Overview
Title
To amend the Small Business Act to reauthorize and modify the Small Business Innovation Research and Small Business Technology Transfer Research programs, and for other purposes.
ELI5 AI
The bill H.R. 10407 wants to make some changes to help small businesses create new ideas and inventions by re-using two programs. It aims to make the programs better by making them more accessible to different people, preventing bad actions, and making sure the businesses get more chances to succeed.
Summary AI
The bill, H.R. 10407, proposes amendments to the Small Business Act aimed at reauthorizing and improving the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. It intends to extend these programs' authorizations, enhance participation from diverse and underrepresented groups, and improve commercialization opportunities. Additionally, it introduces pilot programs for faster award processes, strengthens oversight to prevent fraud, and includes provisions related to participation by entities owned by venture capital, hedge funds, or private equity. The bill also proposes infrastructure improvements, such as updating the programs' websites and making funds available for administrative costs until 2030.
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AnalysisAI
General Summary
The bill, titled the "SBIR/STTR Reauthorization Act of 2024," aims to amend the Small Business Act. It primarily seeks to reauthorize and modify the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. These programs are designed to enhance the role of small businesses in research and development funded by federal agencies. The bill proposes several changes, including extending these programs' authority, enhancing diversity initiatives, improving commercialization processes, and introducing new pilot programs. Furthermore, it emphasizes oversight and technical amendments, aiming for greater efficiency and inclusivity in government-sponsored research and innovation projects.
Summary of Significant Issues
One significant issue arises from Section 506, which addresses safeguards for small business concerns majority-owned by venture capital, hedge funds, or private equity firms. The definition of "majority-owned" status by foreign entities is potentially ambiguous, raising national security and enforcement concerns.
Another concern is found in Section 302, which lacks explicit guidelines for the denial of Phase III agreements by the Department of Defense, leading to potential arbitrariness. This could significantly impact small businesses seeking government contracts. Additionally, Section 406 allows eligible entities to use federal funds to meet matching requirements, a provision that risks financial mismanagement by enabling potential "double-dipping."
The bill also extends the reporting period for award timeliness in Section 504 from 3 to 11 years, yet it does not provide justifications for this extended timeline, possibly leading to concerns about transparency and accountability. In Section 203, changes regarding vendor selection lack clarity, potentially resulting in inconsistencies and favoritism.
Impact on the Public
The bill's reauthorization and modifications could broadly benefit the public by fostering innovation and enhancing the competitiveness of small businesses. By prioritizing diversity and inclusion, as well as improving community outreach, the bill aims to democratize access to federal research opportunities, especially for underrepresented groups. This democratization could lead to a greater diversity of ideas and solutions, ultimately benefiting society at large.
However, the lack of clear guidelines and potential issues like those noted in sections dealing with vendor selection and security controls could potentially lead to inefficiencies or misuse of resources, which would negatively affect taxpayers.
Impact on Specific Stakeholders
Small businesses stand to gain from the bill's focus on reauthorization and funding extensions for SBIR and STTR programs. The inclusion of fellowships and broader participation aims provides them with more resources and access to a larger talent pool. On the other hand, small businesses could face challenges due to potential ambiguities in funding and vendor selections, impacting how they compete for federal opportunities.
Federal agencies are tasked with implementing many of the bill's new requirements, which may stretch their administrative capabilities, especially in terms of oversight and meeting new reporting requirements. These changes could prompt agencies to allocate significant resources toward compliance, impacting efficiency.
Investors and larger firms may face limitations if they are perceived as foreign-controlled, introducing complexities in their participation within these innovation programs. This could impact their investment strategies and partnership dynamics with small firms seeking government contracts.
In summary, while the bill seeks to enhance support for small businesses and innovation, careful consideration and potential amendment of its ambiguous sections are essential to fully realize its intended benefits and avoid unintended negative consequences.
Financial Assessment
The bill H.R. 10407 discusses several financial aspects related to the reauthorization and modification of the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. The financial references in this bill are primarily focused on enhancing the support and expansion of these programs while also addressing concerns related to their administration and oversight. Below are the key financial references and their implications:
Financial Allocations and Spending
Section 203 authorizes recipients of Phase I and Phase II SBIR or STTR awards to use additional funds for specific commercialization and business support activities. For Phase I, recipients can use up to $6,500 per project, while Phase II allows up to $50,000 per project. This allocation aims to enhance the technical and business capabilities of small business concerns.
Section 401 proposes an increase in the administrative fund allocation from 3 percent to 3.3 percent and mandates the transfer of at least 10 percent of these funds from selected departments like Defense and Energy to the Small Business Administration. The extension of fund availability to 2030 without adaptability could risk inefficient use of resources if program goals do not align with shifting national needs.
Section 405 increases funding for Phase 0 proof of concept partnership programs, setting a limit of $1,500,000 per covered agency. This increase has implications for resource allocation efficiency, as the lack of clear criteria for assessing the effectiveness of these programs might result in inefficient use of resources, as indicated in the issues.
Relation to Identified Issues
The ambiguity in Section 406 regarding the use of federal funds other than those from SBIR or STTR programs to meet matching requirements raises concerns about potential financial mismanagement. Allowing entities to use different sources could lead to "double-dipping," where funding is used inappropriately or without accountability.
The changes in Section 203 regarding how agencies should select vendors could lead to inconsistencies and favoritism. The section discusses the authorization of funds for specific business support activities but lacks clarity on vendor selection processes, which might result in unequal treatment of vendors and the small businesses they serve.
The extension of the reporting period in Section 504 from 3 to 11 years for award timeliness reports introduces transparency issues. Prolonging the reporting interval without clear justification may affect oversight and accountability, diminishing stakeholders' confidence in the effective spending and impact of allocated funds.
Furthermore, the Section 506 amendments present financial implications about the eligibility of small business concerns that receive investment from venture capital entities. The potential restriction due to foreign ownership could impact the distribution and accessibility of funds, emphasizing the need for compliance with national security considerations.
Overall, while the bill includes several financially-focused provisions intended to support and expand SBIR and STTR programs, it also presents potential challenges and risks. These include issues of transparency, efficient resource allocation, and fair vendor treatment, all of which must be managed carefully to achieve the bill's intended goals without misusing public funds.
Issues
The amendments in Section 506 regarding safeguards for small business concerns majority-owned by venture capital operating companies, hedge funds, or private equity firms potentially present ambiguity in defining 'majority-owned' status by foreign entities and may complicate enforcement due to the broad definition of 'covered foreign entity.' This raises concerns about national security and compliance issues.
Section 302 lacks clear guidelines for the denial of Phase III agreements by the Department of Defense, which might lead to arbitrary or unaccountable decisions. This could significantly impact small businesses seeking government contracts.
Section 406 allows eligible entities to use federal funds, excluding those from SBIR or STTR programs, to meet matching requirements, which could lead to potential financial mismanagement or 'double-dipping'.
The undefined term 'sole source and other' awards in Section 602 could lead to misuse or favoritism in awarding contracts, raising legal and ethical concerns.
Section 502 extends the reporting on involvement by venture capital and other firms, but without clear justification or explanation of objectives, potentially leaving gaps in understanding how these entities affect program integrity and fraud controls.
Section 405 increases funding for the Phase 0 proof of concept partnership program without clear justification or criteria to assess effectiveness, which could result in inefficient use of resources.
The extension of the reporting period from 3 to 11 years in Section 504 for award timeliness reporting lacks explanation, possibly leading to concerns over transparency and accountability in government spending.
Section 403 introduces the requirement to reduce funding release times to 90 days, which could lead to rushed procedures, undermining the quality or effectiveness of the acquisition process, particularly in DoD awards.
The amendments in Section 401 extending funds availability to 2030 without clear adaptability to changing priorities may lead to wasteful spending if programs do not remain aligned with current needs.
Section 203 changes guidance on vendor selection for small businesses engaged in SBIR or STTR projects, which lacks clarity on how agencies should authorize vendors, possibly leading to concerns about inconsistency and favoritism.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The first section of the bill establishes that the official name of the legislation is the "SBIR/STTR Reauthorization Act of 2024."
2. Table of contents Read Opens in new tab
Summary AI
The text outlines the table of contents for a legislative act, detailing various sections and titles. It covers topics such as the continuation of specific programs, efforts to support diversity and commercialization, pilot initiatives to improve assistance and streamline processes, oversight measures, and technical changes, all within the context of the SBIR and STTR programs.
101. Sense of Congress Read Opens in new tab
Summary AI
The amended section of the Small Business Act expresses Congress's view that the SBIR and STTR programs are designed to boost the role of small businesses in research by promoting innovation, helping meet federal research needs, encouraging participation from disadvantaged and women-owned businesses, and increasing the commercialization of federal research innovations. Additionally, the STTR program aims to allocate funds for small businesses to collaborate with research institutions.
102. Extension of SBIR and STTR authority Read Opens in new tab
Summary AI
The section of the bill extends certain authorities related to small businesses. It removes a specific part of the Small Business Act that provided limits for the SBIR program, and it removes a time restriction for the STTR program that specified the end of fiscal year 2025.
103. Extension of FAST Program Read Opens in new tab
Summary AI
The amendment extends the deadline in the Small Business Act's FAST Program from September 30, 2005, to September 30, 2030.
201. SBIR and STTR fellowships Read Opens in new tab
Summary AI
The section allows federal agencies to give grants or awards to small businesses with SBIR or STTR Phase II awards, enabling these companies to offer fellowship and internship opportunities at various educational levels. It emphasizes enhanced outreach to women and disadvantaged individuals, permitting agencies to partner with experienced nonprofit organizations for support, and limits spending to a specific percentage of available funds.
202. Application assistance to broaden participation Read Opens in new tab
Summary AI
The section of the bill aims to broaden participation in federal programs by providing more application assistance to small businesses, focusing on those from states with low historical award levels. It also mandates new outreach efforts to increase participation from researchers at minority and Hispanic-serving institutions in SBIR and STTR programs.
203. Technical and business assistance improvements Read Opens in new tab
Summary AI
The amendment to Section 9(q) of the Small Business Act requires that recipients of awards from the SBIR or STTR programs be given the choice to utilize up to $6,500 for Phase I and $50,000 for Phase II in additional services like cybersecurity and market validation. It also mandates that Federal agencies must offer innovation training programs, such as I–Corps, to these award recipients, allowing them to use their award funds to cover training costs.
Money References
- I SBIR or STTR award to use not more than $6,500 per project, in addition to the amount of the award of the recipient as determined appropriate by the head of the Federal agency, for the services described in paragraph (1)— “(i) provided through a vendor selected under paragraph (2)(A); “(ii) provided, to the extent authorized by the Federal agency, through a vendor other than a vendor selected under paragraph (2)(A); or “(iii) provided through any combination of clauses (i) and (ii).
- “(B) PHASE II.—A Federal agency described in paragraph (1) shall authorize a recipient of a Phase II SBIR or STTR award to use not more than $50,000 per project, included as part of the award of the recipient or in addition to the amount of the award of the recipient as determined appropriate by the head of the Federal agency, for the services described in paragraph (1)— “(i) provided through a vendor selected under paragraph (2)(A); “(ii) provided through a vendor other than a vendor selected under paragraph (2)(A); or “(iii) provided through any combination of clauses (i) and (ii).”; and (B) in subparagraph (E), by inserting “Phase I or” before “Phase II”; and (3) by adding at the end the following new paragraph: “(5) I–CORPS PARTICIPATION.— “(A) IN GENERAL.—Each Federal agency that is required to conduct an SBIR or STTR program with an Innovation Corps program (established under section 601 of the American Innovation and Competitiveness Act (42 U.S.C. 1862s–8); commonly known as ‘I–Corps’) shall— “(i) provide an option for participation in an I–Corps teams course, I–Corps bootcamp, or another equivalent training program to recipients of an award under the SBIR or STTR program; and “(ii) authorize the recipients described in clause (i) to use amounts authorized under this subsection to participate in the I–Corps teams course, I–Corps bootcamp, or another equivalent training program.
204. Improvements to website relating to the SBIR program or STTR program Read Opens in new tab
Summary AI
The section modifies the Small Business Act to improve data reporting for the SBIR and STTR programs. It requires detailed information about research institutions subcontracted for these programs to be included in a database, such as the type of institution and whether it serves specific minority or underserved populations, with the updates to be made within one year of the Act's passage.
301. Phase III award education Read Opens in new tab
Summary AI
The amendment to the Small Business Act requires the establishment of training for federal contracting officers and acquisition workforce to improve understanding of Phase III acquisitions under the SBIR and STTR programs. This includes educating them on the programs' missions and goals, how to use Phase III agreements, and understanding Phase III data rights.
302. Report on DoD denials of Phase III Read Opens in new tab
Summary AI
The Department of Defense must notify the Administrator within 30 days if they reject a small business's Phase III agreement request, according to an amendment to the Small Business Act.
401. Extend and modify assistance for administrative, oversight, and contract processing costs Read Opens in new tab
Summary AI
This section of the bill extends and modifies financial assistance for certain administrative costs under the Small Business Act, pushing the deadline from 2025 to 2030 and slightly increasing the percentage rate. It also mandates certain federal departments to allocate a portion of their funds to support small business innovation programs, while aiming to boost participation from underserved populations in these programs.
402. Extend and expand the direct to Phase II authority Read Opens in new tab
Summary AI
The section changes the Small Business Act to extend the authority for agencies to go directly to Phase II of the Small Business Innovation Research (SBIR) program from 2025 to 2030. It also limits the value of awards an agency can grant under this authority to 10% of their SBIR funds per year, with the exception of the National Institutes of Health, which can go up to 15%. Additionally, it requires that agencies using this authority report the number and value of awards given.
403. Acceleration of DoD SBIR and STTR awards Read Opens in new tab
Summary AI
The section outlines changes to the process for awarding funds under the Department of Defense's SBIR and STTR programs. It requires creating simplified procedures to speed up the funding process so that money is released within 90 days of notifying a company about the award, with these changes to be implemented within a year.
404. Extend commercialization readiness program for civilian agencies Read Opens in new tab
Summary AI
The bill amends the Small Business Act to change the name of a program from "Pilot" to "Civilian agencies commercialization readiness," replace "pilot program" with "covered program," and extend the program's end date from fiscal year 2025 to fiscal year 2030.
405. Extend and expand Phase 0 proof of concept partnership program Read Opens in new tab
Summary AI
The bill amends the Small Business Act to expand the Phase 0 proof of concept partnership program by replacing "pilot program" with "program" and involving various government agencies. It increases the funding limit from $1 million to $1.5 million and broadens participation to include more researchers, institutions, and small businesses, especially those owned by disadvantaged groups and women.
Money References
- “(iii) Awards may support technical validations, market research, entrepreneurial training, clarifying intellectual property rights position and strategy, and investigating commercial or business opportunities.”; (5) in paragraph (4)— (A) in subparagraph (A)— (i) by striking “The Director” and inserting “The head of a covered agency”; and (ii) by striking “$1,000,000” and inserting “$1,500,000”; and (B) in subparagraph (B)— (i) in the matter preceding clause (i), by striking “In determining” and all that follows through “qualifying institutions—” and inserting the following: “In determining which qualifying institutions receive awards under the Phase 0 program, the head of a covered agency shall consider, in addition to any other criteria such head determines necessary, the extent to which the qualifying institution—”; (ii) by amending clause (i) to read as follows: “(i) have an established and proven record of working in the areas of technology transfer, technology or commercialization, entrepreneurial development, or another related innovation practice;”; (iii) in clause (iv), by inserting “academic,” after “industry,”; and (iv) by amending clause (v) to read as follows: “(v) have demonstrated a plan for encouraging participation of small business concerns owned and controlled by socially and economically disadvantaged individuals and small business concerns owned and controlled by women;”; (6) in paragraph (6)— (A) in the matter preceding subparagraph (A)— (i) by striking “The Director” and inserting “The head of each covered agency”; and (ii) by striking “pilot program” and inserting “Phase 0 program implemented by such head”; (B) in subparagraph (B), by striking “the pilot program” and inserting “such Phase 0 program”; (C) in subparagraph (C), by striking “the pilot program” and inserting “such Phase 0 program”; (D) in subparagraph (D), by striking “the pilot program” and inserting “such Phase 0 program”; and (E) in subparagraph (E)— (i) by striking “the program’s effectiveness” and inserting “the effectiveness of such Phase 0 program”; and (ii) by inserting after “supporting data” the following: “, including how the program contributes to the implementation of the policy directive required under subsection (j)(2)(F)”; and (7) by striking paragraph (7).
406. Extend commercialization assistance programs Read Opens in new tab
Summary AI
The section revises the Small Business Act to eliminate the term “Pilot” and replace “subsequent Phase II” with “third Phase II.” It extends the deadline to September 30, 2030, permits eligible entities to use certain federal agency funds to meet matching requirements, and allows applications for a third Phase II award any time after receiving an additional SBIR Phase II award.
501. Annual reports to Congress Read Opens in new tab
Summary AI
The text describes amendments to the Small Business Act that require reports on the SBIR and STTR programs to be sent to Congress, include a comma after "Administration," and be published on the agency's website as soon as possible. Furthermore, it mandates that another report be shared with Congress and the agency involved.
502. Comptroller General reports on fraud controls Read Opens in new tab
Summary AI
The section involves amendments to the National Defense Authorization Act for Fiscal Year 2012. It extends the deadlines for Comptroller General reports on venture capital, hedge fund, and private equity firm involvement and on programs addressing fraud, waste, and abuse through December 31, 2027.
503. Comptroller General report on diversification and commercialization Read Opens in new tab
Summary AI
The section requires the Comptroller General of the United States to submit a report within three years on the SBIR and STTR programs, focusing on the diversity of participants and how well these programs help in turning ideas into marketable products. The report should assess factors like participant demographics, the inclusiveness efforts by agencies, and how closely the programs align with agency research priorities. The section also defines key terms like "new entrant," "underrepresented groups," and others related to these programs.
504. Extend the report on award timeliness Read Opens in new tab
Summary AI
The section amends the Small Business Act to require an annual report on how long it takes federal agencies to make final decisions on proposals in the SBIR or STTR programs, extending the reporting period from 3 years to 11 years and including details on the average and median decision times.
505. Pilot program to accelerate National Institutes of Health evaluation process Read Opens in new tab
Summary AI
The section establishes a pilot program by the Director of the National Institutes of Health (NIH) to speed up the award process for small business grants under the SBIR and STTR programs by simplifying procedures and shortening award timelines as much as possible. This program will also involve using specific peer review procedures for evaluating submissions, and it is set to end in 2030, with an evaluation report required three years after enactment.
506. Codifying safeguards for small business concerns majority-owned by venture capital operating companies, hedge funds, or private equity firms Read Opens in new tab
Summary AI
The section amends the Small Business Act to prevent small businesses majority-owned by venture capital, hedge funds, or private equity firms from receiving Small Business Innovation Research (SBIR) awards if they are owned or controlled by certain foreign entities. It defines these foreign entities as those involved in activities harmful to U.S. national security or foreign policy, including entities linked to terrorism, espionage, and other threats as determined by various U.S. authorities.
601. Inclusion of SBICs in the SBIR and STTR programs Read Opens in new tab
Summary AI
The section amends the Small Business Act to include SBICs (Small Business Investment Companies) alongside private equity firms in the SBIR and STTR programs, clarifying the definition of SBIC in the process.
602. Phase III and sole-source awards Read Opens in new tab
Summary AI
Section 602 of the bill amends the Small Business Act by changing the title of Section 9(r) to include "Sole Source and Other" and updates the title of paragraph (4) to include the same language. This emphasizes the role of sole-source awards in the justification process.