A Review Of The SBIR-STTR Program
Summary
The printed record of a September 22, 2021 hearing of the U.S. Senate Committee on Small Business and Entrepreneurship reviewing the SBIR and STTR programs, published as S. Hrg. 117-212. Chairman Benjamin L. Cardin describes SBIR Phase I awards of up to $225,000 and Phase II awards of up to $1.5 million, and says Congress should make both programs permanent. Ranking Member Rand Paul questions whether the program should continue and states that, according to SBA's public data, 196 businesses received more than 100 awards each. The witnesses are the executive director of the Small Business Technology Council and the chief executive officer and president of Energetics Technology Center. The appendix includes responses to questions submitted by Senators Coons, Rosen, Risch, Inhofe and Young.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Full text
[Senate Hearing 117-212]
[From the U.S. Government Publishing Office]
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
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
47-001 PDF WASHINGTON : 2025
-----------------------------------------------------------------------------------
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
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
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
Entrepreneurship 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
previously 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 innovation programs, the Small Business Innovation
Research Program, 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
industry'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
participating in the program, including the Departments of
Defense, Energy, Education, and Health and Human Services.
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 laboratory 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 possible through SBIR and STTR grants.
The programs also help prepare our Nation's public health
infrastructure for the COVID-19 pandemic. In 2013, the National
Institutes of Health, which is headquartered in my home State
of Maryland, 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 communities safe.
Simply put, SBIR and STTR have been invaluable to our
national 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 obligation to make these programs permanent,
which both the Pentagon 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 discuss 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 percentage 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
American technology and research industries remain the
standard-bearer for the global economy.
As I pointed out earlier, these programs have enjoyed
strong bipartisan 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
taxpayers are compelled to support research proposals without
any expectation 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 million 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
private actors but it also is duplicative and funds projects
that no one in their right mind would spend their money on.
SBIR funded studies 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 legitimate 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 program 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.
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 percent of the awards were made to the mills, which the
institute defined as firms who received more than 40 Phase I
awards. Forty grants to just one company may raise a few
eyebrows as unnecessary 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
typical 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 others 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 programs. 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 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 universities. 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 business.
The resulting SBIR has become a primary driver for American
innovation and jobs. Seventeen countries have copied the SBIR
program around the world, and China is even going further,
making investments in businesses, even American businesses. The
European 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 Americans, 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
competitive. Four, it focuses on agency needs and there is a
commercialization 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
technology 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 investment 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.
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
technology 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
venture 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 invested 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 sectors 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:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Cardin. Well thank you for your testimony, and
more importantly, thank you for your service in regard to these
programs. We really appreciate it.
Mr. Kavetsky?
STATEMENT OF ROBERT KAVETSKY, CHIEF EXECUTIVE OFFICER 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 catalyst in many parts of the country.
I would like to direct my comments today to the role small
businesses play in what I like to call technology-based
innovation ecosystems, 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
importantly, they recommend that the Federal Government make
additional 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 Valley's semiconductor and computer industries
and Boston in life sciences.
There is an opportunity now to create a whole nation of
ecosystems 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 economic 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 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 examine 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 developments into our weapons systems, and two, the
fragile condition of the existing supply chain, especially
chemicals needed to produce energetic materials.
Small businesses can play a role in addressing both of
these challenges. For example, the SBIR program has a strong
record of creating solutions to defense requirements in
critical sectors. We envision such an investment in energetics
would bring new and innovative 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 specialty 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 critically, we cannot continue to buy these
chemicals from our adversaries, 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 program. 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 Antonio, El Paso, Jacksonville, Cleveland, Greensboro, and
Harrisburg. It is already abundantly clear to me that there is
a massive untapped 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
permanent. Second, increase SBIR allocation to 7 percent.
Third, increase 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 businesses.
Thank you.
[The prepared statement of Mr. Kavetsky follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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 increase 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 security 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,
because 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 partnership 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 programs, 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 companies helps them complete
their mission in a more successful manner. 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 communities?
Mr. Glover. Well, the immediate answer is better outreach
and things like FAST and the incubators innovation. That is
interesting.
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 indirectly against women and
minority-owned businesses. They simply do not fund as many
proportionally as they do other things. So the system obviously
favors, quite frankly, white male-owned businesses.
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 phenomenon.
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 District 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, cutting-edge agencies. Because in
many cases DARPA program managers 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 Defense 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
entrepreneurship. 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 country. We have a partnership arrangement
with Purdue where we are seeing how we can tap into female
engineers coming out of Purdue to both start companies and
actually work in the defense sector. 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 especially 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 businesses 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
Hampshire 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 problem of dryers on submarines. So obviously a
very important program 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 technology, 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
commercialization added then has changed the SBIR world. And
what you see is every company knows that they have to have a
commercialization component. There was some discussion of
multiple award winners. 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 somebody 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.
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
innovation 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
community, and our innovation ecosystem who are able to take
advantage of the resources that this pries loose from otherwise
very large research-oriented conglomerates. And it creates
opportunity, opportunity for small businesses to innovate and
opportunity for the agencies that this is essentially directed
at to achieve their mission. So I see real value in making SBIR
and STTR permanent programs.
I was proud to contribute to the Support Strong Startup
Businesses Act to the NDAA, and to introduce the RAMP for
Innovators Act, which I hope we will consider again on the path
toward reauthorization.
Mr. Glover, if you would, what would be the outcome for
businesses 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 effectively as we have. You lose SBIR, you lose
that innovation spur. Most of the companies that get SBIR
funding would not have developed that technology otherwise, the
studies have shown. So we would lose that.
We would also lose a lot of job-creating potential. In my
testimony I list all the success stories, and I list, in
particular, a number 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 actually produce anything, that do not commercialize,
that do not come 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 provide one thing that is very important.
The government needs research 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 research 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 wedded 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 Defense Department be able to move nimbly
in acquiring new technology.
Senator Coons. Thank you for that input. Thank you, Mr.
Chairman, for this hearing. I hope that we will proceed with
reauthorization.
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
billions 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 capital 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 business sector of our economy, not from the
big corporations. Isn't that 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 innovations 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 accelerator in Honolulu, recently received an
award through this program, and that President Biden has
requested increased funding for fiscal year 2022, from $10
million compared to $2 million in fiscal year 2021.
Can either or you, or both of you, discuss why growth
accelerators 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 capital 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 knowledge 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
mentioned that. It is not easy for the entrepreneurs and
innovators in Hawaii. We are kind of removed from the venture
capital community, and often they want to be right there. And
so you need these programs to get these companies to the point
where they could attract venture capital. Would you agree?
Mr. Glover. Absolutely.
Senator Hirono. I also wanted to ask you about the SBA's
Federal and State Technology Partnership Program, the FAST
program, which provides competitive grants that can be used to
promote 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 everything 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
indicates 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 reports 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, Missouri, 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
geographical 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
discussion 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 explained, I said, ``To the women in the audience, and to
anybody outside 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
accelerator 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 would make it have ripple effects in terms of getting
people to accept the technology. Right now, when you win an
SBIR and you go through a competitive round, your technology is
vetted and reviewed 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 anywhere 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 couple 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
industries 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 agriculture 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
economically, 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 consider 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 suggesting 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 percentage. I am just interested as to your
assessment as to if the various 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 dramatically. They suffer, if you will, from many more
proposals, good proposals, that they would like to fund that
they cannot fund because they just do not have the resources to
do that. I think that would engender additional competition,
which is important to delivering quality products to our
military, and also it would be an increased economic
development engine across the country, if you will.
Chairman Cardin. And a related question is that there are
different 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 threshold, 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
uncertainty 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
recommendations. 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
recommendations.
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.
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 transit, 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 Research Lab, and the Army Research Lab is the Army's
corporate research 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 Maryland, where ARL is
headquartered.
Some of you may be aware that the Army Research Lab
instituted 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 research 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 require agency goals around R&D to go
specifically to small businesses? 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 requirement in the law that there be goals for
small business, in general. 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 essential. 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 spending 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 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
actually 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 businesses, 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
creating their own business.
So again, the Navy program actually has us doing that as a
focused effort, with the idea being we could expand that from
our lessons 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 trying to do what we like to call
technology-based economic development. 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
traction.
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 cooperation, 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
Massachusetts 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
permanent. How long, oh Lord, do we have to go while
recognizing the absolutely indispensability that these programs
play in the economic 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
critical, and that has to do with the time it takes for the
Defense Department 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 technology 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 critical funding to mature the
technology to the point where the program can adopt it.
Senator Markey. Thank you, and I think you put your finger
right on it. We need predictability. Companies, private sector
companies, 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
simplifies 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 contracting 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 program.
Senator Markey. And how about minorities?
Mr. Glover. Minorities are doing okay, but the women is
what was really shocking, how much better they were doing. But
minorities 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.]
APPENDIX MATERIAL SUBMITTED
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
[all]
File and source
- File
- CHRG-117shrg47001.txt
- Size
- 66,617 bytes
- SHA-256
- 9594d99e87aff973b852cfc5f4269d6931af833460094d23c7ee82ce985b35ae
- Our copy
- CHRG-117shrg47001.txt
- Original
- No public link identified.