THE ROLE OF THE SBIR AND STTR PROGRAMS IN …

1 GOVERNMENT PRINTING OFFICEWASHINGTON : For sale by the Superintendent of Documents, Government Printing OfficeInternet: Phone: toll free (866) 512 1800; DC area (202) 512 1800 Fax: (202) 512 2104 Mail: Stop IDCC, Washington, DC 20402 000148 735PS2009 THE ROLE OF THE SBIR AND STTRPROGRAMS IN stimulating INNOVATIONAT small HIGH-TECH BUSINESSESHEARINGBEFORE THESUBCOMMITTEE ON TECHNOLOGY AND INNOVATIONCOMMITTEE ON SCIENCE ANDTECHNOLOGYHOUSE OF REPRESENTATIVESONE HUNDRED ELEVENTH CONGRESSFIRST SESSIONAPRIL 23, 2009 Serial No. 111 20 Printed for the use of the Committee on Science and Technology(Available via the World Wide Web: 11-MAY-2000 16:50 Jun 20, 2009 Jkt 048735 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 C:\DWORK\T&I09\042309\48735 SCIENCE1 PsN: SCIENCE1(II)COMMITTEE ON SCIENCE AND TECHNOLOGYHON.)

2 BART GORDON, Tennessee, ChairJERRY F. COSTELLO, IllinoisEDDIE BERNICE JOHNSON, TexasLYNN C. WOOLSEY, CaliforniaDAVID WU, OregonBRIAN BAIRD, WashingtonBRAD MILLER, North CarolinaDANIEL LIPINSKI, IllinoisGABRIELLE GIFFORDS, ArizonaDONNA F. EDWARDS, MarylandMARCIA L. FUDGE, OhioBEN R. LUJA N, New MexicoPAUL D. TONKO, New YorkPARKER GRIFFITH, AlabamaSTEVEN R. ROTHMAN, New JerseyJIM MATHESON, UtahLINCOLN DAVIS, TennesseeBEN CHANDLER, KentuckyRUSS CARNAHAN, MissouriBARON P. HILL, IndianaHARRY E. MITCHELL, ArizonaCHARLES A. WILSON, OhioKATHLEEN DAHLKEMPER, PennsylvaniaALAN GRAYSON, FloridaSUZANNE M. KOSMAS, FloridaGARY C. PETERS, MichiganVACANCYRALPH M. HALL, TexasF. JAMES SENSENBRENNER JR.,WisconsinLAMAR S.

3 SMITH, TexasDANA ROHRABACHER, CaliforniaROSCOE G. BARTLETT, MarylandVERNON J. EHLERS, MichiganFRANK D. LUCAS, OklahomaJUDY BIGGERT, IllinoisW. TODD AKIN, MissouriRANDY NEUGEBAUER, TexasBOB INGLIS, South CarolinaMICHAEL T. MCCAUL, TexasMARIO DIAZ-BALART, FloridaBRIAN P. BILBRAY, CaliforniaADRIAN SMITH, NebraskaPAUL C. BROUN, GeorgiaPETE OLSON, TexasSUBCOMMITTEE ONTECHNOLOGY ANDINNOVATIONHON. DAVID WU, Oregon, ChairDONNA F. EDWARDS, MarylandBEN R. LUJA N, New MexicoPAUL D. TONKO, New YorkDANIEL LIPINSKI, IllinoisHARRY E. MITCHELL, ArizonaGARY C. PETERS, MichiganBART GORDON, TennesseeADRIAN SMITH, NebraskaJUDY BIGGERT, IllinoisW. TODD AKIN, MissouriPAUL C. BROUN, GeorgiaRALPH M. HALL, TexasMIKE QUEAR Subcommittee Staff DirectorMEGHAN HOUSEWRIGHT Democratic Professional Staff MemberTRAVIS HITE Democratic Professional Staff MemberHOLLY LOGUE PRUTZ Democratic Professional Staff MemberDAN BYERS Republican Professional Staff MemberVICTORIA JOHNSTON Research AssistantVerDate 11-MAY-2000 16:50 Jun 20, 2009 Jkt 048735 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 C:\DWORK\T&I09\042309\48735 SCIENCE1 PsN: SCIENCE1(III)C O N T E N T SApril 23, 2009 PageWitness List.

4 2 Hearing Charter ..3 Opening StatementsStatement by Representative David Wu, Chair, Subcommittee on Technologyand Innovation, Committee on Science and Technology, House of Rep-resentatives ..8 Written Statement ..9 Statement by Representative Judy Biggert, Acting Ranking Minority Member,Committee on Science and Technology, House of Representatives ..9 Written Statement ..11 Prepared Statement by Representative Harry E. Mitchell, Member, Sub-committee on Technology and Innovation, Committee on Science and Tech-nology, House of Representatives ..12 Witnesses:Dr. Robert M. Berdahl, President, Association of American UniversitiesOral Statement ..12 Written Statement ..14 Biography ..17Mr. James C. Greenwood, President and CEO, Biotechnology Industry Orga-nization (BIO)Oral Statement.

5 18 Written Statement ..20 Biography ..23Dr. Sally J. Rockey, Acting NIH Deputy Director, Extramural Research, Na-tional Institutes of Health, Department of Health and Human ServicesOral Statement ..23 Written Statement ..26 Biography ..28Mr. Jere N. Glover, Attorney and Executive Director, small business Tech-nology Council, Washington, DCOral Statement ..29 Written Statement ..31 Biography ..46 Discussion ..81 Appendix: Answers to Post-Hearing QuestionsDr. Robert M. Berdahl, President, Association of American Universities ..112Mr. James C. Greenwood, President and CEO, Biotechnology Industry Orga-nization (BIO) ..115Dr. Sally J. Rockey, Acting NIH Deputy Director, Extramural Research, Na-tional Institutes of Health, Department of Health and Human Serv-ices.

6 118Mr. Jere N. Glover, Attorney and Executive Director, small business Tech-nology Council, Washington, DC ..123 VerDate 11-MAY-2000 16:50 Jun 20, 2009 Jkt 048735 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 C:\DWORK\T&I09\042309\48735 SCIENCE1 PsN: SCIENCE1 VerDate 11-MAY-2000 16:50 Jun 20, 2009 Jkt 048735 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 C:\DWORK\T&I09\042309\48735 SCIENCE1 PsN: SCIENCE1(1)THE ROLE OF THE SBIR AND STTR PRO-GRAMS IN stimulating INNOVATION ATSMALL HIGH-TECH BUSINESSESTHURSDAY, APRIL 23, 2009 HOUSE OFREPRESENTATIVES,SUBCOMMITTEE ONTECHNOLOGY ANDINNOVATION,COMMITTEE ONSCIENCE ANDTECHNOLOGY,Washington, Subcommittee met, pursuant to call, at 2:35 , in Room2318 of the Rayburn House Office Building, Hon.

7 David Wu [Chairof the Subcommittee] 11-MAY-2000 16:50 Jun 20, 2009 Jkt 048735 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 C:\DWORK\T&I09\042309\48735 SCIENCE1 PsN: SCIENCE12 VerDate 11-MAY-2000 16:50 Jun 20, 2009 Jkt 048735 PO 00000 Frm 00006 Fmt 6633 Sfmt 6602 C:\DWORK\T&I09\042309\48735 SCIENCE1 PsN: SCIENCE13 HEARING CHARTERSUBCOMMITTEE ON TECHNOLOGY AND INNOVATIONCOMMITTEE ON SCIENCE AND HOUSE OF REPRESENTATIVESThe Role of the SBIR and STTRP rograms in stimulating Innovationat small High-Tech BusinessesTHURSDAY, APRIL 23, 20091:00 3:00 RAYBURN HOUSE OFFICE BUILDINGI. PurposeOn Thursday 24 April, the Subcommittee on Technology and Innovation of theCommittee on Science and Technology will hold a hearing to examine the role ofthe small business Innovation Research (SBIR) and the small business TechnologyTransfer (STTR) PROGRAMS in supporting innovation at small high-tech firms andhow, in turn, this promotes the economic welfare of the WitnessesDr.

8 Robert Berdahl is the President of the Association of American James Greenwood is the President and CEO of Biotechnology Industry Orga-nization (BIO).Dr. Sally Rockey is the Acting NIH Deputy Director for Extramural Research atthe National Institutes of Health (NIH).Mr. Jere Glover is the Attorney and Executive Director at the small BusinessTechnology Hearing Issues How could the SBIR and STTR effectiveness be improved in promoting inno-vation in today s global R&D enterprise? Are the current SBIR ( percent) and STTR ( percent) set asides appro-priate? How effective are the SBIR and STTR PROGRAMS at stimulating innovation atsmall high-tech firms? What is the role and importance of small high-tech firms to the US innova-tion cycle and to foster economic growth ?

9 Should small high-tech businesses with venture capital investment be allowedto participate in the SBIR and STTR PROGRAMS ?IV. BackgroundSBIRC ongress has demonstrated an ongoing interest in the small business sector. Ad-dressing issues related to economic growth and competitiveness, special consider-ation has been given to small , high tech firms for several reasons, including the factthat data indicates such companies tend to be highly innovative, play a significantrole in technological advancement, and contribute to a high standard of living in theUnited States. Such was the rationale behind legislation creating the SBIR pro-gram, reflecting an effort to increase that portion of the federal research and devel-opment (R&D) budget provided to small enterprises for work associated with themission responsibilities of government departments and agencies.

10 Believing thatsmall companies were under-represented in government R&D activities, 97 219established agency SBIR PROGRAMS to guarantee this sector a portion of the govern-ment s research and development budget to compensate for what was viewed as afederal contracting preference for large 11-MAY-2000 16:50 Jun 20, 2009 Jkt 048735 PO 00000 Frm 00007 Fmt 6633 Sfmt 6621 C:\DWORK\T&I09\042309\48735 SCIENCE1 PsN: SCIENCE141 The House passed 5819 altered the previous eligibility requirements to permit majorityventure capital ownership of small firms in the SBIR and STTR following is taken from the Summary of Activities of the Committee on Science and Tech-nology House of Representatives for the One Hundred and Tenth Congress, (c).