals from small science and technology firms in NSF program areas. The current Federal-wide program mirrors the original NSF program, which was also organized in three phases to ensure the most efficient use of resources.

Phase I was an opportunity to develop research on important scientific and engineering problems. Projects that were found to be promising after the phase I research stage were given phase II awards to further develop the research project. Phase III is a transition phase that involves commercialization of the products or processes developed in the first phases.

Similar to SBIR, STTR is also a highly competitive three-phase program that reserves a specific percentage of Federal research and development funding for small businesses to work in partnership with nonprofit research institutions to help move ideas from the laboratory to the marketplace, to foster high-tech economic development in the United States, and to help to meet the technological needs of the Federal Government. Since the implementation of this program in 1983 through fiscal year 2006, over $20.7 billion has been given in awards for more

than 94,660 projects. The Government Accountability Office, which has been charged with assessing this program, has generally found that these programs have achieved the goal of enhanced participation of a small business in research and development fields.

Given the interest of the Committee on Science and Technology on the research and development of new technology, our committee has a unique interest in this bill. We have long been concerned about how America competes with the rest of the world in these areas. Many initiatives that have been passed by our committee in this Congress have focused on the need to improve our competitiveness in the world through funding of science education programs and public outreach efforts. I view this legislation as one more way we can reach out to the public to assist American innovation.

My only regret with regard to this legislation is that I do not believe it was able to receive the proper attention it warranted by the Committee on Science and Technology. Our committee shares jurisdiction on this legislation, primarily concentrated on the areas of science itself and the amount of science funding.

However, the full committee was not given the opportunity to consider this legislation and have its voice heard with regard to its continuation, primarily because there was a great hurry to bring this bill to the floor. Had regular order been provided, I believe we would be bringing a different bill to the floor today. And in view of that, I have offered an amendment that I believe will strengthen the bill, make it sounder in funding, preserve the funding of other resources and other research in the Federal Government, and also provide an opportunity to increase the funding for SBIR and STTR in the future by bringing up the funding for the other agencies of which these two organizations receive a percentage.

But I believe the approach in the bill of simply arbitrarily increasing the funding for SBIR and STTR hurts our research efforts in the Nation, and I will speak later on that topic when my amendment reaches the floor.

The second reservation is voiced by Mr. Gingrey of Georgia and, if we have time, we will enter into that discussion later and I will give him an opportunity to speak.

I reserve the balance of my time.

Madam Chairman, I am very pleased to yield 4 minutes to the distinguished gentleman from Georgia, Dr. Gingrey.

May I inquire as to how much time I have remaining.

Madam Chairman, I reserve the balance of my time.

I am prepared to close, Madam Chairman.

Madam Chairman, the substance of the bill is good. I support the general intent of it.

I am very concerned about several aspects. One of those is the size of the increase of the allocation, which is going to hurt our Nation's research effort in its totality. Secondly, the issues raised by Dr. Gingrey which involve giving perhaps too much control and power to the venture capitalists. And, third, the issues relating to the other issues that Dr. Gingrey brought forth regarding category I and category II funding, and the interplay between the two.

If we can solve these problems I would hope to support the bill.

Madam Chairman, I have an amendment at the desk.

Thank you, Madam Chairman. I appreciate the recognition.

This amendment is very important in terms of the total research effort of our Nation. H.R. 5819 would increase the Small Business Innovation Research program set-aside from 2.5 percent to 3 percent, a 20 percent increase. It would also increase the Small Business Technology Transfer program set-aside from 0.3 percent to 0.6 percent, a 100 percent increase. My amendment would remove these increases and keep the current set-asides in place at 2.5 percent for SBIR and 0.3 percent for STTR.

This is an extremely important issue. The Science and Technology Committee has worked very hard during the last few years to get the America COMPETES authorization bill signed into law. It has now been signed into law. It establishes a funding doubling path for several agencies under Science Committee jurisdiction, several of which are SBIR and STTR funding agencies. However, finding the money to fund these authorizations has not been so easy, and in fact these increased authorizations have not been appropriated.

Several of my colleagues have expressed the opinion that an increase in the set-aside for these two programs was justified by the authorized funding increases in the COMPETES Act. However, as I said, these have not been appropriated.

My concern and my purpose behind my amendment is to make sure that we are not robbing Peter to pay Paul. If we increase the SBIR and STTR program percentages while other agency's funding remains flat, we begin to severely erode our fundamental research base. I would much rather see us fight over extra funding for our basic research programs, our fundamental research programs, of which a percentage would then transfer into SBIR and STTR.

I should point out that my amendment is supported, first of all, by Mr. Obey, who is chairman of the House Appropriations Committee. He has spoken to me about it, and asked me to specifically mention that he supports my amendment.

I believe it is also supported by a large number of Members, as well as the Association of American Universities, the American Association of Medical Colleges, the Biophysical Society, the Campaign for Medical Research, the Federation of American Societies for Experimental Biology, the National Association of State and Land Grant Colleges and the Small Business Administration.

To quote the President of the Association of American Universities, the change ``would translate directly into cuts in both nominal and real terms in the budgets of most Federal research agencies.''

In real terms, the proposed changes would remove approximately $650 million that is currently provided to researchers, especially those at universities around the country. At the National Institutes of Health, which I believe everyone in this body supports very strongly, if we do not adopt this amendment, the NIH budget would be reduced by $185 million. That is a severe cut.

So I urge the adoption of my amendment. I think it actually will improve things. I hope that in the next few years we will get substantial increases in the amount of funding for the various research agencies and SBIR and STTR would receive substantial increases to the percentage that they will continue to receive.

Madam Chairman, I reserve the balance of my time.

I would just like to offer a few closing comments.

First of all, I thank you for your offer to work on this problem together. As you know from working with me on this so often, I totally support research in all areas. My concern in this case is that we would be giving some money to one agency and taking it from others. I think we should work together to increase the funding for both, and all boats will rise. If we manage to give the appropriate amount of money to the research institutions, then SBIR and STTR will automatically increase because of that. So if we work together from that standpoint, I think we will be in total agreement.

Madam Chairman, I yield back the balance of my time.

I thank the gentleman for yielding, and would like to comment on this amendment.

I have no great objection to it, but I am not terribly excited about it, either. Let me comment.

I personally would prefer, if we are going to show preferences here and use the money for that purpose, I would really prefer that we use those funds to give preference to those organizations that submit proposals for doing research and developing areas that will reduce carbon emissions. I think in the long run that might be better for the Nation than simply rewarding those who have taken steps within the organization rather than developing new ideas and inventions that can apply to everyone in the Nation.

So, as I said, I will not oppose it, but I did want to make that suggestion.

Madam Chairman, would the gentlelady yield?

I am not necessarily in opposition to this amendment, but

Will the gentlewoman please yield?

Thank you for yielding.

I just have to express some concern. We already had a preference earlier for organizations that have exhibited concern about their carbon footprint. And I don't object to the one about veterans, but I worry about getting too many preferences involved here. And Uncle Joe, who's trying to build a widget in his barn, may just fall in the cracks because he doesn't meet any of these preference categories.

I don't particularly oppose this one about transportation. Everyone knows we need improvements in that. But there are so many different areas, I don't want to bog down the SBA in dealing with these requests by having to worry about preference after preference.

So basically I'm issuing a warning here. Let's watch it in the future, and let's make sure we don't add too many preference requirements or it becomes very, very cumbersome.

I would like to thank the Chair of this wonderful committee for yielding time to me today.

Madam Chairman, I used to serve on the Small Business Committee and am pleased every chance I have to take the opportunity to come back and salute all the members of the committee, my colleague from Ohio as well, for the work that they do.

I come to the floor today in support of H.R. 5819 to amend the Small Business Innovation Research program and the Small Business Technology Transfer program because this will bring an opportunity for small businesses in my congressional district to have an opportunity to work on some of the innovative technology that they have been planning over the years.

Within my congressional district, I have more than five medical institutions, and the work that these medical institutions have been able to do with small businesses that have been spawned from much of the research is very, very exciting. And we think that the area of Cleveland and northeast Ohio will be a place where we will have an opportunity to put to work some of the opportunities that are presented in this particular legislation.

I'm particularly pleased that the legislation includes an annual $10 million competitive grant program that will support and assist women-, veteran-, and minority-owned businesses. In today's fast-paced economy, minority businesses are steadily expanding their presence and are increasingly a driving force in the economy. But, more importantly, we all know the importance of small business. Unlike my father and my mother and many of our fathers and mothers who worked for companies for 40 years, it does not happen anymore that you're working for that same company. And we need opportunity to expand business so that young people coming out of high school and college have a place to work.

I'm so pleased to join my colleagues in supporting the expansion of these programs.

I rise today in support of H.R. 5819, a bill that will reauthorize the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs through 2010.

I support these programs because they provide a much needed boost in business innovation and job creation throughout the country. These programs address the needs of our current struggling economy by providing funds to small businesses that work with universities or perform cutting-edge research related to the missions of our different federal agencies.

According to the House Science and Technology Committee, these two programs provide the most federal support--about $2.3 billion annually--for private-sector technology innovation by small businesses. In these tough economic times, small business innovation becomes an increasingly vital asset to our economy. In my home state of Ohio, the SBIR program has made a significant contribution to the economy by providing $83 million in awards to small businesses in 2005 and 2006.

As a representative of a congressional district that is home to more than five major medical institutions, I am keenly aware of the role the SBIR program has played in fostering medical breakthroughs. I am very interested in promoting the ability of our researchers to explore and pursue cutting-edge medical advancements and believe that the SBIR program is critical to ensuring that promising medical innovations can move forward.

I am particularly pleased that this legislation includes an annual $10 million competitive grant program that will provide support and assistance for women, veterans, and minority-owned businesses. In today's fast paced economy, minority businesses are steadily expanding their presence and are increasingly a driving force in the economy.

Today, minorities own over four million firms, generating nearly $700 billion in yearly revenue and employing over 7 million workers. People of color across the country have embraced business ownership and this legislation will allow more of these firms to participate in Federal research and development activities.

I urge my colleagues to support the passage of H.R. 5819.

Madam Chairman, I rise today in support of H.R. 5819, a bill that will reauthorize the Small Business Innovation Research--SBIR, and Small Business Technology Transfer, STTR, programs through 2010.

I support these programs because they provide a much needed boost in business innovation and job creation throughout the country.

These programs address the needs of our current struggling economy by providing funds to small businesses that work with universities or perform cutting-edge research related to the missions of our different federal agencies.

According to the House Science and Technology Committee, these two programs provide the most federal support--about $2.3 billion annually--for private-sector technology innovation by small businesses. In these tough economic times, small business innovation becomes an increasingly vital asset to our economy. In my home State of Ohio, the SBIR program has made a significant contribution to the economy by providing $83 million in awards to small businesses in 2005 and 2006.

As a representative of a congressional district that is home to more than five major medical institutions, I am keenly aware of the role the SBIR program has played in fostering medical breakthroughs. I am very interested in promoting the ability of our researchers to explore and pursue cutting-edge medical advancements and believe that the SBIR program is critical to ensuring that promising medical innovations can move forward.

I am particularly pleased that this legislation includes an annual $10 million competitive grant program that will provide support and assistance for women, veterans, and minority-owned businesses. In today's fast paced economy, minority businesses are steadily expanding their presence and are increasingly a driving force in the economy.

Today, minorities own over four million firms, generating nearly $700 billion in yearly revenue and employing over 7 million workers. People of color across the country have embraced business ownership and this legislation will allow more of these firms to participate in Federal research and development activities.

I urge my colleagues to support the passage of H.R. 5819.

Mrs. TAUSCHER, Madam Chairman, I rise today in support of H.R. 5819, the Small Business Innovation Research, SBIR, and Small Business Technology Transfer, SBTT, Reauthorization Act.

I thank my colleague from New York, Ms. Velazquez, for bringing this bill to the floor today. This legislation would ensure that innovative small businesses in my district and across the country have access to the Federal support they need to conduct research and development and to transform their work into commercially viable products.

Helping small businesses stimulates our economy. Small businesses account for 99 percent of all employers in the United States and are responsible for generating more than half of all new jobs. In particular, the East Bay area of California has hosted countless small business success stories. Throughout my time in Congress, I have been committed to helping these entrepreneurs thrive. This is why I formed a Small Business Advisory Group, which keeps me personally connected with issues affecting small businesses in my district.

Frequently, small business owners need assistance obtaining Federal contracts and grants. To this end, I regularly host seminars to teach small business owners how to apply for grants and contracts, and I work with the Small Business Administration to ensure that underrepresented entrepreneurs like women and minorities are helped to be competitive.

Likewise, I am proud to support this bill, which would encourage greater participation in STTR and SBIR--programs that help small business innovators connect with research institutions and explore their own technological potential, contribute to the marketplace, and profit from commercialization.

This bill would also expand SBIR eligibility to include venture- backed businesses like biomedical firms, whose advances have been critical to the ongoing competitiveness of America's economy. Finally, the bill proposes a $10,000,000 Federal grants program to reach out to small firms owned and controlled by women and minorities and small businesses located in areas that are underrepresented in the SBIR program.

Madam Chairman, this bill would give small businesses access to resources that will facilitate discoveries, create jobs, and energize our economy. I commend Ms. Velazquez for her leadership on this issue, and I urge my colleagues to join me in supporting the bill.

Madam Chairman, I rise in reluctant opposition to the SBIR/STTR Reauthorization Act (H.R. 5819). I am a long-time supporter of the Small Business Innovative

Research, SBIR, and the Small Business Technology Transfer, STTR, program because it requires federal agencies with at least a $100 million research and development, R&D, budget to set aside a certain percentage of awards for small firms. The SBIR program was created in 1982 because small businesses--the most innovative sector of our economy--received very few R&D awards. Almost the entire federal R&D budget back then went to large firms and academic institutions.

There are many good provisions in H.R. 5819. Section 102 increases the small business set-aside in the SBIR program from 2.5 percent to 3 percent. The SBIR awards come in three phases--Phase 1 is for start- ups; Phase II is for follow-on work; and Phase III is for commercialization of the product either in the form of government procurement or for sale in the marketplace. Section 103 increases the maximum award in Phase I from $100,000 to $750,000. For Phase II awards, the maximum award goes up from $300,000 to $2.2 million. There are no grant dollars for the Phase III or commercialization phase. In the past, few federal agencies had any interest in Phase III. However, H.R. 5819 contains several provisions, most particularly in Title IV, to encourage commercialization of products developed with SBIR awards.

However, Section 201 of H.R. 5819 opens up more of the SBIR program to small firms that have significant investments from venture capital (VC) companies. For the purposes of the SBIR program, a small firm would be considered to be independently owned and operated even with a majority share owned by VC firms. VC investments, unlike a bank loan, make the ``owner'' of the company no longer the true leader of the firm if venture capitalists own more than 50 percent of the firm. In other words, he or she doesn't control the ultimate destiny or direction of the company--the ``owner'' has to take ultimate direction from the VC firms. The small business is no longer independently owned and operated. Thus, if a small company receives venture capital even from multiple sources to pursue Vaccine A but then sees the research going in a different direction to develop Vaccine B, the ``owner'' of the company will be compelled to complete the research on Vaccine A for which he or she received funding unless the ``owner'' receives permission from the venture capitalists to pursue Vaccine B.

The only limitations on VC investments in Section 201 for SBIR firms are that (1) no one single VC firm can own a majority of the tech company applying for a SBIR grant; (2) the VC firm does not control a majority of the seats on the tech company's board of directors; (3) only ``small'' VCs, as defined in the bill as those VC firms employing 500 employees or less, can participate; and (4) a ``corporate-owned'' VC firm can only own up to 10 percent of a SBIR tech company and that a SBIR tech company can only have one investment from a corporate VC. My concerns are that the first two limitations can be easily evadable by creative VCs that set up multiple firms. The third limitation dealing with a small business definition of a VC encompasses almost every VC in the nation. The Small Business Administration (SBA) currently defines small venture capital firms as those with less than $6.5 million in annual receipts. There is no need to change the small business definition of a VC.

In Section 110, H.R. 5819 also allows firms to apply directly for Phase II awards, bypassing the Phase I process. In my opinion, combining three key elements of H.R. 5819--dramatically higher awards (Section 103), allowing almost every VC in the nation to own more than a majority of a SBIR firm (Section 201), and bypassing Phase I (Section 110)--sets up a stage where VC-owned ``small'' firms will gobble up most of the money in the SBIR program. Then, there would be a dramatic drop-off in the number of truly very small and independently-owned companies in the SBIR program, particularly those looking for Phase 1 start-up funding.

During my tenure as Chairman of the House Small Business Committee, I spent a lot of time and effort trying to solve the specific problem of the eligibility of some small businesses with venture capital investments to participate in the SBIR program at the National Institutes of Health (NIH). After the Defense Department, the NIH is the second- largest spender of R&D funding in the federal government. This issue of the role of VC investment in SBIR companies seems primarily confined to NIH.

Section 201 in H.R. 5819 tries to solve a problem that is grossly exaggerated. It is a myth that small businesses with VC investments are unable to participate in the SBIR program at NIH because of a misinterpretation of the law by the SBA. In an impartial Government Accountability Office (GAO) study that was released in 2006, the GAO discovered that 17 percent of NIH SBIR awards, accounting for 18 percent of the dollar value, went to small businesses with VC investments in Fiscal Year 2004. These small firms had no problem in complying with SBA guidelines. Nevertheless, I tried to proffer a compromise to establish a two-year pilot SBIR-like program to set-aside 0.5 percent of NIH R&D funding for smaller firms that receive a preponderance of their funding from VCs and do not own or control their company. Unfortunately, my compromise was rejected by NIH and by the biotech and VC industries. However, the solution contained in Section 201 is a dramatic overreach in the effort to solve this specific problem with NIH.

Finally, the Bush Administration shares my concern on this issue. According to the Statement of Administration Policy issued on April 22, 2008, ``the Administration believes that H.R. 5819 goes too far in relaxing constraints on venture capital ownership of firms receiving SBIR and STTR funds, which could lead to inappropriate subsidization of well-capitalized businesses that do not warrant funding through a set- aside program. The Administration is reviewing whether venture capital funding of businesses receiving SBIR and STTR funds could be expanded through reforms of SBA regulations without inappropriately providing Federal commercialization subsidies to well-capitalized businesses.''

Thus, for these reasons, I urge my colleagues to oppose H.R. 5819.