A Review of the Sbir–sttr Program (Senate Small Business Committee hearing, September 22, 2021)
Summary
The printed transcript of a hearing titled A Review of the SBIR–STTR Program, conducted September 22, 2021 before the Senate Committee on Small Business and Entrepreneurship, 117th Congress (S. Hrg. 117–212). The committee met in Room 301 of the Russell Senate Office Building with Chairman Ben Cardin presiding, and opening statements are by Benjamin L. Cardin and Ranking Member Rand Paul. The witnesses are Jere W. Glover, Executive Director of the Small Business Technology Council, and Robert Kavetsky of the Energetics Technology Center, Indian Head, MD. The transcript includes their testimony, prepared statements and responses to questions from Senators Coons, Rosen, Risch, Inhofe and Young, and a statement by Sabrina Howell and Josh Lerner, The SBIR Program at 44, dated September 27, 2021.
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“A Review of the Sbir–sttr Program (Senate Small Business Committee hearing, September 22, 2021).”
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S. HRG. 117–212
A REVIEW OF THE SBIR–STTR PROGRAM
HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP
OF THE
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
SEPTEMBER 22, 2021
Printed for the Committee on Small Business and Entrepreneurship
(
Available via the World Wide Web: http://www.govinfo.gov
U.S. GOVERNMENT PUBLISHING OFFICE
47–001 PDF WASHINGTON : 2022
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COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
ONE HUNDRED SEVENTEENTH CONGRESS
BENJAMIN L. CARDIN, Maryland, Chairman
RAND PAUL, Kentucky, Ranking Member
MARIA CANTWELL, Washington MARCO RUBIO, Florida
JEANNE SHAHEEN, New Hampshire JAMES E. RISCH, Idaho
EDWARD J. MARKEY, Massachusetts TIM SCOTT, South Carolina
CORY A. BOOKER, New Jersey JONI ERNST, Iowa
CHRISTOPHER A. COONS, Delaware JAMES M. INHOFE, Oklahoma
MAZIE HIRONO, Hawaii TODD YOUNG, Indiana
TAMMY DUCKWORTH, Illinois JOHN KENNEDY, Louisiana
JACKY ROSEN, Nevada JOSH HAWLEY, Missouri
JOHN HICKENLOOPER, Colorado ROGER MARSHALL, Kansas
SEAN MOORE, Democratic Staff Director
WILLIAM HENDERSON, Republican Staff Director
(II)
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C O N T E N T S
OPENING STATEMENTS
Page
Cardin, Hon. Benjamin L., Chairman, a U.S. Senator from Maryland .............. 1
Paul, Hon. Rand, Ranking Member, a U.S. Senator from Kentucky .................. 3
WITNESSES
Glover, Mr. Jere W., Executive Director, Small Business Technology Council,
Annapolis, MD ...................................................................................................... 5
Kavetsky, Mr. Robert, Chief Executive Officer and President, Energetics
Technology Center, Indian Head, MD ................................................................ 32
ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED
Cardin, Hon. Benjamin L.
Opening statement ........................................................................................... 1
Glover, Mr. Jere W.
Testimony .......................................................................................................... 5
Prepared statement .......................................................................................... 7
Responses to questions submitted by Senators Coons, Rosen, Risch,
Inhofe, and Young ......................................................................................... 60
Howell, Sabrina and Lerner, Josh, The SBIR Program at 44
Statement dated September 27, 2021 ............................................................. 52
Kavetsky, Mr. Robert
Testimony .......................................................................................................... 32
Prepared statement .......................................................................................... 34
Responses to questions submitted by Senators Coons, Rosen, Risch, and
Inhofe ............................................................................................................. 79
Paul, Hon. Rand
Opening statement ........................................................................................... 3
(III)
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A REVIEW OF THE SBIR–STTR PROGRAM
WEDNESDAY, SEPTEMBER 22, 2021
UNITED STATES SENATE,
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP,
Washington, DC.
The Committee met, pursuant to notice, at 2:15 p.m. in Room
301, Russell Senate Office Building, Hon. Ben Cardin, Chairman of
the Committee, presiding.
Present: Senators Cardin, Shaheen, Markey, Coons, Hirono,
Rosen, Hickenlooper, Paul, Young, and Hawley.
OPENING STATEMENT OF HON. BENJAMIN L. CARDIN,
CHAIRMAN, A U.S. SENATOR FROM MARYLAND
Chairman CARDIN. The Senate Small Business and Entrepre-
neurship Committee will come to order.
Today we are holding a hearing on the review of the SBIR-STTR
program. I want to thank Senator Paul and our witnesses for
agreeing to start this hearing 15 minutes earlier than the pre-
viously advertised starting time, because of the adjustment of a
Senate schedule and voting. It gives us a little bit more leeway. So
I just want to thank everyone for their cooperation. I know Senator
Paul will be joining us, and he encouraged us to get started.
So thank you all for joining us today for this important hearing,
examining two of the Federal Government’s most important inno-
vation programs, the Small Business Innovation Research Pro-
gram, also known as the SBIR, and the Small Business Technology
Transfer Program, or the STTR for short.
The SBIR and STTR represent the best of government and in-
dustry’s partnerships. They harness the creativity and ingenuity of
America’s small businesses to solve the most pressing public health
and national security challenges of our time. They also support the
growth of small, high-tech companies that create high-paying, local
jobs and keep the American economy on the cutting edge of the
technology industry.
Congress created the SBIR in 1982, to increase the participation
of small businesses and federally funded research and development
opportunities. Under the program, Federal agencies that budget at
least $100 million annually for outside research must allocate a
portion, 3.2 percent since fiscal year 2017, to support research and
development in small businesses.
There are currently 11 Federal agencies and departments partici-
pating in the program, including the Departments of Defense, En-
ergy, Education, and Health and Human Services.
(1)
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The program awards funds in three phases. Phase I, awards are
up to $225,000 and may be used to conduct a feasibility study to
determine if the idea’s scientific and commercial promise. Phase II
awards are worth up to $1.5 million, and may be used to conduct
further research and development on the feasibility of turning an
idea into a commercial product. And Phase III does not award
funds but denotes that an idea is ready to move from the labora-
tory to enter the marketplace. During the commercialization phase,
small businesses are expected to raise funds from private sector or
non-SBIR Federal funding.
Congress created the STTR program in 1992. While the program
is similar to the SBIR in structure, utilizing a similar three-phase
progression, STTR awards are made to small businesses engaging
in collaborative research and development with Federal labs as
well as nonprofit, educational, and scientific institutions.
The program requires Federal agencies and departments that
spend at least $1 billion on outside research to allocate at least
0.45 percent of those funds to STTR opportunities.
The American people may not be familiar with SBIR and STTR,
but they definitely recognize the products and companies that were
created through the program. The Sonicare electric toothbrush, the
iRobot, Lasik eye surgery, and Qualcomm, the company that makes
the technology that powers our smartphones, were all made pos-
sible through SBIR and STTR grants.
The programs also help prepare our Nation’s public health infra-
structure for the COVID–19 pandemic. In 2013, the National Insti-
tutes of Health, which is headquartered in my home State of Mary-
land, awarded $2.53 million SBIR grant to the Seattle-based
Adaptive Biotechnologies to support the company’s development of
adaptive immune system testing technology. On March 5th of this
year, the Food and Drug Administration granted the company an
emergency use for its T-Detect COVID test, which is able to detect
a recent or prior COVID–19 infection. The development of this test
was a direct result of the research and development the company
was able to conduct through an SBIR.
While the test cannot be used to detect a current infection, the
FDA is confident that the test will be especially useful for people
who may have exhibited symptoms previously or believe they have
been exposed but have not tested positive for COVID–19. The test
will deepen our knowledge of the virus and help keep our commu-
nities safe.
Simply put, SBIR and STTR have been invaluable to our na-
tional economy, and they continue to help us keep safe.
I have had many discussions with State government officials and
leading scientists in Maryland who have told me that one of the
most sensible steps we could take to improve the SBIR and STTR
programs would be to make them permanent. Right now, SBIR and
STTR are only authorized through September 30 of next year. The
high-risk research that grant awardees are engaged in requires
more certainty.
Instead of leading the researchers who will create the technology
that will power the economy of tomorrow wondering about funding
for SBIR or STTR, we in Congress have an opportunity and an ob-
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ligation to make these programs permanent, which both the Pen-
tagon and NASA have urged us to do.
Acknowledging the importance of these programs is not meant to
imply that they are perfect, by any means. Today we must also dis-
cuss how to best improve the speed of grant reviews, how to assist
and target potential applicants in underserved communities, the
disbursement of award funds, and whether to increase the percent-
age of funds that agencies and departments are required to set
aside for these grants.
I look forward to hearing more from our witnesses about how we
can improve the SBIR and STTR programs to ensure that Amer-
ican technology and research industries remain the standard-bear-
er for the global economy.
As I pointed out earlier, these programs have enjoyed strong bi-
partisan support in the United States Senate, and for good reason.
They have really resulted in a very fine investment for America’s
economy and America’s future.
With that let me recognize the distinguished Ranking Member,
Senator Paul.
OPENING STATEMENT OF HON. RAND PAUL,
A U.S. SENATOR FROM KENTUCKY
Senator PAUL. Thank you, Mr. Chairman.
When the Federal Government spends other people’s money it
has little incentive to spend it wisely. Unsurprisingly, when tax-
payers are compelled to support research proposals without any ex-
pectation of a return on investment, the results often have been
bad science and wasted dollars.
The Small Business Innovation Research and Small Business
Technology Transfer programs are no different. We should look at
the history of SBIR and ask ourselves whether the taxpayers
should be compelled to continue funding the folly of this program.
For instance, the National Science Foundation spent nearly $1 mil-
lion to genetically engineer an alternative hops-flavored beer. Now
why would the government, which is trillions of dollars in debt,
offer this almost million-dollar donation when the $100 billion beer
industry would likely finance such a project?
The SBIR not only funds projects that would be taken on by pri-
vate actors but it also is duplicative and funds projects that no one
in their right mind would spend their money on. SBIR funded stud-
ies for a phone app that measures your gratitude. Yes, that is
right, a phone app that measures your gratitude, whatever that
means. The SBIR also funded an app to promote virtual clothing
fittings. Really? I wonder what cretin thought that was a legiti-
mate function of government.
SBIR even provided seed funding to test a new show that teaches
children to eat their fruits and vegetables first. Well, one would
think the proposal would call to mind something we already do
through Sesame Street, the pro-veggie kids’ show that the Federal
Government already spends millions of dollars annually on. Maybe
we should not be surprised that the bureaucrats at the SBIR pro-
gram offices have never heard of Sesame Street. If they had they
might be able to count all the way up to $28 trillion, which is our
national debt at the moment.
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A country approaching $30 trillion in debt cannot afford such
frivolous spending. Now is the time to put a stop to such waste. A
century of economic history proves, beyond a doubt, that the free
enterprise system is best suited to provide capital to help small
businesses grow and succeed. When private investors have skin in
the game they will prudently invest their own dollars rather than
roll the dice with taxpayer subsidies.
Milton Friedman got this right. He explained succinctly when he
said, ‘‘Nobody spends somebody else’s money as wisely as their
own.’’ When those investments pay off, everyone in the market
wins. But only a select few win and have figured out how the SBIR
program worked for them, and them alone.
Some companies have been so successful in creating an entire
business model and revenue stream that solely for these grants
they are known as SBIR mills. An analysis by the State Science
and Technology Institute showed that from 2009 to 2019, 21 per-
cent of the awards were made to the mills, which the institute de-
fined as firms who received more than 40 Phase I awards. Forty
grants to just one company may raise a few eyebrows as unneces-
sary and excessive and somebody abusing the system. According to
SBA’s public data, 196 businesses received more than 100 awards
each. Some businesses received more than 900 awards. It sounds
like somebody has figured out the system here.
Various studies show minimal or no program benefits for firms
that receive multiple awards. They typically do not commercialize
their products or move on from the program. Instead, they crowd
out new small businesses from participating.
The question is, why do these firms receive so many awards
without any limitations from Congress? The SBIR program is typ-
ical of government programs that pick winners and losers. The
SBIR mills, the winners, will always ask to continue the flow of
free money. It is somebody else’s money anyway. It is the small
businesses that are crowded out of this program that are not heard
from, and the taxpayers, the people who pay all the costs while oth-
ers get the benefits. These people are the losers in this game.
We need to question whether this program should continue to
exist. We need to hold agencies accountable, and at the very least,
we need to stop the abuse of the SBIR mills.
Thank you.
Chairman CARDIN. We will now go to our witnesses. Our first
witness will be Mr. Jere Glover, who is the Executive Director of
the Small Business Technology Council, a group of small, high-tech
companies, most of which are involved in the SBIR and STTR pro-
grams. Mr. Glover’s experience with the SBIR is extensive, as he
is one of the fathers of the program. As counsel to the House Small
Business Committee, he directed an extensive set of hearings on
small business innovation that laid the groundwork for the SBIR
in 1978. He was also the lead witness before Congress in 1982,
when the SBIR program was first proposed.
Our second witness will be Mr. Robert Kavetsky, who is the
Chief Executive Officer and President of Energetics Technology
Center, a research and development organization headquartered in
the great State of Maryland. ETC executes technology development
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and tech transfer programs for the Department of Defense and
other agencies.
We will start with Mr. Glover. And for the information of our
witnesses, your entire statements will be made part of the record.
You may proceed as you wish.
STATEMENT OF JERE W. GLOVER, EXECUTIVE DIRECTOR,
SMALL BUSINESS TECHNOLOGY COUNCIL, ANNAPOLIS, MD
Mr. GLOVER. Thank you. Good afternoon, Chairman Cardin,
members of the Committee. I am Jere Glover, Executive Director
of the Small Business Technology Council of the National Small
Business Association.
We know America’s small business, which employs 35 percent of
our scientists and engineers, are the primary innovators and job
creators led by entrepreneurs developing new products and services
and focusing on building their businesses. Yet Federal R&D is still
done primarily by large businesses, government labs, and univer-
sities. Congress realized this disconnect, and with President
Reagan passed the SBIR in 1992, to make sure that at least a
small portion of the Federal R&D dollars was done by small busi-
ness.
The resulting SBIR has become a primary driver for American
innovation and jobs. Seventeen countries have copied the SBIR pro-
gram around the world, and China is even going further, making
investments in businesses, even American businesses. The Euro-
pean Union invests over 20 percent of its R&D dollars on small
businesses, more than twice what the United States does.
The genius of the SBIR program is it enlists our Nation’s small
businesses to competitively convert American science into scientific
breakthroughs, useful technologies that meet the Federal needs
while engaging entrepreneurs to build their businesses and create
jobs.
SBIR does not cost anything. It redirects a portion of the Federal
R&D dollars to small business, the most innovative sector of the
economy. These small firms must be based in and owned by Ameri-
cans, and the work must be done in America.
Why does SBIR work? One, it gets Federal R&D done by small
business, the most innovative sector of the economy. Two, there is
a merit selection based on technology. Three, it is highly competi-
tive. Four, it focuses on agency needs and there is a commercializa-
tion focus.
Attached to my testimony is a list of links to hundreds of SBIR
success stories, but let me just mention two in particular that are
on everybody’s cellphones these days. One is the GPS and
Bluetooth, and the second is CMOS, which is the camera tech-
nology used for almost all cellphones.
Let me talk about the DoD. Two agencies, DoD and the National
Cancer Institute, have both had detailed studies showing over 95
percent of all Phase II SBIR awards. Looked at it. Out of an invest-
ment of $16 billion by those agencies, it attracted additional $30
billion in additional assets and R&D, and returned $130 million in
sales, $56 billion for acquisition of SBIR technologies by those two
agencies.
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The market really loves SBIR. Fifteen of the leading 20 biotech
companies have SBIR awards, 15 of 2000. Two thousand SBIR
firms have been acquired, DoD firms, have been acquired. Most
major prime contractors recognize the importance of SBIR tech-
nology and actually acquire them. Most of them have acquired at
least 10 SBIR firms.
Over 4,000 SBIR firms have received $170 billion worth of ven-
ture capital. The SBIR rate of return at the DoD is 22-to–1, and
33-to–1 at National Cancer Institute. The SBIR returns in tax
money, State and Federal tax income, over $3 for every dollar in-
vested in the National Cancer Institute of Health and just slightly
under $3 at DoD.
The best program at DoD is the Navy. Its SBIR program will
reach $1 billion per year in follow-on contracts. That is $2 for every
dollar invested.
In conclusion, the SBIR program works.
I am sorry. One other thing.
In many sectors, SBIR funding is the primary source of R&D
funding. SBIR and STTR invest in the innovation stage, well before
venture capital and banks will provide risk capital. VCs focus on
sectors such as software, internet, telecommunications, and health
care. These get 83 percent of VC investment deals. SBIR, on the
other hand, invests in a broad spectrum of technologies in all sec-
tors and regions of the country.
In conclusion, after 19 National Academy of Sciences studies, 4
economic impact studies that have found the SBIR program meets
the congressional goals with over 50 percent commercialization.
The SBIR program works and should be reauthorized as soon as
possible and should be grown.
Thank you.
[The prepared statement of Mr. Glover follows:]
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Chairman CARDIN. Well thank you for your testimony, and more
importantly, thank you for your service in regard to these pro-
grams. We really appreciate it.
Mr. Kavetsky?
STATEMENT OF ROBERT KAVETSKY, CHIEF EXECUTIVE OFFI-
CER AND PRESIDENT, ENERGETICS TECHNOLOGY CENTER,
INDIAN HEAD, MD
Mr. KAVETSKY. Chairman Cardin, Ranking Member Paul, and
members of the Small Business Committee, my name is Bob
Kavetsky. I am the CEO of the Energetics Technology Center. ETC
is a 501(c)(3) headquartered in Maryland. It has been my great
pleasure to head ETC for past 15 years.
I am an engineer by training, and prior to joining ETC I served
32 years at the Department of Defense, working on hypersonics
and undersea warfare programs. I greatly appreciate you giving me
the opportunity to share my thoughts on the role of small business,
in general, and the role of the Small Business Innovative Research
program specifically with you today, and I look forward to, after my
testimony, answering your questions.
You are all acutely aware of the important role small businesses
play in our economy. My fellow panelist has addressed the critical
role the SBIR program plays in not only getting new technologies
into the hands of warfighters but also serving as an economic cata-
lyst in many parts of the country.
I would like to direct my comments today to the role small busi-
nesses play in what I like to call technology-based innovation eco-
systems, and the importance of these ecosystems to our national
defense.
MIT economists, Gruber and Johnson, in their seminal work,
‘‘Jumpstarting America,’’ do an excellent job of documenting the
benefits realized from government investments in creating science-
based innovations that came out of World War II. More impor-
tantly, they recommend that the Federal Government make addi-
tional investments to position the U.S. to continue its leadership
role as a major economic and military power.
Specifically, they identified 100 regions of the country that were
ripe for the creation of technology-based innovation ecosystems.
They suggest, and I agree, that such an investment will result not
only in distributing our economic prosperity across the country
more evenly but also contribute a strong national defense.
Innovation ecosystems bring together industry, academia, and
government to provide technology solutions to the government and
private sector markets. Two prime examples of this are Silicon Val-
ley’s semiconductor and computer industries and Boston in life
sciences.
There is an opportunity now to create a whole nation of eco-
systems using programs such as SBIR as a primary engine for this
development. This is a critically important issue, not only for our
national defense but in addressing what I see as a developing eco-
nomic inequality between regions of the country that have these
ecosystems and those that do not.
My organization recently completed a study of energetics for the
Department of Defense. Energetics are explosives and propellants
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that are used in our weapons systems. We brought together experts
from industry, academia, and government, led by Dr. Theresa
Mayer, Vice President of Research at Purdue University, to exam-
ine what has led to now well-documented shortfalls in U.S. military
capabilities when compared to China and Russia.
These shortcomings can be traced in part to two major issues:
one, our inability to develop and then transition new material de-
velopments into our weapons systems, and two, the fragile condi-
tion of the existing supply chain, especially chemicals needed to
produce energetic materials.
Small businesses can play a role in addressing both of these chal-
lenges. For example, the SBIR program has a strong record of cre-
ating solutions to defense requirements in critical sectors. We envi-
sion such an investment in energetics would bring new and innova-
tive companies into the energetics research arena.
Second, we need to develop a network of specialty chemicals
manufacturing and production facilities to ensure a robust supply
chain for energetics. Currently we need approximately 350 spe-
cialty chemicals to produce the energetic materials the Department
of Defense needs. There is absolutely no reason these chemicals
cannot be produced by small and medium-sized companies. This
production does not need to be from industry giants. Most criti-
cally, we cannot continue to buy these chemicals from our adver-
saries, such as China.
The second example I would like to highlight is the work the
Navy’s SBIR program currently has us conducting to reach out and
involve underrepresented communities and companies in the pro-
gram. The catalyst behind this effort is to ensure that the Navy is
tapping into the full potential of all of America, not just a handful
of communities.
We have created a process called ‘‘City TechFire’’ which we are
starting to pilot in Houston, San Diego, Phoenix, Detroit, San Anto-
nio, El Paso, Jacksonville, Cleveland, Greensboro, and Harrisburg.
It is already abundantly clear to me that there is a massive un-
tapped potential in these communities.
In closing, I would like to make a few recommendations for the
Committee to consider. First, make the SBIR-STTR programs per-
manent. Second, increase SBIR allocation to 7 percent. Third, in-
crease the STTR allocation to 1 percent. Fourth, expedite security
clearances for SBIR and STTR firms. And fifth, require all agencies
to set goals of at least 15 percent of all R&D goes to small busi-
nesses.
Thank you.
[The prepared statement of Mr. Kavetsky follows:]
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Chairman CARDIN. Thank you very much for your testimony, and
particularly your specific recommendations, which we very much
appreciate.
We will start five-minute rounds. I want to take a little bit of my
time to respond briefly to Senator Paul’s opening comments. We
disagree. I would like to see us devote more Federal resources to
research and development. I think it has shown that this is in the
best interest of our country. I was proud to be part of efforts to in-
crease the amount of research dollars at NIH, and the amount of
research dollars we do in defense, the amount of research dollars
we have under NASA, because those partnerships that we have
with the private sector has paid off big time for our national secu-
rity interests and our public health interests.
And the SBIR and STTR program are not really about the size
of the programs. They are more about making sure that the part
of the business partnerships are done with small companies, be-
cause we know small companies is where innovation takes place at
a higher level and jobs are created. So we want to make sure that
small businesses are part of our technology firms that we do part-
nership with.
So I really do not quite follow the point that Senator Paul was
raising, but I just want to put on the record that the SBIR and
STTR program does not deal with the size of the programs. It does
more in making sure the allocation of the private sector, that there
is fair allocation for smaller companies.
I also want to point out that as you look at the Federal agencies
that support this, the Department of Defense supports these pro-
grams, because they know they are getting a better product as a
result of the partnerships under the SBIR and STTR programs. So
they are supporting it. NASA supports it, because they know it
helps them in their mission, their science mission, which is very
important to my State and very important to the agenda of climate
change. They know that their partnerships with small tech compa-
nies helps them complete their mission in a more successful man-
ner. And you gave us the ratios of benefits to cost, which is 22-to–
1, 33-to–1. These are pretty large numbers.
I want to ask one question to both of you, if I might, and that
is, there have been several studies and reports that have been done
on both the SBIR program and the STTR program. They are all
very, very positive, about meeting the missions that Congress set
to stimulate technology innovation, to use small business to meet
Federal research and development needs, to increase private sector
commercialization of innovation derived from Federal research and
development. All very high grades.
There is one part of the mission that has not gotten high grades,
and that is to foster and encourage participation by minority and
disadvantaged persons in technology innovation, and I add to that
the women-owned small businesses.
So my question to both of you is, how can we do a better job in
making sure there is real diversity in the companies that we are
working with so that there is opportunity among all of our commu-
nities?
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Mr. GLOVER. Well, the immediate answer is better outreach and
things like FAST and the incubators innovation. That is inter-
esting.
Probably a more in-depth, there is a recent study—not a recent,
I am sorry, several years old now, that I just discovered that the
National Academy of Sciences has even pushed as one of their own,
which looked at pitch days. And what they found was that pitch
days discriminated against women in particular. When you see a
venture capitalist, we all know tend to discriminate, directly or in-
directly against women and minority-owned businesses. They sim-
ply do not fund as many proportionally as they do other things. So
the system obviously favors, quite frankly, white male-owned busi-
nesses.
One of the things the Navy is doing right now is their pitch days
are gender neutral. There is no face-to-face contact and there is no
way to know whether it is run by a man or a woman. And I think
that is working. GSA, which you guys have allowed to happen a
few years ago, now is doing $4.6 billion of Phase III contracts.
Their process is gender neutral and does not really have people
coming in and talking to them face-to-face. Over 40 percent of their
$4.6 billion is to women-owned businesses. It is an interesting phe-
nomenon.
If we speed up the process, make it happen very quickly, which
it should, then I think you take some of the gender out of this and
you will see that the awards are going to be more like the GSA,
and we will overcome some of that inherent bias. But we have still
got to do a lot more educational outreach. Women business owners
need to be able to have places to go and people to work with. But
I think there is some hope here that we can make this process
work better.
Chairman CARDIN. Mr. Kavetsky?
Mr. KAVETSKY. So I have a couple of near-term pragmatic things
that we are actually involved in, as we speak, to address the issue,
Chairman Cardin, you raised. As a matter of fact, this morning I
had a discussion Vic McCrary, who is at the University of the Dis-
trict of Columbia, in terms of how we can work with UDC to build
an innovation ecosystem around his university, tying that actually
into DARPA, one of the Defense Department’s, as you know, cut-
ting-edge agencies. Because in many cases DARPA program man-
agers do not know about specific technical capabilities at some of
the HBCUs, such as University of District of Columbia, North
Carolina A&T—we are engaging in discussions with Dean Robin
Coger at North Carolina A&T—Morgan State, in your own State,
Senator.
But the thing is you have to be present there and start making
those connections, intimate connections in the case of the HBCUs,
between faculty members and, in my arena, in the world of the De-
fense Department.
Relative to the issue of females involved in SBIR, a number of
states, such as yours, have programs such as ACTiVATE, which
was created many, many years ago, encouraging female entrepre-
neurship. And I think, again, a pragmatic idea we have is to go
where the females are. For instance, Purdue University graduates,
I think, more female engineers than most universities in the coun-
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try. We have a partnership arrangement with Purdue where we
are seeing how we can tap into female engineers coming out of Pur-
due to both start companies and actually work in the defense sec-
tor. Thank you.
Chairman CARDIN. Thank you. Senator Shaheen.
Senator SHAHEEN. Thank you, Mr. Chairman, and thank you to
both of you for being here and for your testimony. Mr. Glover, I es-
pecially appreciate all of your support for the SBIR program. I have
been a big fan, as I am sure you know. It was originally introduced
by New Hampshire Senator Warren Rudman, and so our busi-
nesses in New Hampshire really like the SBIR program.
And Mr. Kavetsky, I appreciated your comments about the Navy.
I had the opportunity to do an embark on the U.S.S. New Hamp-
shire submarine several years ago, and one of the things they told
me was that the biggest concern on a submarine is the potential
for fires, because the dryers, the way the dryers are vented. And
I was able to tell them that I had just been to a company in New
Hampshire that had an SBIR contract to try and address the prob-
lem of dryers on submarines. So obviously a very important pro-
gram when it comes to innovation and what we need to do, both
in the defense industry but also in terms of innovation throughout
the economy.
Mr. Glover, I understand that one of the things that you have
been working on is the question of commercialization of SBIR tech-
nology, and, as you know, that is one of the issues that comes up
again and again with respect to SBIR. Can you tell us what you
have found in your investigation of this issue and what we can do
to encourage commercialization of SBIR technologies?
Mr. GLOVER. Well, in 2000, Congress added the requirement in
the reauthorization for commercialization would be an evaluation
factor. Obviously, the technology, the personnel, a lot of other
things go in there, but one factor was added. And commercializa-
tion added then has changed the SBIR world. And what you see
is every company knows that they have to have a commercializa-
tion component. There was some discussion of multiple award win-
ners. Well, those award winners learned, and the companies now
have all focused on commercialization.
You know, 2,000 of these companies have been acquired. They
did not get acquired because their technology was not
commercializable. It was because somebody wanted that technology
to put in their weapons system, to put in their business. There is
real success there. Sonar and a lot of components of the submarine
are SBIR-driven. We gave an award to Dick McNamara, who ran
the submarine program at the Navy, many years ago, for reaching
$1 billion of SBIR subcontracts on the submarine.
So commercialization has changed. They all do it. They all do it
very well. There are many success stories, and the idea that some-
body is in this business to win a $1 million award, no. They are
in this business to develop a technology that somebody will pay lots
of money for, whether it is DoD or somebody else.
Senator SHAHEEN. Thank you. Do you agree with Mr. Kavetsky
that we should make the program permanent?
Mr. KAVETSKY. Oh definitely, yes. I believe the ROI on SBIR is
pretty clear-cut, so I think the evidence speaks for itself.
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Senator SHAHEEN. And do you agree with that, Mr. Glover?
Mr. GLOVER. Yes, indeed.
Senator SHAHEEN. I thought you might.
Mr. Chairman, I hope that this Committee can make the SBIR
program permanent, because I think it would be good for innova-
tion in the country. So thank you.
Chairman CARDIN. As I think Senator Shaheen is aware, we do
have hopes of getting legislation that can accomplish that purpose
during this Congress. Senator Coons.
Senator COONS. Thank you, Chairman Cardin, and thank you to
both our witnesses today. I am intimately familiar with the SBIR
and STTR programs, and the Small Business Development Center
in Delaware has done a great job over many years to help make
sure that there are small businesses in Delaware, in our commu-
nity, and our innovation ecosystem who are able to take advantage
of the resources that this pries loose from otherwise very large re-
search-oriented conglomerates. And it creates opportunity, oppor-
tunity for small businesses to innovate and opportunity for the
agencies that this is essentially directed at to achieve their mis-
sion. So I see real value in making SBIR and STTR permanent pro-
grams.
I was proud to contribute to the Support Strong Startup Busi-
nesses Act to the NDAA, and to introduce the RAMP for Innovators
Act, which I hope we will consider again on the path toward reau-
thorization.
Mr. Glover, if you would, what would be the outcome for busi-
nesses if we failed to reauthorize these programs? What would be
the consequences, both for the agencies that rely on them and for
the businesses that have participated?
Mr. GLOVER. Well, there is very little that we have in American
as an advantage over the rest of the world. SBIR is one of those
things. Now it is being copied, but not doing it as well or as effec-
tively as we have. You lose SBIR, you lose that innovation spur.
Most of the companies that get SBIR funding would not have devel-
oped that technology otherwise, the studies have shown. So we
would lose that.
We would also lose a lot of job-creating potential. In my testi-
mony I list all the success stories, and I list, in particular, a num-
ber of companies that have come out of the SBIR program and
have grown and developed. Things not only like your cellphones,
Qualcomm starting, but some Symantec and a whole bunch of
other companies would not have gotten their start.
Eleven of 15 top biotech companies would not have gotten their
money. At critical stages in economic development the government
needs to provide funds because the private sector will not. Half of
venture capital now goes overseas. It is no longer just an American
phenomenon. And SBIR, without that, you would lose thousands of
companies, thousands of individuals who would never have a
chance to see if their technology, their ideas could grow into new
markets and new businesses.
Senator COONS. Mr. Glover and Mr. Kavetsky, some criticize
SBIRs and tend to try to characterize them as just sort of repeat
funding by the Federal Government of businesses that never actu-
ally produce anything, that do not commercialize, that do not come
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to scale. What do you think are the biggest remaining barriers to
helping those who are successful in winning SBIR-STTR contracts
and then developing technology? What are the biggest barriers to
actually getting integrated into larger systems, or getting acquired,
or being able to scale, that we should be mindful of as we move
toward reauthorization?
Mr. GLOVER. As I understand the question—and there is a little
echo here so I might not have gotten it exactly right——
Senator COONS. What are the barriers to commercialization?
Mr. GLOVER. The commercialization is in areas one never expects
it to be. Innovation drives new industries, new technologies that
did not exist before, and they make things a lot better, and the
SBIR program, by and large, goes into those areas. But it does pro-
vide one thing that is very important. The government needs re-
search done. And when a company gets a 2nd or 3rd or 10th or
100th award, it is because the people reviewing it decided that was
the very best proposal, the very best company to give them the re-
search they need.
Senator COONS. Mr. Kavetsky, did you want to contribute briefly,
and then we will move on.
Mr. KAVETSKY. I have a very specific answer to that, that—I do
not know if it is DoD unique. I think perhaps it is—and that is we
need to make sure that people in the defense contracting business
understand the contracting flexibilities that have, under the SBIR
program, to rapidly acquire products and further R&D work from
these companies. Many of our defense contract shops are very wed-
ded to what we call the FAR, the Federal Acquisition Regulation
system——
Senator COONS. I am quite familiar with it.
Mr. KAVETSKY [continuing]. That would choke an elephant if you
tried to eat it. And frequently they do not take advantage of the
flexibilities afforded them under SBIR to more rapidly transition
technology, which, from our standpoint, is imperative that the De-
fense Department be able to move nimbly in acquiring new tech-
nology.
Senator COONS. Thank you for that input. Thank you, Mr. Chair-
man, for this hearing. I hope that we will proceed with reauthoriza-
tion.
Chairman CARDIN. Thank you, Senator Coons. Senator Hirono?
Senator HIRONO. Thank you, Mr. Chairman. I always wonder
why people who say that they support small businesses and yet
criticize programs such as the SBIR and STTR programs, without
which small businesses would not be able to compete for the bil-
lions of dollars in Federal money that the Federal Government lets
out. And so I always wonder, you know, what the thinking is, but
maybe there is not that much thinking going on.
Okay. So when we meet with small businesses, particularly with
women-owned small businesses, they always say that access to cap-
ital is one of the real barriers to them being able to get started.
That is why I have been a very long-term supporter of both SBIR
and STTR programs. You talked a little bit, both of you, about
what would happen if these programs were not in place. And, in
fact, there is a lot of innovation that comes out of the small busi-
ness sector of our economy, not from the big corporations. Isn’t that
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true, there is a lot of innovation that comes out of small, you
know——
Mr. GLOVER. Absolutely. Years ago there was a study that
showed two-thirds of major innovations come from small business.
More recently, there is a study that says 20 percent of key innova-
tions come from the SBIR program itself.
Senator HIRONO. And that is why, for a lot of us, it is very clear
the import and importance of these programs.
I do want to ask you a question, for both of you, about the SBA’s
Growth Accelerator Fund Competition, which has been an effective
program when it comes to promoting startups, but especially those
by women and minorities and those in underserved areas.
Senator Booker and I recently introduced legislation to expand
the program, called the SOAR Act, which would provide increased
support for organizations that work with these businesses, and I
am happy to report that Accelerate Hawaii, which is a growth ac-
celerator in Honolulu, recently received an award through this pro-
gram, and that President Biden has requested increased funding
for fiscal year 2022, from $10 million compared to $2 million in fis-
cal year 2021.
Can either or you, or both of you, discuss why growth accelera-
tors are so important for businesses in the SBIR-STTR programs
and the broader innovation ecosystems more generally?
Mr. KAVETSKY. Well, I think Mr. Glover mentioned earlier, these
types of programs, these funding sources provide some critical cap-
ital in the development cycle, even before, sometimes, the venture
firms get involved. We find that is absolutely critical. That actually
also applies to even technology and research done in defense labs
as well. We call it the ‘‘valley of death,’’ that we try to get these
companies through, if you will.
So I think programs such as you were mentioning, Senator, are
absolutely critical for providing those kinds of resources.
Mr. GLOVER. The growth accelerators, FAST, those operations—
and I attached two of those to my testimony to sort of what local
organizations can do to increase the SBIR program and make them
do work better—is critical, absolutely. And there are many states.
Hawaii has had some great SBIR firms through the years. But it
needs some additional infrastructure to help it match and compete
with companies coming from Silicon Valley; Austin, Texas; Boston.
And those accelerators and FAST programs do provide that knowl-
edge and training that helps them understand.
If you are in Boston you walk down the street and ask somebody
what to do. You cannot do that in most of the country.
Senator HIRONO. So, of course, you would support increasing the
funding for these accelerator programs, and I am glad you men-
tioned that. It is not easy for the entrepreneurs and innovators in
Hawaii. We are kind of removed from the venture capital commu-
nity, and often they want to be right there. And so you need these
programs to get these companies to the point where they could at-
tract venture capital. Would you agree?
Mr. GLOVER. Absolutely.
Senator HIRONO. I also wanted to ask you about the SBA’s Fed-
eral and State Technology Partnership Program, the FAST pro-
gram, which provides competitive grants that can be used to pro-
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mote diversity in the SBIR-STTR programs. I am very committed
to increasing the opportunities for women and for minority-owned
enterprises to have access to these kinds of grants. And so the
FAST program is a partnership with the states to really facilitate
this kind of diversity.
President Biden has requested a substantial increase for the
FAST program next year—$10 million compared to $4 million for
2021. I take it you would support that kind of increase also.
Mr. GLOVER. We strongly support FAST. It is a great program.
There is a chance to succeed if you are just really good and do ev-
erything right, without any help. But boy, it sure helps to be able
to meet with people, talk to people, have people who know what
they are doing, to facilitate your learning curve. It makes it much
quicker, much faster, and much better.
Senator HIRONO. Thank you. Thank you, Mr. Chairman.
Chairman CARDIN. We were joined by Senator Young via Webex.
I just really wanted to acknowledge that he was present. He indi-
cates he has no questions he wants to ask.
I will recognize Senator Hawley.
Senator HAWLEY. Thank you, Mr. Chairman. Good timing. Thank
you for waiting for me. Thanks to the witnesses for being here.
Mr. Glover, if I could just start with you. I have seen some re-
ports depicting the distribution of the SBIR awards, and I noticed
that some of these reports include heat maps that suggest that
there is a relative concentration of awards that are allocated to the
East and West Coasts and to larger metro areas that already have
a lot of capital, I mean, just by the nature of what they are and
who they are. By comparison, more rural states like mine, Mis-
souri, have been granted relatively fewer awards, and that is true
even when you adjust for the population differences.
So my question is, what do you think accounts for this geo-
graphical discrepancy?
Mr. GLOVER. As an individual from a small rural town of 1,400
people in Tennessee, I have had that fight and debate and discus-
sion for a long time. And I entered into a debate at NYU some
years ago in which they were saying that the Boston folks were
saying there was no venture capital shortage in America. And I ex-
plained, I said, ‘‘To the women in the audience, and to anybody out-
side the coast, it is a problem,’’ and it certainly is.
What we see, though, is that the SBIR program does about as
well on science indicators, or maybe actually better in different
science indicators like R&D, scientists, engineers, money going to
universities—it does a little bit better than average in most states.
Indiana has a very good system, and it works pretty well.
We need to do more, and I think the FAST, the growth accel-
erator programs and others, one, should be increased, and two,
should focus on underserved areas and populations. I was surprised
and disappointed when I saw some limited FAST money going to
California and Boston. Now, I understand it was going to rural
areas that might be a little underserved, but quite frankly there
are a lot of other states that are much more underserved.
So we can do more there. It is a merit-based program, which is
the beauty of it. If you do put a geographical requirement or a
quota or a percentage, you would lose the merit-based, and that
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would make it have ripple effects in terms of getting people to ac-
cept the technology. Right now, when you win an SBIR and you go
through a competitive round, your technology is vetted and re-
viewed in most cases, and people say this technology has at least
a government seal of approval, so let’s look at it. You take that
away and it is just like anything else. The hardest thing to do is
to convince somebody your technology has merit.
Senator HAWLEY. Let me ask you—thanks for that answer—let
me ask you about something that you wrote in your testimony. You
said the SBIR program needs to do a better job of attracting high-
quality, rural technology companies. So on a similar theme here,
what tangible steps do you think the program can take to try to
attract and recruit companies that fit that profile?
Mr. GLOVER. You know, the universities are really helpful, but
they are, again, more geographically focused. Like in Indiana you
have got major universities doing good things and it is easy to
build a company around university-driven technology. When you
get away from that in the area, so that is when you get into—and
SBA is doing a much better job than it used to, of online education,
online training, so that a good, smart inventor, entrepreneur any-
where in America can win. And while we focus on the general area,
we always want the best science to win but we want to make sure
that the best scientist has an opportunity to compete and a fair
chance.
Senator HAWLEY. Mr. Kavetsky, do you have any thought on
that?
Mr. KAVETSKY. Yes, I do. Relative to rural activity, I had a cou-
ple of thoughts. First, there are large businesses in all these rural
areas. Frequently they are farming or agricultural businesses. If
you talk to a farmer, and actually I happen to be married to the
farmer’s daughter so I have some experience in this arena, you find
they have a whole host of problems that technology and programs
like SBIR could help them with.
And so I think part of it is really engaging with the major indus-
tries in any region and really understanding their problems, and
bringing them then to the program that can actually help them. I
am mainly a defense guy, but, you know, there is SBIR in agri-
culture and other arenas, and certainly I think that would be part
of a specific thing.
I have seen, as well, some states actually offer an SBIR match.
They have seen the SBIR program is so good for them economi-
cally, you know, from an economic development standpoint, that
the State actually matches an award from the Federal program
with State dollars, which I would encourage rural states to con-
sider as well.
Senator HAWLEY. Very good. Thank you both for your testimony,
and thank you for being here. Thank you, Mr. Chairman.
Chairman CARDIN. Thank you. I know that we were joined by
Senator Rosen, and I understand that she did not have questions.
I know Senator Markey has been with us. I am not sure he is
ready now for questioning. Senator Hickenlooper is on his way, I
have been told.
So what I am going to do, I have a couple of questions I would
like to ask. Mr. Kavetsky, in your recommendations you are sug-
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gesting that we increase the percentages that are allocated to both
programs. I have been in the Congress when we have increased
those numbers, and I know at times we have had different views
from different stakeholders in regard to the changing of the per-
centage. I am just interested as to your assessment as to if the var-
ious stakeholders are prepared for us to increase the percentages
of these two programs.
Mr. KAVETSKY. Yes. Thank you, Chairman Cardin. I think the
short answer to that question is yes. Again, I work mainly in the
defense sector, mainly with the Army and the Navy, and I know
both of those program offices are ready to scale their program dra-
matically. They suffer, if you will, from many more proposals, good
proposals, that they would like to fund that they cannot fund be-
cause they just do not have the resources to do that. I think that
would engender additional competition, which is important to deliv-
ering quality products to our military, and also it would be an in-
creased economic development engine across the country, if you
will.
Chairman CARDIN. And a related question is that there are dif-
ferent eligibilities for agencies that are part of the SBIR and STTR
programs. Do we have that right on the agencies that are included
in those programs, obviously more on SBIR program because of the
lower threshold than in the STTR program. Do we have that right?
Mr. GLOVER. I pretty much think so. I think an SBIR program—
and it is permissible for any agency to do an SBIR. And there have
been some discussions about some of the agencies below the thresh-
old, you know, could take advantage of using the program. And
that may have been tried once or twice. But SBA can facilitate that
if it is desirable.
Chairman CARDIN. So we will be looking at—we are looking at
permanency, and I appreciate both of you strongly support that. At
the same time, we would look at whether there are provisions that
need to be updated or changed. And it seems like you are saying
that increase the percentages should be under consideration but
the eligibility of agencies that have to participate, you think it is
pretty well—working fairly well, at the current dollar amounts?
Mr. GLOVER. The real concern that I hear most often is the un-
certainty that the program’s life, and when we went through that
with 14 continuing resolutions over a period of three years or so,
the agencies stop-start, everybody cannot plan, cannot budget. It
becomes a real serious problem not to have it continued, and that
is why we would urge SBIR be continued as quickly as possible.
Chairman CARDIN. And Mr. Kavetsky gave us some specific rec-
ommendations. Mr. Glover, do you have other specific changes that
you would like to see in the statute, other than permanency and
perhaps considering increasing the percentage amounts?
Mr. GLOVER. We have a variety of those. I will be happy to send
you those. But yes, they are very similar to Bob’s list of rec-
ommendations.
Chairman CARDIN. Good. That would be helpful if you have that
information.
I believe Senator Hickenlooper may be on the Webex?
Senator HICKENLOOPER. I am here.
Chairman CARDIN. You are up.
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Senator HICKENLOOPER. Sorry about that. I was out racing
around trying to, you know, get through wind and peril and other
aspects of it. Give me one second here.
All right. And part of this we heard as I was listening in, in tran-
sit, or my staff was. Colorado is a center of tech innovation. I think
our State is home to over 30 Federal labs. How much further can
we support STTR in bridging that gap between these labs and the
smaller innovators? The innovators would be entrepreneurs, you
know, putting that research into action.
That is for both witnesses.
Mr. KAVETSKY. Yes, I would like to comment on that, Senator.
We are actually working on just such a program with the Army Re-
search Lab, and the Army Research Lab is the Army’s corporate re-
search institution, about 1,500 Ph.D.’s there. They have actually
asked us to focus on finding those small businesses that should be
collaborators with the Army Research Lab scientists and engineers,
and that is a national effort. That is not just in the State of Mary-
land, where ARL is headquartered.
Some of you may be aware that the Army Research Lab insti-
tuted a program called ‘‘Open Campus’’ about six years ago under
Dr. Tom Russell, where they opened up branch campuses. They are
all across the country. And part of the motivation for that was to
tie into these innovation ecosystems across the whole nation and
not just those geographically proximate to ARL headquarters in
Maryland.
So I think that is one example I would offer as a specific example
of the type of work that, in this case, the Army Research Lab has
an organization like us helping them with in terms of being kind
of a tech scouter, tech hunter, and connecting small businesses to
their researchers. Thank you.
Senator HICKENLOOPER. All right. And then the second question,
and the famous ‘‘valley of death’’ that, you know, stage between re-
search and successful innovation. In other words, that period where
you get up and going but then you find all the glitches. Beyond
making the SBIR-STTR permanent, how do we, or should we re-
quire agency goals around R&D to go specifically to small busi-
nesses? How do you look at that?
Mr. GLOVER. Interestingly enough, the SBIR law never expected
to be the only program driving small business to the Federal R&D.
They expected there to be goals, and there is a very specific re-
quirement in the law that there be goals for small business, in gen-
eral. We always expected there would be follow-on programs, once
SBIR was proven to be so good that there would be other programs.
That is a requirement. I think it is absolutely important. It is es-
sential. With the most effective sector of the innovation economy,
why shouldn’t the government be spending more than maybe 6, 7,
8 percent with small business? The government ought to be spend-
ing a lot more. There definitely should be goals. I know that the
Air Force is considering putting goals in place for small businesses,
and I think the other agencies should do so as well.
Senator HICKENLOOPER. Good. Well, we agree on that, and I
think there are a lot of avenues that we can do to work on that.
Another one of our priorities is ensuring equitable—you know, a
level playing field for entrepreneurs who may come from socially
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disadvantaged background. Can you expand on how SBIR and
STTR support diverse entrepreneurs and innovators?
Mr. KAVETSKY. If I could offer a specific example, Senator, that
I touched on briefly in my comments, the Navy SBIR program actu-
ally is funding my organization to do exactly that. We have, over
the last year, created a methodology. We call it ‘‘City TechFire’’ to
give it a little bit of glitz. We have actually identified an initial set
of 10 cities across the country, 10 regions, where our focus is really
on reaching into underrepresented groups, if you will, of busi-
nesses, and even colleges, if you will. Because in many cases you
find the entrepreneurs, you need to get to them when they are in
college so that when they are coming out of college those that have
an entrepreneurial bent have a forum and a pathway ahead for cre-
ating their own business.
So again, the Navy program actually has us doing that as a fo-
cused effort, with the idea being we could expand that from our les-
sons learned from this initial set of 10 cities to cities all across the
country, cities and regions all across the country.
Senator HICKENLOOPER. Does that seem viable at this point?
Mr. KAVETSKY. Oh yes. I mean, what we are finding is there is
a real appetite in each of these communities, not surprisingly. We
are working with the P-TECH network which is, in some cases, an
underutilized network. But we are really finding a real hunger for
this. And as with any other program, you find some areas are
hungrier than others, and those are the organizations we like to
work with, where a local economic development group is really try-
ing to do what we like to call technology-based economic develop-
ment. And we focus in on working with those organizations. But we
are having some initial success, especially in places like El Paso,
as one specific example where we are getting some really good trac-
tion.
Chairman CARDIN. If we can I want to go to Senator Markey and
allow him to ask the questions so I do not have to go into recess,
because of a vote that is pending, with Senator Hickenlooper’s co-
operation, if you have completed your questioning.
Senator HICKENLOOPER. Yes, absolutely.
Chairman CARDIN. Senator Markey.
Senator MARKEY. Thank you, Mr. Chairman, very much, and
thanks to our witnesses from Maryland who have joined us today.
Maryland and Massachusetts are not that dissimilar in terms of
the overall makeup of our economy. And there is no question that
SBIR and STTR programs have played a crucial ingredient in the
economic vibrancy of Massachusetts, like Maryland itself.
So far, 24,000 SBIR and STTR grants have been given to Massa-
chusetts companies, which is an astounding number, 24,000. And
just in 2020, we had 718 Massachusetts companies receiving over
$400 million worth of investment. And it works. It has created
hundreds of thousands of jobs, ultimately, in Massachusetts. And
they are smaller companies, innovative companies.
And I know, Mr. Kavetsky, that you support making SBIR and
STTR programs permanent. I do as well. Why don’t I just give you
a minute to make the case for why these programs should be per-
manent. How long, oh Lord, do we have to go while recognizing the
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absolutely indispensability that these programs play in the eco-
nomic growth of our country.
Mr. KAVETSKY. Yes. Thank you for that question. I will give you
a very specific example of why the permanency is absolutely crit-
ical, and that has to do with the time it takes for the Defense De-
partment to implement what we call a program of record, whether
it is a weapon or a ship or whatever platform we are developing.
And those program executive offices, we call them, they need to
know that the SBIR program is going to be there.
And people like Dick McNamara, many years ago, as Mr. Glover
noted, used SBIR to really disrupt the base for submarine tech-
nology companies, and used SBIR as the fulcrum to do that. If he
did not know that SBIR was going to be around for five or six or
eight years during the development cycle of that submarine, he
would not have stuck his neck out as he did, as the PM, to make
that happen.
So I think there is a very pragmatic reason, at least in the world
of defense, that we need this program to be permanent, so if a PEO
does want to stick their neck out and look at adopting emerging
technology they know SBIR is going to be there to provide that crit-
ical funding to mature the technology to the point where the pro-
gram can adopt it.
Senator MARKEY. Thank you, and I think you put your finger
right on it. We need predictability. Companies, private sector com-
panies, they need predictability.
And over to you, Mr. Glover. Can you give us an example of an
agency, a Federal agency, that takes the SBIR program and sim-
plifies it, streamlines it in a way that you believe is absolutely a
model for how the program should be operating across the whole
country, because so many different Federal agencies participate.
But can you give us a good example of one that does it, in your
mind, at the top of the level of excellence?
Mr. GLOVER. I really cannot give you a model agency that has
simplified it. Congress passed a law a couple of years ago that said
the agencies should standardize, simplify, and expedite the con-
tracting process. There has been some improvement in that area,
but we still do not have that compressed.
The shocking GAO study said it was taking 300 days between
Phase I and Phase II to get contracts. That ought to be automatic.
You ought to have a simple contract, you go to Phase I. Some grant
agencies send you the grant when they tell you you have their
word. Why can’t contracting the agencies do exactly the same
thing? The same for Phase II and Phase III.
What we do know about GSA, when they started writing Phase
III contracts they cut that down to 90 days, that had been well over
a year, and almost impossible in some cases, ever. They get it down
to a year and they are doing a very good job of it.
And I want to reiterate that over 40 percent of their awards are
going to women-owned business. That process is not discriminating
against women, because they are doing very well under the pro-
gram.
Senator MARKEY. And how about minorities?
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Mr. GLOVER. Minorities are doing okay, but the women is what
was really shocking, how much better they were doing. But minori-
ties are doing better than the regular.
Senator MARKEY. Well, let’s hope that a year from today we can
say how shocking it is how well minorities are doing, as well as
women. That should, in my opinion, be the objective which we seek
to achieve.
So thank you both for your great testimony today, and back to
you, Mr. Chairman.
Chairman CARDIN. Thank you, Senator Markey, and I want to
thank both of our witnesses not only for their testimony but for
what you have done in regard to these programs. This testimony
will be very helpful to us as we look at legislation in regard to both
programs.
With that the Small Business and Entrepreneurship Committee
will stand adjourned.
[Whereupon, at 3:23 p.m., the Committee was adjourned.]
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Æ
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