Hearing of the Senate Committee on Small Business and Entrepreneurship on
the Markup for S.3362, the SBIR/STTR Reauthorization Act of 2008
Kerry Opening Statement
Good morning. We're here today to mark up S. 3362, the SBIR/STTR Reauthorization Act of 2008. I know that we all have places to get to, so we will try our best to make this markup as quick and painless as possible. I want to thank Senator Lieberman for pushing his markup back a few minutes to accommodate us, and, since I know that several members will need to leave shortly to go to that markup, we will move to report the bill out of Committee as soon as a quorum is present.
Before I talk about the provisions in the bill, I want to thank Senator Snowe for giving us a good foundation to work with. The bill she introduced and passed out of Committee in 2006 had many important provisions, bold provisions, such as a doubling of the SBIR and STTR programs, making the SBIR program permanent, and strengthening the intellectual property protections of SBIR firms, that I agree with and that had a lot of support in the small business community. Unfortunately, bold ideas are often targets for lightening, and in order to get this program reauthorized, the bill we introduced yesterday changed some of those provisions. I thank Senator Snowe for trying to get the programs reauthorized well before the expiration date and appreciate all she did to help us get another good bill to strengthen the program.
Part of getting a bill involved finding a compromise on the extent to which firms majority owned and controlled by multiple firms could participate in the SBIR program. Like my colleagues, I support and understand the necessary role of venture capital, and also support the biotechnology industry.
I thank my colleague Senator Bond for working over these many months to reach a compromise. Neither of us really like it, but no one took advantage of anyone, and everyone is still trying to figure out who won. I am told that is the sign of a good compromise. And it took a lot of help from our colleagues -- Senators Snowe, Coleman, Lieberman, Cantwell, Cardin and Pryor. And it took a lot of help from the SBA and SBIR agencies, and the business community. I thank you all. And while I don't ask anyone to love the VC compromise, or even the bill, I do hope that you will recognize that everyone got some of what mattered to them, and I hope that everyone will get behind this bill so that we can get it out of the Senate.
The legislation in front of us reauthorizes the Small Business Innovation Research and Small Business Technology Transfer programs for 14 years each and makes several improvements to the programs that will allow them to work better for small business, while continuing to make an important contribution to our country's innovation economy.
When the SBIR program was originally conceived in the late 1970s and early 80s, it was in response to serious concerns that the United States was falling behind its competitors in the global economy because of a failure to innovate. At that time, as remains the case today, the lion's share of our federal research and development budget was going to large businesses and to universities that, while doing important work, simply were not doing the type of high-risk, high-reward research that drives innovation and keeps us on the technological cutting edge. It was found that small businesses were fastest and most effective not only at generating new technologies but at doing so in cost-effective ways; however, they were receiving a disproportionately low share of federal R&D dollars, as also remains the case today. The SBIR program, therefore, was designed in 1982 to harness the innovative capacity of America's small businesses to meet the needs of our federal agencies and to help grow small, high-tech firms that, in turn, grow local economies all across the nation. The STTR program was originally created as a pilot program in 1992 to stimulate partnerships between small businesses and non-profit research institutions, such as universities.
Today, our country once again stands at a turning point, and competition from all across the globe, from Europe to Far East Asia, makes it more important than ever that we continue to innovate and to push the boundaries in sectors across the whole range of the spectrum, from defense technologies to energy efficiency to biotechnology. This bill ensures that small businesses can be confident that the SBIR and STTR programs will be there for them years down the line and that these highly successful programs can continue to help our federal agencies meet their needs and help maintain our role as a world leader in innovations. In order to provide more small businesses with access to the SBIR and STTR programs, the bill increases the allocation for the SBIR program and doubles the allocation for the STTR program. This will allow for more technologies to be developed through these programs, technologies such as a machine that uses lasers and computer cameras to sort and inspect bullets at a much finer level than the human eye can manage, developed through an SBIR grant by a small business in Michigan, a therapeutic drug to treat chronic inflammatory disease, developed by a Montana SBIR recipient, and a nerve gas protection system, developed by an SBIR company in Massachusetts. This is not to mention the tangible benefit that these additional dollars for the SBIR and STTR programs will have in the way of business growth, job creation, and economic development, since, according to the National Academy of the Sciences, more than one in ten SBIR award recipients start their company simply because of their having received an award.
To keep these innovation programs strong, the bill:
* Reauthorizes the programs for 14 years
* Increases the SBIR program allocation by one percent, from 2.5 to 3.5 percent, at most agencies, spread out over ten years
* Increases the STTR program allocation from.3 percent to .6 percent spread out over six years
* Makes firms majority owned and controlled by multiple venture capital firms eligible for up to 18 percent of the SBIR funds at NIH and up to 8 percent of the funds at the other agencies
* Increases the award guidelines for SBIR and STTR awards from $100,000 to $150,000 for Phase I and from $750,000 to $1 million for Phase II. Reauthorizes and enhances the Federal and State Technology Partnership program, or FAST program, that was created by Senator Bond in 2000, and the Rural Outreach Program.
* Strengthens the Office of Technology at the SBA so that it has the authority and resources to carry out its duty to oversee the SBIR and STTR programs across the government.
* Streamlines and improves data collection and reporting requirements for the SBIR and STTR programs
* Helps SBIR and STTR companies move their technologies across the "valley of death" between the lab and the marketplace and into products and technologies for the agencies.
Our Committee has a long history of working together in a bipartisan way to pass legislation, and I am pleased to have worked closely with my Ranking Member, Senator Snowe, on this bill. I am also pleased that we have been able to incorporate provisions to address the priorities of a number of other Senators on the Committee, including
* Language from Senator Lieberman to address the National Academies' concerns about the lack of data and evaluation at NIH and to encourage innovation at NIH to accelerate the development of treatments and cures,
* Language from Senator Landrieu regarding the FAST program to increase the participation of rural small businesses by making the matching requirement from rural states more affordable,
* A provision from Senator Coleman that creates a pilot program to encourage innovative small businesses to provide opportunities to college students studying science, technology, engineering, and math, and,
* A provision from Senator Cardin to clarify that small businesses with Cooperative Research and Development Agreement (CRADA) with federal labs can still participate in the SBIR program.
With that, I want to thank all those involved for their hard work on this legislation. It is my hope that we can move this bill expeditiously through the Committee and then on the floor. I turn now to Senator Snowe for any comments she ma