Providing for consideration of the bill (H.R. 2965) to amend the Small Business Act with respect to the Small Business Innovation Research Program and the Small Business Technology Transfer Program, and for other purposes.

Mr. Speaker, by direction of the Committee on Rules, I call up House Resolution 610 and ask for its immediate consideration.

Mr. Speaker, for the purposes of debate only, I yield the customary 30 minutes to the gentlewoman from North Carolina, Dr. Foxx. All time yielded during consideration of the rule is for debate only.

General Leave

Mr. Speaker, I ask unanimous consent that all Members be given 5 legislative days in which to revise and extend their remarks on House Resolution 610.

Mr. Speaker, I yield myself such time as I may consume.

House Resolution 610 provides for consideration of H.R. 2965, the Enhancing Small Business Research and Innovation Act of 2009, under a structured rule. The rule provides for 1 hour of general debate with 40 minutes controlled by the Committee on Small Business and 20 minutes controlled by the Committee on Science and Technology. The rule makes in order five amendments printed in the Rules Committee report. The amendments are debatable for 10 minutes each, except for the manager's amendment, which is debatable for 30 minutes. The rule provides one motion to recommit, with or without instructions.

Mr. Speaker, I rise in support of House Resolution 610 and the underlying bill, H.R. 2965, the Enhancing Small Business Research and Innovation Act, which reauthorizes the Small Businesses Innovation Research Program and the Small Business Technology Transfer Program.

Programs such as these, programs that successfully create high-wage jobs and ensure our Nation's technological competitive advantage in wide areas from software to defense to medicine, are vital, particularly in light of our economic climate.

On behalf of my constituents in Colorado whose businesses have prospered as a result of this program, I thank my friend from Pennsylvania (Mr. Altmire) for crafting this legislation. I also thank Chairwoman Velazquez and Chairman Gordon and their staffs for their hard work and efforts to bring this bill in a timely fashion before us on the floor of the House of Representatives. With the Small Business Innovation and Research Program extension set to expire at the end of this month, these committees have carefully debated this legislation and with deliberate speed have brought us a bill that is an improvement over existing programs and is deserving of swift passage by this body.

Since its inception in 1982, the SBIR has made awards to more than 94,000 projects totaling over $20.7 billion of funding for small businesses. The SBIR program was conceived to help small innovative businesses access Federal research and development funding that creates jobs and allows Federal agencies to benefit from the ingenuity of private industry. SBIR's companion, the Small Business Technology Transfer Program, which began in 1992, goes further by incorporating nonprofit research institutes. This public-private partnership program is a success story that's not only created jobs but has also yielded dividends for the Federal agencies that sponsor the program. Americans can be proud that Federal resources have been leveraged to create innovations that have benefited 11 Federal agencies that have SBIR programs, including the National Institutes of Health, the Department of Energy, and the Department of Defense. The research and development of new technologies and processes that is completed by private companies have created efficiency in the Departments that sponsor SBIR while freeing the resources and staffs for projects that are essential to the agency's mission, making our Nation safer and our citizens healthier.

Mr. Speaker, the success of this program is clear. One need only look to the patents that have resulted from SBIR awards or the 1.5 million Americans employed by SBIR program participant companies to get a sense of the real value of this program.

Less tangible but equally important are the other benefits of this program. Across the country, communities have

enjoyed the economic impact of investment in small business. The projects of SBIR participants have resulted in not only high-wage, direct research employment but also have generated manufacturing jobs right here in this country and a host of support industry jobs.

In my State of Colorado, the synergy of Federal labs, small business, and academia has driven economic growth in good times and in bad, and acted as a stabilizing effect in the hard times. In my district, as a result of SBIR participation, Boulder-based Tech-X Corporation has created 58 high-paying jobs that earn $453,000 from sales and licensing of advanced software that's used in private industry as well as NASA, the Department of Energy, and the Department of Defense.

The legislation before us reauthorizes the program that allows small businesses to make big plans and helps them succeed. I remind my colleagues that in the midst of a recession, we have an obligation to our small businesses to provide as much security as possible, and that reauthorizing this program through 2011 provides security for long- range planning while giving Congress the opportunity to adjust any deficiencies in the program. This flexibility is important when considering the fast pace of change in the high-tech industry.

With H.R. 2965, we don't just reauthorize the SBIR program, we also modernize and improve the program. We increase funding levels for phase I and phase II awards to a level that's consistent with modern financial realities. We clarify the language regarding which companies can participate so that no worthwhile innovation is left behind. And we streamline the SBIR and STTR so that the two programs operate more efficiently, meet clear performance standards, and put taxpayer dollars to the best possible use.

We also put a greater emphasis on bringing products to market and broaden the pool of businesses that participate with outreach to rural and underserved communities. Finally, and importantly, we increase the outreach to our Nation's veterans, ensuring that those who have served our country have every opportunity to reenter the business world and succeed financially when they get home.

Mr. Speaker, today we have a great opportunity to reauthorize a program that the Government Accountability Office has said clearly is doing what Congress asked it to do in achieving commercial sales and developmental funding for the private sector.

I ask my colleagues to join me in supporting this bill and the underlying legislation.

I reserve the balance of my time.

One minor correction, to the gentlelady from North Carolina. The rule is a structured rule as opposed to a closed rule. I know that my colleague on the Rules Committee is aware of the difference as well.

Specifically, this rule calls for five amendments to be in order, including three Republican amendments and two Democratic amendments. I think it's a very fair rule. There were 34 amendments that were submitted to the Rules Committee. Thirteen of those were withdrawn by the sponsors, and two were nongermane.

With that, I would like to yield 2 minutes to the gentleman from Georgia (Mr. Barrow).

The bill before us today has no earmarks. To elaborate upon the processes for awarding funds, I'd like to yield 3 minutes to the chairman of the Subcommittee on Technology and Innovation, the gentleman from Oregon (Mr. Wu).

With the Nation facing a historically tight credit market, H.R. 2965 makes it easier for small businesses that participate in SBIR to find capital and lets the business owners--not Washington bureaucrats--decide how to raise that capital.

The commonsense improvements to the SBIR program, clarifying its mission and which businesses qualify, will make an already successful program run more efficiently and yield better results for taxpayers and for American businesses.

The new focus on bringing products to market will help create even more job growth in manufacturing as well as support industries. America can be competitive and will continue to be competitive in manufacturing jobs in the high-tech sector. As technology improves at a lightning pace, the investments we make today in high-tech companies will ensure our Nation's technological advantage for many years to come.

The success of these companies brings new technology, efficiency and economic activity to Federal agencies and private industry alike. But more importantly, these successes will spark interest in science and technology in our youth. The advances we make now need a steady pipeline of new lines to keep us on track. We can leave no better legacy to the next generation of Americans than our example of intellectual prowess. Our colleagues on the Small Business Committee and the Science and Technology Committee understand the importance of taking action now for a stronger economic future. It is for this reason that both committees voted unanimously to bring this legislation to the floor of the House of Representatives.

Mr. Speaker, let us follow the example of our colleagues by putting partisanship aside and reauthorizing this program which has been so beneficial for our constituents. Let us show the American people that this is what we can accomplish when Democrats and Republicans work together for the common good.

I reserve the balance of my time.

I yield myself such time as I may consume.

To address the points made by my colleague Mr. Manzullo of Illinois, previous to this change, we effectively require that recipient companies take government money in Phase I in order to be eligible for Phase II. By making this change, we're saying, You know what, you don't need to rely on the government. You can raise private capital to make yourself eligible for Phase II. And we can actually have more funding available for Phase II by reducing the need for Phase I money by using private capital sources rather than government capital, rather than the taxpayer money that would otherwise go into it.

We also have protections to ensure that a majority of the company is owned by those inventors and entrepreneurs who start the company. Venture capital investment is typically 20, 30, 40 percent of the company. Under this bill, we also stipulate that it can't be a majority of the company.

I yield to the gentleman from Illinois.

Reclaiming my time, why should companies be forced to accept government grants when there's private capital out there that would be willing to save taxpayer money, invest in those companies, bring that technology to the next stage and preserve that taxpayer money to be able to invest in the commercialization of those products and technologies?

With that, I would like to yield 2 minutes to the gentleman from Oregon (Mr. Wu), the chairman of the Subcommittee on Technology and Innovation.

I yield the gentleman 1 additional minute.

Mr. Speaker, I would share with my colleague from Illinois that in my previous career before I came to Congress, I had been on various sides of this equation. I have been a venture capital investor. I have been in venture-backed companies. I have been a limited partner in venture capital companies, and I have raised money from individual investors as well.

I can't see any good reason why the government should discriminate on the form of capital based on the form of capital the company has raised. It might be debt financing from a bank. It might be private capital from individual investors. It might be professional venture capital. It might be a grant under DARPA. It might be a Phase I grant under SBIR. These are all valid ways to raise money. These are all perfectly fine ways. Personally, I think it's better when they raise money from people rather than taxpayers. If they raise money from venture capital investors, that's a plus. If they raise money from a bank through credit, that's a plus too.

The truth is, a lot of types of businesses aren't bankable. They can't borrow. They can't leverage because they are not buying a tangible asset with that. If you are in software, if you are in e- commerce, you can't borrow to develop that company. You need to rely on equity capital. By discriminating based on equity capital, which is what we are talking about with venture capital, you are basically favoring companies that have a bankable asset that they're purchasing.

Now I'm sure both kinds of companies are critical for the future of our economy, but many of the very technology companies we need to support and are going to be a powerful growth sector in biotech, in computer technology, are going to be companies that can only raise money through equity capital. And by allowing them to do that, through allowing venture capital-

backed companies to be eligible for these programs, we're furthering our engine of economic growth.

I would like to yield 2 additional minutes to the gentleman from Oregon (Mr. Wu).

I yield 1 additional minute to the gentleman from Oregon.

To address the points of the gentlelady from North Carolina, when we are talking about this bill, we are talking about a pro business bill. There are no taxes in this bill. This is all budgeted for already in the budget that was passed.

The Democrats have already delivered a number of tax cuts for small businesses. Tax cuts are certainly part of the solution. We have done that through the American Recovery and Reinvestment Act for small businesses. Soon we will be taking up health care, which will be a tremendous benefit to the small businesses of this country.

This bill, H.R. 2965, which invests in small businesses, is supported by the Advanced Medical Technology Association, the Biotechnology Industry Association, the Medical Device Manufacturers Association, the National Venture Capital Association, and the U.S. Women's Chamber of Commerce. It is also supported by many of the patient advocacy groups who recognize that this type of investment will help cure the health concerns and address the health concerns of many American families. It is supported by the Cystic Fibrosis Foundation, the Parkinson's Action Network and the ALS Association.

These are all critical reasons that, for American small business to create jobs and for the health of our population and the continued growth of our economy, we need to pass this rule and pass this bill.

I would like to reserve the balance of my time.

Mr. Speaker, again, there is no good economic reason to discriminate on the form of capital, the form of private investment that goes into companies. When you have a company that borrows, a company that has access to credit, one could argue if they are worth less than they borrowed, the bank owns 100 percent of the company, and yet that company could, in fact, be eligible for the SBIR grant. The control provisions are clear. The control of the company cannot reside with the venture capitalist. I think this is a very positive step towards the direction in making sure that, regardless of the source of capital of the company, we invest in the very best technologies, products and services for the American people.

With that, I would like to yield 2\1/2\ minutes to the gentleman from Oklahoma (Mr. Boren).

Again, I think there is, from the other side of the aisle, somewhat of a misunderstanding with regard to what venture capital is. It's as valid a way to finance a company as anything else. It has nothing to do with whether the company is large or small.

There are provisions in here, in the bill, that will require that the company is, in fact, a small company. Whether they receive their financing from a bank, from individual investors, from labor financing, which means people not taking a salary and kind of working for free or on spec, there is a variety of ways to finance companies. And it shouldn't be the business of the government to discriminate based on how a particular company chooses to finance itself.

With that, I would like to yield 1\1/2\ minutes to the gentleman from Virginia (Mr. Perriello).

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, if small businesses are the engine that drives our economy, then investment is the fuel. By ensuring that a portion of Federal research dollars are invested in small businesses, SBIR and STTR are fueling job creation and technological innovation. Since 1992, SBIR has issued 65,000 grants to small companies that are engaged in cutting-edge research to cure diseases, strengthen our national defense, and reduce our dependence on foreign energy sources.

This Congress has been tasked with helping American families keep their jobs through the worst economic downturn since the Great Depression. We now have an unemployment rate of 9.5 percent. While there has been disagreement and spirited debate on the best prescription to get our economy moving again, we are fortunate that we have in place programs that are time tested. Every year the SBIR program invests $2.2 billion in small businesses, helping 1,500 new firms get off the ground.

Mr. Speaker, I speak on behalf of Tech-X in Boulder; Coherent Technologies in Louisville; Community Power Corporation in Littleton; NavSys in Colorado Springs; and the many other small businesses which have benefited from the SBIR in my State of Colorado and across the country.

Again, I commend the Members and staff who have worked diligently to bring this bipartisan bill to the floor.

Mr. Speaker, as I said before and will continue to say, so much of our work thus far in Congress has moved us in the direction of creating more jobs. Whether it was passing the budget or work on health care, clean energy, education, the Recovery Act, the Green Schools bill, and even the Water Quality Investment Act created jobs. This bill is just another step on the road to recovery.

I urge a ``yes'' vote on the previous question and on the rule.

I yield back the balance of my time, and I move the previous question on the resolution.

I rise in support of H.R. 2965, updating and enhancing the Small Business Administration's Small Business Innovation Research and Small Business Technology Transfer programs.

Mr. Chairman, I yield myself such time as I may consume. I rise in support of H.R. 2965, which will reauthorize and improve the SBA's SBIR and STTR programs. This bill has strong bipartisan support and would work to invest in entrepreneurial innovation and job growth.

While our economy is recovering, it still has a ways to go. Even now, we need to be focused on putting Americans back to work. We need growth that is lasting and industries that are sustainable. We need jobs that cannot be shipped overseas and will not evaporate in the next cycle of boom and bust. But those jobs aren't going to appear out of thin air. They need to be created. By expanding existing industries and unlocking new ones, H.R. 2965 will generate the jobs we need.

The SBIR and STTR programs are vital to small business growth. Year after year, they help jump-start 1,500 new companies. At the very least, that is 1,500 new employers. Over time, that is millions and millions of direct and indirect positions. But while these initiatives are crucial, they're not living up to their full potential. Through H.R. 2965, we can improve SBIR and STTR so they are running at maximum capacity.

Job creation, Mr. Chairman, is the primary goal of R&D. But in order to generate new positions, we have to first develop new industries. Commercialization is critical to that process.

But, unfortunately, most research never makes it to the market.

To address that issue, we are creating commercialization benchmarks. We're also encouraging conversations between SBIR officers and purchasing agents. Ultimately, those dialogs will enhance the flow of information between buyers and sellers, helping more ideas move from the drawing board to the marketplace.

When all is said and done, commercialization means more than new products--it means new jobs. Once a product hits the mainstream, it opens up a world of opportunity in a wide range of industries, from retail to manufacturing. By stimulating these sectors, we can help our economy on its route to recovery.

Even as our economy rebounds, small firms struggle to find funding-- particularly equity investment. Just a year ago, venture capital firms drove $5.7 billion into small companies. Today, we have seen almost a 50 percent decline. In terms of what that means for the economy, there are now $3.7 billion fewer dollars to help our small businesses create jobs. The programs' current regulations only compound those challenges.

By shutting venture capital out of SBIR and STTR, we are blocking billions of dollars to create jobs and limiting our ability to innovate. What are we supposed to say to a venture-backed firm that is researching cures for pancreatic cancer? Are we supposed to shake our heads and say, Sorry, you've done some promising research, but we just can't help you find a cure?

Mr. Chairman, this program is better than that. That is why H.R. 2965 gives small firms--not Washington bureaucrats--the final say in how their firms are financed.

This bill provides for the reasonable use of venture capital, while maintaining important safeguards. Make no mistake, SBIR and STTR are-- and forever will be--small business programs. This provision doesn't change that. What it does do is give small firms the funding they need to develop new products.

Even with the necessary capital, small firms struggle to see R&D from start to finish. That is because it is a complex process. Measures to block funding delays and increase efficiency will streamline R&D, helping more products make it out of the laboratory and into the marketplace. Meanwhile, we're going to broaden the scope of American innovation.

Silicon Valley doesn't hold a franchise on innovation, which is why H.R. 2965 reaches out to underserved rural areas. Through cutting edge technology and grassroots marketing, it also seeks to bring women, minorities, and veterans into the SBIR and STTR programs.

Innovation is the first stop on the path to prosperity. By enhancing and expanding SBIR and STTR, we can encourage small business growth in all parts of the country. In doing so, we will help our small firms to grow, innovate, and--most importantly--create homegrown jobs.

Mr. Chairman, I reserve the balance of my time.

Mr. Chairman, I yield 3 minutes to the Chair of the Subcommittee on Contracting and Technology who moved this legislation through the subcommittee, the gentleman from Virginia (Mr. Nye).

Mr. Chairman, I yield 4 minutes to the bill's sponsor, the gentleman from Pennsylvania, Mr. Jason Altmire.

Mr. Chairman, I yield 4 minutes to the gentlewoman from Illinois, Mrs. Halvorson, who authored several of the provisions of this bill.

Mr. Chairman, I would like to inquire of the Chair how much time we have left.

I yield to the gentlelady from New York (Ms. Clarke) 3 minutes.

(Ms. CLARKE asked and was given permission to revise and extend her remarks.)

Mr. Chairman, I yield to the gentlewoman from Pennsylvania (Ms. Schwartz) 2 minutes.

Mr. Chairman, I yield myself the balance of my time.

Mr. Chairman, today we have an opportunity to invest in the two greatest sources of economic growth: entrepreneurship and innovation. We know that small firms create roughly 70 percent of all new jobs, and we recognize that new markets are the surest path to prosperity, so it only makes sense to strengthen small business innovation. H.R. 2965 does exactly that. This is a bipartisan bill, one that could not have been drafted without contributions from my colleagues, Mr. Graves, Mr. Schock, Mrs. Halvorson, Mr. Bright, Mr. Nye, and most importantly, the bill sponsor, Mr. Altmire.

I would also like to thank Science and Technology, both chairman and ranking member, and the subcommittee chairman, Mr. David Wu, and the ranking member.

Especially, I want to say thank you to the staff on both committees who have worked so diligently in working in a bipartisan manner.

This legislation has the support of 60 different organizations, including the U.S. Women's Chamber of Commerce, the Advanced Medical Technology Association and the Biotechnology Industry Organization. The SBIR and STTR programs are critical to small business resources. They helped 1,500 firms get off the ground every year, and in the past we have sparked breakthroughs in everything from antivirus software to defense technology.

Clearly, these programs hold enormous value. Even so, they haven't been modernized in over 8 years and are in sore need of enhancement. In improving SBIR and STTR, we are going to increase efficiency, expand the small business talent pool and boost commercialization.

Meanwhile, we are also going to give entrepreneurs more options for forming their ventures. Taken together these measures will do more than spark invention. They will help small firms market new products, open new industries and put more Americans back to work.

I will urge my colleagues to support this bill.

I yield back the balance of my time.

I have an amendment at the desk.

Pursuant to the rule, I send to the desk a modification to amendment No. 1.

Mr. Chairman, the manager's amendment makes technical and conforming changes to the underlying legislation. It also incorporates several important amendments offered by Members.

I would like to thank these Members for their contributions: Mr. Barrow, Mr. Boren, Mr. Boswell, Ms. Sutton, Mr. Cardoza, Mr. Childers, Mrs. Dahlkemper, Mrs. Kirkpatrick, Mr. Kratovil, Ms. Markey, Mr. McNerney, Ms. McCollum and Mr. Perlmutter.

Because of their contributions, we have a stronger bill before us today. The provisions that are included in the manager's amendment will foster what we are doing to help veteran small businesses. As a new generation of veterans returns home from the current conflicts in Iraq and Afghanistan, many of them will be seeking opportunities through entrepreneurship. Veterans are often well suited to be small business owners.

The manager's amendment will also enhance our outreach to women- and minority-owned businesses. Diversity has always been our Nation's greatest strength. By expanding the diversity of the firms that compete for SBIR grants, we will strengthen the overall SBIR program. The same can be said about the provisions in the manager's amendment that will encourage greater participation by rural businesses. Drawing these companies into the program will mean more ideas and better ideas.

In addition to encouraging greater diversity among participating firms, the manager's amendment targets SBIR and STTR groups toward a number of pressing problems where innovation and research are badly needed. For instance, language in the amendment clarifies that the programs shall make renewable energy a priority. Small businesses are already leading the way in constructing a green economy, and this provision will build on that success.

Lastly, the manager's amendment improves oversight. The 111th Congress has made oversight one of our top priorities to ensure that taxpayers' dollars are spent wisely and well.

This amendment continues that effort. SBIR and STTR are two of our Nation's most successful programs. It is our goal to ensure they continue functioning smoothly and effectively.

Mr. Chairman, I strongly encourage my colleagues to support this amendment.

I reserve the balance of my time.

Mr. Chairman, I yield 3 minutes to the gentlelady from Pennsylvania (Mrs. Dahlkemper).

Mr. Chairman, I yield 2 minutes to the gentleman from Iowa (Mr. Boswell).

(Mr. BOSWELL asked and was given permission to revise and extend his remarks.)

Mr. Chairman, I yield 2 minutes to the gentleman from California (Mr. McNerney).

I urge adoption of the manager's amendment, and I yield back the balance of my time.

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

Mr. Chairman, in the 111th Congress, this body has made oversight a top priority. Accountability is critical to the legislative process, and it is the principle that the Small Business Committee has consistently worked to promote. So I thank the gentlelady from Florida for this amendment.

As I mentioned, my colleagues and I on the Small Business Committee have conducted a great deal of oversight. We have collaborated with GAO in the past, and I know they do good work. So I would be particularly interested to see them do a study on the effects of venture capital investment in the SBIR program.

In particular, I think it would be useful for all of Congress to understand how both this legislation as well as the 2003 ruling blocking venture capital participation has affected the SBIR program. These questions are critical to our continued oversight of these initiatives, and I thank the gentlelady for her efforts in this area.

I think a study will shed light on the role that venture capital plays in the high-tech arena. For many small firms, access to capital is critical, and it is often equity investment that allows a small business to advance their research to the marketplace.

A recent study by the National Research Council, which this GAO investigation would complement, found that restricting venture capital investment adversely affected the most promising firms. GAO has the broad capabilities to investigate the impact of this legislation and the SBA's regulation in this area, across all SBIR agencies. This comprehensive review will shed light on both the historical patterns of venture capital financing throughout the program, and whether certain agencies are embracing such investment.

Like Ms. Brown-Waite, I am committed to keeping SBIR and STTR small business programs. I believe that this study will help ensure this. With the economy facing so many challenges, expanding access to capital for small businesses has never been more important.

I yield to the gentleman from Missouri (Mr. Graves) for any thoughts he may have.

Mr. Chairman, if the gentlelady is prepared to yield back, we are prepared to accept the amendment.

Mr. Chairman, I urge adoption of this amendment, and I yield back the balance of my time.

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

Space exploration has long been a symbol of American innovation. Today, we are in the process of unwinding one of our most high-profile efforts in that arena. In the next year, NASA's space shuttle project will retire for good. As the program comes to an end, so will an estimated 8,000 contracting jobs. While the project is shutting down, its contractors and the innovation behind it shouldn't have to.

In the past, these firms contributed a great deal to NASA's space shuttle program. I believe they can do the same for other Federal agencies, and for other space initiatives such as the Mars Lander project. That is why Ms. Kosmas's amendment is so important.

By retooling their operations and seeking new markets, space shuttle contractors can continue to offer high-wage jobs to countless Americans, all while maintaining their commitment to science and technology.

This amendment offers transitional assistance to displaced firms, helping them identify and vie for other R&D projects. In doing so, it will ensure that even with the loss of the program, we don't lose our most innovative businesses.

I urge the adoption of this amendment.

I yield to the gentleman from Missouri (Mr. Graves) for any comments he wishes to make.

We are prepared to accept the amendment.

I urge adoption of the amendment, and I yield back the balance of my time.

Mr. Chairman, the legislation that we're debating today is designed to expand the pool of businesses that participate in the SBIR program. That is why this bill provides grants to economic development organizations so that they can educate rural entrepreneurs as well as businesses owned by women, minorities,

and veterans about SBIR. By expanding the set of businesses that compete for grants and contribute creative ideas, we can further spur innovation and encourage the development of new, better products.

The amendment offered by the gentleman from Washington strengthens this part of the bill. By utilizing organizations that have experience with the communities we are trying to reach, it will expand the reach of the SBIR and STTR program, making this bill more effective.

It only makes sense to have the Small Business Administration leverage the knowledge of groups that already work closely with these populations. These organizations are already familiar with the small businesses in their communities and know which entrepreneurs will make strong SBIR candidates.

With this amendment, we will be able to broaden the pool of talent that competes for SBIR grants. That means more ideas, better ideas, and an improved return on investment for the taxpayer.

I, therefore, urge the adoption of this amendment and yield to the cosponsor of the bill, the gentleman from Washington (Mr. Smith).

(Mr. SMITH of Washington asked and was given permission to revise and extend his remarks.)

Mr. Chairman, we are prepared to accept the amendment.

I yield back the balance of my time.

Mr. Chairman, I thank the gentleman from Minnesota for his good amendment.

We all know that one area where SBIR has been most successful is medical research. From heart stents to pacemakers, advances in the medical technology field bring important benefits to the lives of ordinary Americans every day.

In addition to improving our quality of life, the medical technology industry is an important driver in the American economy. In 2006, this industry employed more than 350,000 people and paid $21.5 billion in salaries. Clearly, this field, which is dominated by smaller firms, plays a vital role in providing jobs and fostering economic growth.

Many of these firms got their start thanks to SBIR funding. The kind of high-risk/high-reward research that medical technology companies engage in makes them strong candidates for SBIR grants, so already there is an important relationship between SBIR and advances in the medical technology field. Mr. Paulsen's amendment would codify this relationship by putting a direct reference to medical technology in the act.

While a seemingly small change, this amendment will formalize SBIR's support for medical technology research. In that way, the amendment will support future research and may very well lead to the development of the medicines of tomorrow.

I believe this is a good amendment, and I yield to the ranking member, Mr. Graves, for any comments that he may have.

Mr. Speaker, I reserve a point of order.

Mr. Speaker, I insist on my point of order.

Putting aside the gentleman's comments, let me just say that we spent almost 2 hours, 3 hours here debating the SBIR/STTR, and what we heard is people talking about the economic downturn and how can we grow this economy. This bill deals with title IX of the Small Business Act. As such, Mr. Speaker, under clause 7 of the House rule, the amendment is not in order and is not germane to the underlying bill.

Mr. Speaker, I move to table the appeal.

Mr. Speaker, I demand a recorded vote.

Mr. Speaker, I yield myself such time as I may consume.

I want to thank my colleague from Colorado for yielding time. However, I must rise in opposition to this closed rule for H.R. 2965, Enhancing Small Business Research and Innovation Act. While there may be many merits to the underlying bill, this would have been a perfect opportunity for the majority to have opened up this process and allow the House to work its will.

This is a relatively noncontroversial bill which might not even have needed to be considered under a rule except for the opportunity for some of our Democratic colleagues to get some amendments passed. We are in a very busy time with the appropriations process and the schedule very, very full this week, and had we done this, again, under an open rule, I think the process could have gone very, very quickly.

However, the majority has continued its process of shutting out not only the minority, but many of their colleagues by not allowing their amendments to be made in order. So we will oppose this rule on that basis.

With that, Mr. Speaker, I reserve the balance of my time.

I now yield 4 minutes to my colleague, the gentleman from Arizona (Mr. Flake).

I yield an additional 1 minute.

Mr. Speaker, I yield 1 minute to the gentleman from Arizona (Mr. Flake).

Mr. Speaker, I yield 2 minutes to the gentleman from Illinois (Mr. Manzullo).

I yield the gentleman from Illinois 1 additional minute.

Mr. Speaker, I yield the gentleman from Illinois 1 additional minute.

Mr. Speaker, it is my understanding that this program has resulted in many good things happening in our country. We are now going to be spending this year $260.5 million on this program; however, I think that we need to call attention to the many ways that the Democrats are harming small businesses in our country.

This is a small program, but what they are going to be doing, in terms of what we have understood from the Democrat health plan that is going to be introduced later this week, from press reports, is they are going to partially pay for it by imposing a surtax on individuals with incomes in excess of $250,000 a year. But because most small businesses do not pay corporate income taxes and, instead, pay taxes on small business income on their individual returns, small businesses are going to be particularly hard hit by this tax increase. While precise data is not currently available on the Democrat proposal, data is available on many small businesses that pay taxes at the top rate.

I want to talk a little bit about that. We have the results of a survey that the National Federation of Independent Business has done. It shows that out of all small businesses, 6.4 percent of those with one to nine employees, 21 percent of those with 10 to 19 employees, and 40 percent of those with 20 to 249 employees would be impacted by a tax increase on incomes above $250,000.

So while the Democrats are giving to a small group of small businesses in this country through this program, they are going to be hurting many, many more small businesses. And this, I think, in some ways is a sop to our small business community when what Republicans want to do is help all of our small businesses, and we can do that by keeping our taxes lower instead of raising them on them.

I would now like to yield 2 minutes to my colleague from Iowa (Mr. King).

I yield the gentleman 30 additional seconds.

Mr. Speaker, I find it interesting that my colleague from Colorado would be praising a budget that was passed earlier this year that has the seeds of the largest tax increase in the history of this country and will impact all small businesses adversely.

I now would like to yield 3 minutes to my colleague from Georgia (Mr. Gingrey).

Mr. Speaker, we are not talking about taxes being in this bill. Many, as I have said, support this legislation. However, we do know that this is a drop in the bucket compared to the jobs that the Democrats are killing in this country right now, and I'm going to talk a little more about that later. But just the bill that passed just before we went home for the Independence Day break, the cap-and-tax bill, we know is going to eliminate between 1 and 7 million jobs in this country if it is enacted. So many, many more jobs are being killed by this Congress than are being created by this small bill.

I would now like to yield 2 minutes to our colleague from New York (Mr. Lee)

Mr. Speaker, I would now like to yield 3 minutes to our distinguished colleague from Michigan (Mr. Ehlers).

Mr. Speaker, we have had, I think, a very good debate on this rule. We have explained why the rule should not be approved.

Very, very good amendments which were offered to this rule were not accepted. Amendments to the bill were not accepted, and we should be dealing with those amendments. We want to make sure that the money that is going to help small businesses in this country is being used as wisely as it can be. We know right now that the American people are hurting and continuing to lose jobs.

The impact of the policies of this administration and the Democratically controlled Congress have been devastating, not only to large but also to small businesses. The Obama administration and congressional Democrats

promised us earlier this year that their trillion-dollar stimulus would create jobs immediately and unemployment would not rise above 8 percent. In June alone, almost half a million jobs were lost, driving unemployment to 9.5 percent, it's highest level in almost 3 decades.

It's clear that the Democrats' trillion-dollar stimulus bill isn't working.

Every American has the right to ask where are the jobs that were promised by them. Every American has to ask on every piece of policy that we pass here, how is it going to impact jobs? How is it going to impact me as an American?

Small businesses particularly have a concern about this. We have been spending hours and hours and hours doing things like honoring sports teams and athletes for their achievements. We have honored people retiring from their jobs, universities on various anniversaries and other items that are not critical to the operations of our government.

We want to acknowledge the achievements of all of these people and all of these groups, but what we should be doing is spending time talking about what we need to be doing to bring back this economy.

But the Democrats constantly say they have the schedule, they have to adhere to it, and as a result of it, they have to limit the amendments that can be offered on the floor to these important bills.

Those are not very good excuses while the American people, I think, are hurting. They, again, have the right to ask where are the jobs that were promised, what is happening to this economy?

The American people also know we cannot tax and spend and bail our way back to a growing economy. The Democrats in this body are on the side of more government and more taxes. Small businesses, not government, are the engine of our economy.

House Republicans are on the side of the American people, and what we want to do is focus on small businesses to help put America back to work. We know that the health care bill that's going to come forward, we believe, later this week or next week, will have lots of tax increases in it that are going to finance their health, quote, reform proposal.

However, what it's going to do is have a negative impact on small businesses. As I mentioned earlier, the cap-and-tax bill, which passed here 10 days ago, will eliminate between 1 million and 7 million jobs in this country if it is enacted.

So while there is this small sop to small businesses and to the American people in the form of this bill, I am going to urge my colleagues to vote ``no'' on the rule for H.R. 2965, Enhancing Small Business Research and Innovation Act, because we can be doing better for the American people and particularly better for small businesses.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

I thank the gentleman. I want to correct the impression that my friend and colleague from Arizona left. I respect him for his consistency in pursuing certain topics, but I believe that on this particular topic he has completely missed the mark.

Federal research dollars in this program are allocated on a merit, peer-reviewed process. That applies to the 97.5 percent of the moneys that are allocated for research. The products, the fruits of that research are sometimes commercializable, and that's why there's a 2.5 percent set-aside for the SBIR program.

Now, that 2.5 percent, which is what we're talking about here today, that 2.5 percent is given out by each of the agencies that sponsor that research on a merit-based process that is not subject to congressional influence of any kind whatsoever. It is done by the agencies by peers who are professionals in the field.

And any impression that my friend and colleague from Arizona has left that there is congressional influence in earmarking is completely wrong. He should take his battles about earmarks to an appropriate field, and not this one, where both the 97.5 percent of the research dollars that are granted as a peer-review process is awarded on merit, and the 2.5 percent of those research dollars that are awarded under this SBIR program is also awarded by peers in the field based on merit.

This has nothing to do with any congressional earmarking process, and any allegation to the contrary just completely misses the mark.

I thank the gentleman.

I want to address the points raised by Mr. Manzullo, which I also believe to be erroneous. First, the history of this program has been that from 1982 until 2003, venture capital investment in SBIR companies was not restricted in any way whatsoever. The National Academy of Sciences studied this issue and said that during that period, there is absolutely no evidence that VC funding helped crowd out any small businesses. The legislation then and the legislation today limits the businesses that receive SBIR grants to those with 500 employees or less, the quintessential definition of what a small business is.

Now what happened in 2003 is that a single administrative law judge in Boston, Massachusetts, interpreted a domestic ownership provision in the law to say that it has to be owned by real American people as opposed to American VCs. That was permitted before. The 2003 ruling has been expanded, in effect, to bar majority VC ownership. That is wrong. It prevents the public sector from giving money under this program to very good technologies. It prevents companies from raising money from both the public sector and the private sector, and this argument is completely erroneous about big VCs. We are talking about small companies. We are talking about small companies getting SBIR grant funds, and those small companies may have board members from VCs, but they are independent of VCs.

Quite frankly, I do not know of a single VC that wants to spend the time or energy controlling an investment company. What they want to do is to get their money out with a big return. What the gentleman is concerned about is a scenario that just doesn't occur in the real world.

Paradoxically, what the gentleman is pressing is a position that actually penalizes the smaller companies because it is precisely the smaller company that has to give away more of its equity to VCs to raise the same amount of money. So if you are a three-employee company, you might have to give away 60 percent of your company to raise $1 million; whereas, if you have 30 employees or 300 employees, you might only give away 10 percent of your money to raise the same amount of money. Paradoxically, what the gentleman is asking for actually penalizes small startup companies.

I thank the gentleman.

Mr. Speaker, to address the points raised by the gentleman from Illinois, this is a program that permitted unlimited venture capital participation from 1982 until 2003. The National Academy of Sciences studied the program then and now. There is absolutely no evidence that VC investment crowds out any small business whatsoever. That was the finding of the National Academy of Sciences. They also found that by permitting venture capital majority participation companies to apply for SBIR, it improved the quality pool of the applicants for SBIR funds.

Now I think one needs to understand that there are two very different segments of this industry. One is the industries that Mr. Polis and I are more familiar with, in biotech and high tech where companies typically pick up one of these grants or maybe just a couple, and they rocket up or grow and become a public company to get some VC investment. But it's a hockey puck growth curve. It's the classic high- tech startup. There is another group of companies that basically is concentrated around the Defense Department; and they are, in effect, the research arm of the Defense Department. They are steady-state small businesses that are going to have a stream of SBIR and STTR grants, and this is how they fund themselves. Both are valid business models. This has been a very acrimonious battle between these two very different groups of folks who haven't taken enough time to understand each other.

Quite frankly, I came from the high-tech, high-growth model; but I've tried to come to understand this other defense-oriented, steady-state, many SBIR grants model.

What we have in the bill is a careful set of protections so that this is approved by many of the parties around the table, but evidently not all. We are going to permit majority venture capital ownership again to improve the quality of applicants so that we choose the proper technologies and the best technologies for both the public and the private sectors. There would be certain restrictions on VCs that are owned by large corporations, and no VC could control the board of any of these applicants.

The provisions in the bill are carefully crafted. They are emphatically in the interests of the smallest investees, that is, those small companies that have to give away more of their equity to get a certain amount of money from a venture capitalist. Those are the companies that have been disqualified under the ALJ ruling, under the judge's ruling, and the historic norm from 1983 to 2002 will be partially restored by this bill.

I thank the gentlelady for yielding. I rise in opposition to this rule. I submitted a very noncontroversial amendment to the Rules Committee that would have prevented congressional earmarking to any of the funds appropriated to the Federal agencies while carrying out these programs.

My amendment was germane. It would have been in order, had they simply ruled it in order. This same amendment has been added several times both by voice vote and by roll call vote to several other pieces of legislation. So there's no controversy here. But I have to wonder why they wouldn't allow this amendment. And let me just speculate for a minute.

Under this program, which continues to grow, according to CRS, the SBIR awarded $45 million for nearly 700 projects in 1983--the year it was established. By the time we reached fiscal year 2006, more than $1.8 billion was awarded to almost 6,000 projects.

Now these are projects that are awarded by the SBA based on merit, for the most part, I guess. That's the way the program is set up, as it should be if you're going to have a program like this. I can't pretend to be a fan of this program, but if you are, you allow the projects to be distributed--the money for projects, based on merit.

The problem is, as we have discovered here in Congress, one way to ingratiate yourselves to your constituents and to win reelection is to earmark those kind of funds for projects in your home district and to circumvent the process of merit that should go on with the Federal agencies. That's what we have done in program after program after program after program.

We were told, for example, when we had the Homeland Security Department established, and we started appropriating money to it, We will never earmark these funds. Don't worry, we're not going to earmark it. Well, guess what? We're already earmarking. The last bill that came to the floor, the Homeland Security Bill, had hundreds of earmarks in it.

For example, there's a program called the pre-disaster mitigation program. It's supposed to be for Homeland Security to award grants to help communities prepare for disasters.

Well, guess what? Already a quarter of those funds are lopped off the top, earmarked, mostly by appropriators and powerful committee chairs, to their districts. In fact, I think the last figures were 70 percent of the money that was earmarked was earmarked by fewer than 25 percent of this body. So it's a spoils system.

Now this, when you're awarding money to 6,000 projects, this is simply irresistible to Members of Congress who seek to earmark. Mark my words, if we don't put protections in here, these funds are going to be earmarked.

And so the failure to allow the amendment to stipulate that none of these funds should be earmarked should be taken as notice that we're going to start earmarking these funds. And that is unfortunate.

It's part of a pattern, though, that we've seen this year. We are actually

bringing appropriation bills to the floor under rules, under a structured or closed rule, where very few amendments are allowed to even be offered.

We will be considering the agriculture bill. There are hundreds and hundreds and hundreds of earmarks in that bill. We will have amendments to strike maybe a half dozen. That's not transparency and accountability. What good is transparency if you can't actually challenge a number of these earmarks?

The real purpose of all this narrowing down the number of amendments that can be offered, believe me, is that we will be appropriating for the Department of Defense later this month. There will be more than a thousand----

There will be well over a thousand, if history proves correct here, over a thousand earmarks in the Defense bill, most of which will be earmarks to private companies, most of which will be in proximity to campaign contributions that will be returned--the circular fundraising that has become a fixture over the past couple of years under Republicans and Democrats in this House.

The purpose of narrowing the amendments that can be offered is so we won't have to face those kind of questions on the House floor. Is this money being appropriated for this company? Is this company or their executives contributing back to the Member who secured the earmark?

People don't want those questions being asked on this floor. That's why you're seeing amendments that won't be allowed in order here. That's what this is about. And it's a shame. We should do better than that. We owe this institution better than that.

With that, I urge opposition to the rule.

Will the gentleman yield?

I thank the gentlelady for yielding. I thank the gentleman from Oregon for clarifying that. All my amendment would do is say that this program should continue to be based on merit rather than be subject to congressional earmarking.

I appreciate what the gentleman has said. Unfortunately, we have seen program after program after program that started off as a merit-based program all of a sudden be earmarked later. All this amendment would have done is what we have done in many other bills by voice vote and roll call, to simply stipulate that in future, or for the life of this authorization, those moneys that are meant for merit-based programs are not earmarked by Congress.

And so I thank the gentleman for clearing that up. I just wish we would have made this in order. The fact that we didn't worries me because this becomes irresistible to Republicans and Democrats alike to start earmarking these funds.