Golden Age of Innovation: Reforming SBIR-STTR for the 21st Century (Senate Small Business Committee hearing, March 5, 2025)
Summary
Transcript of the Senate Committee on Small Business and Entrepreneurship hearing Golden Age of Innovation: Reforming SBIR-STTR for the 21st Century, on March 5, 2025, published as S. Hrg. 119–20. Chair Joni Ernst led the committee, with Edward J. Markey as Ranking Member. Witnesses were Austin Strawhacker of America's Small Business Development Center Iowa, Dr. Ken Mahmud of Triton Systems, Caleb Carr of Vita Inclinata Technologies, and David Rothzeid of Shield Capital. The print adds letters from groups including MassBio, the Small Business Technology Council and the Software in Defense Coalition, an open source investigation into Triton Systems connections to China, a Triton memo dated March 19, 2025, and an additional statement by Chair Ernst on Triton.
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
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“Golden Age of Innovation: Reforming SBIR-STTR for the 21st Century (Senate Small Business Committee hearing, March 5, 2025).”
Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/golden-age-of-innovation-reforming-sbir-sttr-for-the-21st-century-sena-43a2e678bc/
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S. HRG. 119–20
GOLDEN AGE OF INNOVATION:
REFORMING SBIR-STTR FOR THE 21ST CENTURY
HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP
OF THE
UNITED STATES SENATE
ONE HUNDRED NINETEENTH CONGRESS
FIRST SESSION
MARCH 5, 2025
Printed for the use of the Committee on Small Business and Entrepreneurship
(
Available via the World Wide Web: http://www.govinfo.gov
U.S. GOVERNMENT PUBLISHING OFFICE
59–474 WASHINGTON : 2025
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COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
ONE HUNDRED NINETEENTH CONGRESS
JONI ERNST, Iowa, Chair
EDWARD J. MARKEY, Massachusetts, Ranking Member
JAMES E. RISCH, Idaho MARIA CANTWELL, Washington
RAND PAUL, Kentucky JEANNE SHAHEEN, New Hampshire
TIM SCOTT, South Carolina CORY A. BOOKER, New Jersey
TODD YOUNG, Indiana CHRISTOPHER A. COONS, Delaware
JOSH HAWLEY, Missouri MAZIE K. HIRONO, Hawaii
TED BUDD, North Carolina JACKY ROSEN, Nevada
JOHN R. CURTIS, Utah JOHN W. HICKENLOOPER, Colorado
JAMES C. JUSTICE, West Virginia ADAM B. SCHIFF, California
JOHN HUSTED, Ohio
MEREDITH WEST, Republican Staff Director
SEAN MOORE, Democratic Staff Director
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CONTENTS
WITNESS PREPARED STATEMENTS
Page
Mr. Austin Strawhacker, Associate State Director, America’s Small Business
Development Center Iowa, Ames, IA ................................................................. 8
Dr. Ken Mahmud, Executive Vice President, Triton Systems, Chelmsford,
MA ......................................................................................................................... 15
Mr. Caleb Carr, Chief Executive Officer, Vita Inclinata Technologies, Broom-
field, CO ................................................................................................................ 23
Mr. David Rothzeid, Principal of Investments, Shield Capital, Washington,
D.C. ........................................................................................................................ 31
ADDITIONAL LETTERS/STATEMENTS FOR THE RECORD
Alliance for Commerical Technology in Government-Letter dated March 7,
2025 ....................................................................................................................... 54
Iowa Economic Development Authority-Letter dated March 5, 2025 ................. 56
MassBio-Letter dated March 5, 2025 ..................................................................... 57
MassMEDIC-Letter dated March 5, 2025 ............................................................. 61
New England Innovation Alliance-Statement dated March 5, 2025 ................... 63
Open Source Investigation into Triton Systems Connections to China .............. 70
Small Business Technology Council-Letter dated March 5, 2025 ....................... 85
Software in Defense Coalition-Letter dated March 4, 2025 ................................. 86
The Technology Association of Iowa-Statement .................................................... 89
Triton Systems Inc.-Memo dated March 19, 2025 ................................................ 90
Triton Systems Inc.-Chair Ernst Additional Statement ....................................... 94
QUESTIONS FOR THE RECORD
Dr. Ken Mahmud
Responses to questions submitted by Senators Cantwell and Hirono ......... 97
Mr. David Rothzeid
Responses to questions submitted by Senator Cantwell ............................... 105
Mr. Austin Strawhacker
Responses to questions submitted by Senator Hirono ................................... 108
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GOLDEN AGE OF AMERICAN INNOVATION:
REFORMING SBIR-STTR FOR THE 21ST
CENTURY
Wednesday, March 5, 2025
UNITED STATES SENATE,
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP,
Washington, DC.
The committee met, pursuant to notice, at 2:34 p.m., in Room
428A, Russell Senate Office Building, Hon. Joni Ernst, chairwoman
of the committee, presiding.
Present: Senators Ernst [presiding], Young, Hawley, Budd,
Husted, Markey, Shaheen, and Rosen.
OPENING STATEMENT OF SENATOR ERNST
CHAIR. Thank you everyone, and I call the Committee on Small
Business and Entrepreneurship to order. With its authorization ex-
piring at the end of this fiscal year, today we turn our attention
to the Small Business Innovation Research and Small Business
Technology Transfer programs, or SBIR/STTR. This program has
effectively partnered federal agencies with private sector entre-
preneurs to scale research and development projects aimed at ad-
dressing the pressing challenges of the day.
While we’ve seen a measure of success over the years through
the committee’s oversight efforts, agency studies and GAO reports,
it is clear SBIR is in need of additional reforms to safeguard tax-
payer funds and enable this program to meet its full potential. De-
spite the funding spanning 11 agencies and countless critical tech-
nology areas, SBIR has demonstrated an incredible potential to re-
vitalize our small business industrial base and preserve America’s
technological leadership. The cutting-edge technologies being gen-
erated are already serving to enhance competition, improve supply
chains, and increase overall readiness.
For these reasons, I am excited to announce that today I’m intro-
ducing the Investing in National Next Generation Opportunities for
Venture Acceleration and Technological Excellence or INNOVATE
Act—we have to come up with these fancy names, okay—the IN-
NOVATE Act, a bill to reauthorize and comprehensively reform the
SBIR/STTR program.
My legislation streamlines and simplifies existing processes, di-
rects the funding toward projects based on merit, channels funding
to help accelerate the most promising projects towards final stage
commercialization, protects against waste and abuse, and intro-
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duces enhanced protections and accountability tools to prevent
these new technologies from getting into the hands of our foreign
adversaries.
First, the INNOVATE Act reforms Phase I to provide new appli-
cants with a simplified two-page proposal process with smaller,
one-time awards, so that more innovators throughout the country
can have access to this program, even if they can’t hire professional
grant writers. My bill also eliminates DEI preferences. These meas-
ures enable agencies to scout the best proposals based on substance
from across the country. I am committed to ensuring open competi-
tion for innovators with traditionally lower engagement in the pro-
gram.
Second, my bill addresses the practice of SBIR Mills, where firms
benefiting from their beltway connections and grant writing exper-
tise have been able to collect an outsized portion of the funding,
with fewer results to show for it. This problem was verified by both
the GAO, the Government Accountability Office, and the DOD’s
Defense Industrial Board, which reported that the firms that got
the most awards were less productive in terms of commercializa-
tion, investments, and patents than those who got fewer awards.
To prevent the use of Phase I or II funding as a permanent
source of revenue, my bill imposes a $75 million lifetime cap. It
forces small businesses with dozens of awards to demonstrate com-
mercial traction or follow on contracts with non SBIR dollars.
Third, my bill empowers DOD to repurpose, underutilized and
overly regulated STTR Phase II funding, to more efficiently scale
the most promising technologies for long-term contracts for deploy-
ment through strategic breakthrough awards. For these awards of
up to $30 million, the bill limits eligibility to small businesses mak-
ing clear progress towards commercialization, and with an identi-
fied DOD end user.
It also requires 100 percent matching funds to ensure that firms
have skin in the game, and aren’t just in it for corporate welfare.
These reforms will enable more flexible use of SBIR funding to help
bridge the valley of death for the companies on the verge of suc-
cess.
Finally, my bill builds on my longstanding work to safeguard
these new SBIR technologies from being stolen by our adversaries.
For years, China and other state actors have stolen intellectual
property and proprietary secrets from American businesses and
universities. That is why I championed the Foreign Ties Due Dili-
gence Program Reforms in the 2022 reauthorization. But we have
found that more needs to be done.
That’s why my INNOVATE Act introduces a new definition of
foreign risk, to create a stronger risk assessment baseline stand-
ard, that must be applied consistently across all agencies. It imple-
ments a clear list of ties to foreign countries of concern, that dis-
qualify an applicant. And it empowers agencies with clear clawback
authority if a small business exposes SBIR funded products to ad-
versarial influence post award.
By targeting SBIR funds to the very best innovators in the coun-
try, by cutting off the unserious applicants who are just after cor-
porate welfare, by providing a boost to the best companies who
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need it to get over the final hurdles and by better protecting our
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taxpayer funded innovations from going directly to China, the
SBIR/STTR program can expedite new technologies, increase eco-
nomic opportunity, and attract investment back into our towns and
cities, and help to usher in a new golden age of innovation for
America.
I look forward to working with my colleagues to get this across
the finish line. It’s up to us, the members of this committee, to
work together to optimize this important program. I’d like to thank
the witnesses for being here today and being willing to share their
experience and expertise with us. I now recognize Ranking Member
Markey for his opening statement.
STATEMENT OF SENATOR MARKEY
Senator MARKEY. Thank you, Madam Chair. And today’s hearing
centers on American innovation and the small businesses that lead
the way every day of the year.
For decades, the Small Business Innovation Research Program,
or SBIR, and the Small Business Technology Transfer Program, or
STTR, have played an essential role in driving our country’s inno-
vation. And I’m extremely proud that Massachusetts small busi-
nesses have played such a prominent role.
The Commonwealth is the second highest recipient of total
awards in the country, receiving more than 24,000 SBIR awards,
totaling $8.3 billion, and 2,000 STTR awards totaling over $720
million.
This success is due to the Massachusetts business plan: attract
the best and the brightest, provide a world class education, and
provide opportunities for small businesses to compete on a level
playing field, while having the best educated and the best trained
workforce in the country. We start in the fourth grade, we’re num-
ber one in the fourth, eighth, and 10th grade in America in math
and verbal. It’s a business plan; it provides that workforce.
This has led to the development of America’s high-tech highway,
Route 128, which extends outside of Boston and into the sur-
rounding area, akin to Silicon Valley in California, or the research
triangle in North Carolina.
SBIR was codified in 1982, and STTR 10 years later, both on a
bipartisan basis. During this time, Congress was keenly aware that
the federal research and development needs of the country were
not being met. SBIR and STTR were designed to use America’s
small businesses to drive innovation.
These highly competitive programs have contributed to the gold-
en age of innovation in our country. We have experienced that over
the last 40 years. Without these programs, Americans would not
have novel technologies at their fingertips as they do today. For ex-
ample, the very popular LASIK eye surgery, was developed in part
due to an SBIR funding. SBIR also funded earlier Qualcomm wire-
less communications systems.
I’m proud of the SBIR and STTR advancements that have come
from Massachusetts. Just as Iowa is rich in nutrient filled soil
makes it the premier producer of corn, it is Massachusetts tech-
nology ecosystem that provides a fertile ground for innovation in
the technology sector, which is why we’re not just the Bay State,
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For example, Massachusetts small businesses have received more
than 70 awards for projects related to the treatment of Alzheimer’s
disease, the brain, and it’s approaching it for many different ave-
nues. Today we’ll hear from Triton Systems, a company from the
Commonwealth, that used an SBIR award to help create the
world’s smallest heart pump, which is now universally used in hos-
pitals because of an SBIR grant.
Without SBIR and STTR funding, many of these products may
have never seen the light of day. These programs are highly effi-
cient and pay dividends for the American people. The return on in-
vestment for every dollar the government spends on these pro-
grams is anywhere from $20 to $30.
SBIR and STTR awards from the Department of Defense alone
creates over 65,000 new jobs every year. The SBIR and STTR pro-
grams work because they prioritize merit and competition-Dar-
winian paranoia inducing competition—that’s the hallmark of
STTR and SBIR. That’s what it’s all about-Darwinian competition;
the best ideas prevail.
We should not place limits on the number of awards or the
amount of funding that goes to deserving small businesses. We
should not put a limit on the best ideas or the best technologies.
That’s what we’re going to need to compete against China. We
would never limit the number of contracts that a large defense con-
tractor receives from the Federal Government. So why would we
consider limiting our most nimble allies in innovation-our small
businesses?
We don’t tell Raytheon or Lockheed Martin, ‘‘You’ve had enough
Federal contracts; we’re going to start with a smaller firm.’’ We
don’t do that. We go to where the best ideas are. While SBIR and
STTR have enjoyed bipartisan support for several decades, we have
not yet been able to make them permanent. They’re currently set
to expire at the end of September.
I’ve worked throughout my time in Congress to make improve-
ments to the programs and ensure that their authorization never
lapses. It’s critical that we do so again, and I’m looking forward to
working with you, Chair Ernst, on this issue, and I want to thank
all of our witnesses for your help in us understanding this issue
today.
CHAIR. Great. Thank you, Ranking member Markey. And again,
I want to extend a warm welcome to all of our witnesses today, and
I will now introduce the three witnesses who are testifying today
on behalf of the majority. I am thankful that all of you took time
out of your busy schedules to join us in front of the committee and
share your expertise and insight into the SBIR and STTR programs
with this committee.
First is Mr. Austin Strawhacker, who is the Associate State Di-
rector at America’s SBDC in Iowa, at Iowa State University in
Ames, Iowa. The Iowa SBDC operates 15 centers across the state,
providing expert business counseling to entrepreneurs and small
business owners. Mr. Strawhacker oversees the Iowa’s SBDC’s
Technology and Commercialization team, which supports innova-
tive entrepreneurs in leveraging federal and state resources in all
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99 counties.
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He also chairs the Association of Small Business Development
Centers Research and Data Committee, and serves on the Iowa
Rural Development Council. Mr. Strawhacker also holds bachelor’s
degrees from Grandview University and a Master of Public Admin-
istration from Drake University, both in Des Moines, Iowa. So,
Austin, thank you very much for being here today.
Next, Mr. Caleb Carr is the CEO of Vita Inclinata, an aerospace
and industrial company headquartered in Broomfield, Colorado.
Vita Inclinata received six SBIR awards totaling just over $4 mil-
lion that were crucial to the company’s success. Mr. Carr serves as
a board member for the Software and Defense Coalition, and is a
professor of entrepreneurship at the University of Colorado. He
graduated with a bachelor’s degree from the University of Colorado
at Denver and holds a Juris Doctor from Mitchell Hamline School
of Law.
Our third witness, Mr. David Rothzeid, is a Principal at Shield
Capital, a venture capital firm focusing on investing in early-stage
companies, developing technologies critical for national security. He
served for eight years as an acquisition officer in the United States
Air Force. Thank you very much for your service to our country,
including a deployment with Special Operations Command in Af-
ghanistan.
He subsequently worked at the Defense Innovation Unit, ending
his time there as Director of Acquisition Pathways. Mr. Rothzeid
has a bachelor’s degree from Miami University, and an MBA from
the University of Colorado, Colorado Springs. Thank you again.
And I now recognize Ranking Member Markey to introduce his wit-
ness.
Senator MARKEY. Thank you, Madam Chair. The minority wit-
ness today is Dr. Ken Mahmud, who is the executive Vice President
of Triton Systems, which is a business at the cutting edge of inno-
vation. Triton Systems is a multi-award winning SBIR and STTR
company and was awarded the Small Business Administration’s
TIBBETTS Award in 2016 for its success in the SBIR program.
Dr. Mahmud has more than 35 years of experience in research
and development, including managing Triton’s participation in the
SBIR and STTR programs. And we welcome you, Doctor, to the
panel today. Thank you, Madam Chair.
CHAIR. Thank you, Ranking Member. And briefly, I’d like to take
a moment to explain our lighting set system to the witnesses.
There are three lights in front of you; green means go, yellow
means you are running out of time, and red means to go ahead and
wrap up those remarks. So, I ask unanimous consent that the
witness’s full statements be included in the record. Without objec-
tion, so ordered.
As your written testimony has been made part of the record, the
committee asks that you limit your oral remarks to five minutes.
And with that Mr. Strawhacker, you are recognized for five min-
utes for your testimony.
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STATEMENT OF MR. AUSTIN STRAWHACKER, ASSOCIATE
STATE DIRECTOR, AMERICA’S SMALL BUSINESS DEVELOP-
MENT CENTER IOWA, AMES, IOWA
Mr. STRAWHACKER. Chair Ernst, Ranking Member Markey, and
distinguished members of the committee, thank you for the oppor-
tunity to testify on the reauthorization of the Small Business Inno-
vation Research and Small Business Technology Transfer Pro-
grams.
As the Associate State Director of America’s SBDC Iowa, I pro-
vide oversight to our technology and commercialization center,
which provides guidance to innovators, often including the explo-
ration of SBIR and STTR funding. I’m proud to work for an organi-
zation that is vital to the success of so many small businesses. The
Iowa SBDC fosters innovation, strengthens local economies, and
drives small business success.
We engage with approximately 5,000 clients annually, that in
2024 alone launched 225 new businesses, created 101,795 new
jobs—I wish it was the bigger number, generated $174 million in
sales and secured $57 million in new capital. This yields an ROI
of 3.7 on all of our funding sources.
Hosted by Iowa State University, the Iowa SBDC collaborates
with various partners to provide tailored services that support
businesses in both urban and rural areas. Our regional centers act
as a pipeline to lead technology driven businesses to our technology
and commercialization center for assistance with SBIR/STTR pro-
posal development, intellectual property, and commercialization as-
sistance.
Today I would like to focus on three main points: the importance
of the SBIR/STTR programs, the importance of localized support,
and outline a couple of challenges and opportunities. For over 40
years, SBIR and STTR have ensured that small businesses play a
significant role in the federal research and development.
These programs help develop groundbreaking technologies, cre-
ate high quality jobs, and enhance our global competitiveness. In
Iowa SBIR and STTR fundings help bridge the gap between re-
search and market deployment, particularly in key sectors like ad-
vanced manufacturing, agricultural technology, and biosciences.
These programs also attract follow on investment, drive job cre-
ation, and expand local supply chains.
In fact, over 50 percent of successful SBIR and STTR applica-
tions that we have assisted with, have leveraged their awards to
generate additional funding that has more than doubled the overall
investment in these companies. Rural entrepreneurs in particular
exemplify the grit and innovation that define American small busi-
nesses. Despite facing challenges such as limited access to capital,
workforce shortages and geographic barriers, they drive techno-
logical advancement and local economic growth. SBIR and STTR
often provide the critical support needed for these entrepreneurs to
take risk, push innovation, and continue to contribute to the na-
tional competitiveness.
The success of small businesses, particularly in rural commu-
nities, depends on access to localized support. A prime example in
Iowa is Senator Ernst Entrepreneur Expo, an annual collaboration
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between the Senator, the Iowa SBDC, and Iowa State University
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Center for Industrial Research and Service. This event connects
small businesses with industry experts, government resources, and
potential investors, fostering collaboration and showcasing innova-
tion.
Additionally, we have established the Great Plains SBIR working
group with our partners in Kansas, Nebraska, and Oklahoma. This
group meets monthly to share best practices, develop solutions and
strengthen the regional support network.
While SBIR and STTR have been highly effective, there are op-
portunities to enhance their impact. Streamlining the application
process and introducing a smaller Phase I award could lower bar-
riers for first time applicants, particularly in rural areas. This
would allow early-stage research to explore commercialization po-
tential before full feasibility and commercialization work begins.
Many companies also receive very little feedback on their Phase
I proposals if they’re declined. Often the reason for declaration is
something that SBDC could help with proactively if more guidance
was provided. Increasing transparency and structured feedback
would help applicants refine proposals and improve success rates.
There should be recognition that innovation exists everywhere
across our nation, yet just five states receive 46 percent of SBIR/
STTR awards and dollars according to public data on sbir.gov. Ad-
dressing this disparity through targeted outreach, regional train-
ing, and improved evaluation transparency, could ensure fair ac-
cess to funding no matter the geographic location of the business.
In conclusion, SBIR and STTR awards have driven innovation,
strengthened local economies, and created high quality jobs in
America for over four decades. By leveraging SBDC’s support,
small businesses can access commercialization experts, funding
strategies and technical assistance to maximize program benefits.
Continued collaboration among federal agencies, local resource
providers and entrepreneurs will be essential in maintaining the
United States leadership and innovation. I thank you for your time
and consideration today, and I welcome any questions.
[The prepared statement of Mr. Strawhacker follows.]
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CHAIR. Thank you very much, Mr. Strawhacker, and we will go
next to Mr. Mahmud, and you are recognized for five minutes for
your testimony.
STATEMENT OF DR. KEN MAHMUD, EXECUTIVE VICE PRESI-
DENT, TRITON SYSTEMS, CHELMSFORD, MASSACHUSETTS
Dr. MAHMUD. Good afternoon, Honorable Chair Ernst, Ranking
Member Markey, and all other members of the Senate Small Busi-
ness Committee. Thank you for the opportunity to speak at today’s
hearing. I’m pleased to share my insights into how Triton has sup-
ported SBIR’s successful track record of both advancing national
security and the economy. I’d like to share a few examples with the
committee, mainly to show the different paths to commercialization
and the benefits to both the war fighter and the United States as
a whole.
First, a few words about myself. I received my Master’s and Ph.D
from RPI in upstate New York, in chemical engineering. I have
been in leadership roles as Senator Markey mentioned in U.S. in-
dustry for over 35 years. I’m an inventor with over 30 patents, and
I received the Tibbetts award from the SBA on behalf of Triton for
commercial success and commercializing SBIR derived tech-
nologies.
Triton is a hundred percent U.S. owned company with significant
employee ownership. Most of our technical staff have security clear-
ances and carry an incredible passion for helping the country and
the war fighter, as you will see. Let me show you some examples
of the impact on national security and the economy as a whole.
We supply a critical component to the F–35 aircraft, which is the
largest DOD platform ever. It is expected to save the Air Force
over $550 million in sustainment costs. We supply another critical
component to the F–22 aircraft, which will enable another $200
million in sustainment cost savings for the Air Force.
We have set up a venture in the state of Washington to manufac-
ture long range aerial mobility systems, to support a Navy program
of record. To do this, we are setting up an entire Berry compliant
U.S. supply chain, bringing back capability that had moved over-
seas. This involves companies across the country, primarily start-
ing with North Carolina, but also companies in Tennessee, Massa-
chusetts, Rhode Island, Pennsylvania, and of course final manufac-
turing in the state of Washington.
Our hearing protection product is being qualified for Army heli-
copter air crew. I do want to point out here that hearing loss and
tinnitus is two of the biggest health issues affecting our veterans.
With over a million veterans affected, it is estimated that the VA
provides over a billion dollars in disability benefits related to these
conditions.
Our bladder relief product for aviators is being qualified for navy
combat missions, and Air Force recon missions. Our SBIR derived
sensor technology enabled the world’s smallest heart pump for use
in cardiac failure intervention. I do want to mention here that
heart disease is the number one cause of death for Americans
today.
We are also investing in the first large area metallic 3D printing
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capability in the country, with internal funding. This will be a new
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14
capability for the United States, allowing for the manufacturer of
3D printed large metallic parts for aircraft, missiles and other
DOD platforms. I would like to finish by offering some suggestions
to the committee for improving the SBIR program based on our ex-
perience with it.
The SBIR program is one of the most successful technology pro-
grams in the federal government, as indicated by all National
Academy of Science Studies and multiple agency studies. We be-
lieve this is because of the merit-based nature of the program, the
competition, the ruthless competition that it fosters, and the flexi-
bility, and this is very important, the flexibility given to the agen-
cies to adapt it to their needs.
Our suggestions to the committee include: number one, provide
meaningful incentives for transition to Phase III for DOD platforms
in particular. I will just add on a personal note, that you know, for
a small business when most of the platforms are owned by the
prime contractors, it is incredibly hard for a small business which
is focused on a sub component or a component to de-risk it, mature
it, qualify it, and integrate it. It requires a tremendous amount of
cooperation with the primes.
And I do want to add here that, small businesses like ours, who
have developed a rare expertise in working with academia to re-
duce ideas to practice and working with primes, to then take them
to a platform and transition it to a program of record, offer a
unique skillset in our innovation ecosystem.
Number two, streamline the contracting process. I believe this is
a request that all of the witnesses will make, streamline the con-
tracting process by mandating standard contracts. Number three,
adequately resource the agencies to implement the foreign risk
management provisions.
And number four, reauthorize permanently, or at least for a
longer term so that small businesses and agencies have some cer-
tainty in their business planning. I wish to end by thanking the
members of the committee for your continuing support for the pro-
gram, and for the opportunity for me to speak to you today.
[The prepared statement of Dr. Mahmud follows.]
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CHAIR. Thank you very much, Mr. Mahmud. I appreciate that.
We’ll move next to Mr. Carr. You’re recognized for five minutes of
testimony.
STATEMENT OF MR. CALEB CARR, CHIEF EXECUTIVE OFFI-
CER, VITA INCLINATA TECHNOLOGIES, BROOMFIELD, COLO-
RADO
Mr. CARR. Chairwoman Ernst, Ranking Member Markey, and
members of the committee. Thank you for having me today.
I founded my company following the death of a friend of mine.
While we were on a search and rescue exercise in the mountains,
he experienced active cardiac arrest and we called the rescue heli-
copter to come and rescue him. The helicopter proceeded to lower
a rescue basket down to us, but due to the winds of the helicopter,
the rescue basket kept swinging, and because of it, we couldn’t get
it through the trees above. As a result, we called off the mission
and called time of death.
Several years later, my business partner and I founded what
would be known today as Vita, a company focused on designing
technology that would eliminate the swing and sway of suspended
loads on rescue helicopters and save lives. Preventing the reality
that happened to my friend over a decade ago and drastically im-
proving upon the current solution that our war fighters and rescue
personnel use today, a rope.
We started in a cold garage in Denver, Colorado, working tire-
lessly to find a solution to the problem. Investors would turn us
down, left, and right due to the lack of market knowledge on the
issue and more importantly, the amount of complexity that design-
ing a solution and selling said solution to the U.S. government
would entail.
It wasn’t until something else took a risk on us in late 2018-the
SBIR program, specifically the open topic AFWERX SBIR program.
The SBIR program took a risk on us, our three-page white paper,
and our idea. And in doing so, it empowered us to quit our jobs,
hire a team, and design a solution that we now call the Vita Rescue
System. Subsequently, the company went on to secure two Phase
II contracts and eventually a Phase III transition, $50 million IDIQ
to the U.S. Army, which we anticipate putting into motion later
this year.
Meanwhile, that system is now deployed to the battlefields of
Ukraine, CALFIRE’s fire attack helicopters that were used recently
during the Palisades in Eaton fires, multiple Army National Guard
units, including South Carolina and across the entire Air National
Guard.
Yet that was just the beginning. Thanks to that investment by
the SBIR program, Vida expanded into providing the essential gear
that crews need to fight the mission, such as harnesses and rescue
bags, to the point whereby just two weeks ago, we received the fol-
lowing message from a son. ‘‘I just wanted to thank you for making
such a great product. My father was in a horrific helicopter acci-
dent and his best friend died on impact. He was in the backseat
and had your harness on, and despite the helicopter being de-
stroyed, he actually walked away from the incident with only
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bumps and bruises’’.
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It’s this type of mission, this type of capability, these products,
would not be here today without the support of the SBIR program.
You are going to hear a lot today about what the SBIR program
is and is not. But I come to you as someone who used the SBIR
program for what it was meant to do-transition real life solutions
into the hands of the people that need it most.
What I can tell you is the SBIR program should not be a welfare
program to award 50 plus contracts to the same party. The SBIR
program is an investment program, an investment in ideas to fa-
cilitate solutions that take what was a rope for decades, and make
it into a technology solution. An investment to empower Americans
and frankly, the market to validate scale and deploy new capabili-
ties that never thought about until today.
The SBIR program is a mission-focused initiative, that advances
the objectives of the agencies it supports, providing structure and
funding to enable companies to directly address these missions
head on, whether for organizations like CALFIRE or the South
Carolina Army National Guard. I wonder, would those crews have
this capability today if the capability remained in the R&D envi-
ronment. Yet at the end of the day, the SBIR program is the bed-
rock of transitioning the future into reality.
Therefore, as you consider how to improve the SBIR program
during the upcoming reauthorization, I encourage you to support
the following. One, dedicated funding mechanisms for companies
that can demonstrate, private sector demand for commercialized
technology and government demand for innovative solutions. As we
must provide the tools to transition and transition quickly.
Two, the use of firm fixed price contracts for SBIR’s default con-
tracting vehicle, reducing the bureaucratic overhead, and allowing
the SBIR program to take the small risk on people like me, and
empower us to do something great.
And three, limits on SBIR awards for those repeat offenders, spe-
cifically companies that continue to receive SBIR awards without
commercializing a viable product from the vast majority of their
SBIR awards, directly to the end user, not to a prime to an end
user. In doing so, you’ll prevent the SBIR program from becoming
a welfare program, and keep it focused on being an investment ve-
hicle to allow entrepreneurs like me to ideate, innovate, and create
the critical solutions that don’t just sit on the shelf for someone to
talk about one day, but instead are used in reality, executing the
mission that it was designed to complete. Thank you for your time
today, and I look forward to your questions.
[The prepared statement of Mr. Carr follows.]
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29
CHAIR. Thank you very much, Mr. Carr. And now I recognize Mr.
Rothzeid for five minutes of testimony.
STATEMENT OF MR. DAVID ROTHZEID, PRINCIPAL OF
INVESTMENTS, SHIELD CAPITAL, WASHINGTON, D.C.
Mr. ROTHZEID. Thank you, Chair Ernst, Ranking Member Mar-
key, the members of the committee, Senator Rosen, thank you for
the opportunity to testify.
I’m an investor at Shield Capital, where I work with over 40
early-stage startups, building technology at the intersection of na-
tional security and commercial applications, colloquially known as
dual use technology. Before this, I spent over a dozen years on ac-
tive duty as an Air Force acquisition officer, including at Defense
Innovation Unit, where I helped pioneer a new model for working
with venture-backed startups.
The reality is that America’s technological edge is eroding. While
we maintain clear dominance in Iraq and Afghanistan, we face a
very different challenge in the People’s Republic of China, yet our
defense and commercial technology ecosystems continue to operate
in parallel universes. If we are going to win the global power com-
petition, then we must leverage America’s private capital markets
backing the most innovative ideas.
Private capital is critical to accelerating the development of next
generation defense tech. Venture capitalists bring funding, exper-
tise, and a culture of iteration needed to develop cutting edge capa-
bilities. Venture-backed startups thrive on rapid R&D, allowing
them to develop, test, and scale disruptive technologies efficiently.
In recent years, the investment in defense tech has surged, grow-
ing from 8 billion in 2016 to 42 billion just last year, seven x in-
crease. And this trend, it’s driven by geopolitical instability and
emphasis on streamlined processes from organizations like DIU
and AFWERX, and a growing recognition of private capitals value
in national security.
The SBIR and STTR programs were created as America’s seed
capital for innovation, avenues for non-dilutive funding, which have
contributed to major technological breakthroughs developed by ven-
ture-backed companies. These program, SBIR or STTR should be
reauthorized, but with vital improvements. I outlined a number of
policy solutions in my written testimony, including addressing an
obstacle course that favors entrenched companies so-called SBIR
Mills.
A naval postgraduate school study found that of nearly 5,000
SBIR companies, the top 25 alone secure 18 percent of all DOD
Phase I And Phase II funding. That’s over 2.3 billion between 2012
and 2021. Many of these firms focus on securing grants rather than
fielding operational capabilities. Meanwhile, true high growth
startups like the one here on my right, the ones building the tech-
nology of the future, organized to scale, employing thousands, and
attracting billions of private capitals, are often locked out. We must
ask, shouldn’t America’s government backed seed capital be an en-
trepreneur’s first step and not a bureaucratic bottleneck?
Even when startups win SBIR awards, too few transition to
Phase III procurement contracts. That same MPS study found that
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rest remain stuck in perpetual R&D. Programs like TACFI and
STRATFI in the Air Force and Space Force and Catalyst in the
Army provide a model for bridging this gap.
As a former acquisition officer, it is these types of programs that
would incentivize a federal government program office to engage
with SBIR companies rather than ignore them to the purview of
government labs. Without these transition pathways, startups
struggle to gain meaningful traction and investors hesitate to back
them.
At Shield Capital, we have four startups that have successfully
transitioned from a SBIR Phase II to winning a STRATFI contract,
enabling them to integrate into emerging programs of record. We
expect these startups will likely graduate from the SBIR program,
creating an onramp to scalable operational technology. This is the
paradigm we need to solve for.
VC financing on a grand scale-it is small but mighty force. Just
like SBIR within federal R&D, by working together, we ensure that
SBIR will be a true launchpad. Venture-Backed startups will gain
a real onramp into government markets, and both private capital
and federal investment can work together to co-fund the tech-
nologies our war fighters need.
R&D-it’s a bipartisan issue that impacts the workforce and econ-
omy of every state in America. Chair Ernst, Ranking Member Mar-
key, your states represent two critical sectors of American innova-
tion. Iowa’s ag tech drives food security, while Massachusetts
biotech sector pioneers’ life-saving advancements. Neither thrives
without investment, scale, and clear pathways to impact.
In conclusion, I want to thank all the members of the Senate
Small Business Committee. Now is the time to modernize SBIR as
a bridge between government needs and America’s private capital
system. The golden age of American innovation will not be won by
government funding alone, it will be secured by unlocking the full
potential of America’s arsenal, leveraging our free market system,
ensuring economic prosperity, and national security resiliency. I
look forward to being a resource and answering your questions.
Thank you.
[The prepared statement of Mr. Rothzeid follows.]
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37
CHAIR. Great. Thank you, Mr. Rothzeid. And now I recognize my-
self for five minutes of questions. We’ll move into questions. So,
we’ll start with you. Mr. Strawhacker, thank you for your amazing
work and support of small businesses in Iowa. I am very familiar
with what you do, and thank you for it.
I believe it’s in our national interest to scale the best tech-
nologies with strong potential to solve America’s challenges no mat-
ter where they are located. What bureaucratic obstacles exist for
small businesses who are new to SBIR and what reforms should
Congress consider?
Mr. STRAWHACKER. Thank you, Chair Ernst, for that question. As
I mentioned in my testimony, local support is critical for early-
stage development, particularly when it comes to learning about
what these programs can and cannot do for companies. The expo
that we jointly host in the state has done tremendous work in edu-
cating people about these resources, but it has also brought federal
agency representatives to our state to have firsthand conversations
with those business owners. That’s where I believe the most work
occurs.
When someone can sit down with someone who can answer their
questions, right then and there, and provide firsthand technical as-
sistance in the moment, leads to significantly better planning as
people start to enter this space.
In 2022, the year before the expo was launched, we held a very
similar event. And while it was impactful—because it was the first
one that we had done in quite some time, it was very difficult to
get a lot of our agencies to come and have a presence at that event.
Those that did come, were blown away by the amount of innovation
that occurs in our state.
Thankfully we have many more of them coming to our event
right now. But in addition to the expo, the other things that were
mentioned in the testimony such as introducing a smaller Phase I
award, will be very helpful as well as increasing the transparency
and feedback when awards are not approved. Thank you.
CHAIR. Thank you. And if we could move on to you, Mr. Rothzeid.
In your written testimony, you stated, ‘‘innovation thrives in a com-
petitive market where the best ideas rise to the top’’. Over the past
five years, just 10 percent of DOD’s SBIR/STTR funding went to
companies without prior government contracts. I’m concerned
about whether SBIR is living up to its potential, and from what
I’ve been able to see, a system so skewed towards the status quo
and entrenched players is not utilizing competition to drive the in-
novation America needs to stay ahead. So how can we ensure real
and open competition in the SBIR program?
Mr. ROTHZEID. Thank you, Senator Ernst. And I agree with you,
it is not okay that only 10 percent of SBIR recipients are new en-
trants. This ought to be seed capital for the next emerging ideas.
I think one of the major bottlenecks for that program is the idea
of these esoteric, very nuanced, specific topics that are clearly
wired for specific companies based on prior existing relationships
with a company and government labs.
If we can start to generalize the topics more around different
technology areas that an innovator can come and create a new so-
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for the future. It’s also what’s going to address the problems for the
program officers that are responsible for fielding operational equip-
ment to the war fighters.
The labs have a different perspective with R&D, versus the pro-
gram office that are trying to deal with near and dear issues. Addi-
tionally, I do find it hard to believe that a company, a small busi-
ness, can work on a myriad of different technology areas. For my
startups any more than two or three, and they’re very tapped out.
So, we sort of have to ask ourselves, why is there such a market
efficiency where a company can still be a small business, but work
across a dozen different SBIR at the same time? Thank you,
ma’am.
CHAIR. Thank you for pointing that out. I appreciate it. And I
will now turn to Ranking Member—Oh, I can, yes, sir, I can. I will
now turn to Senator Rosen for her questions. Thank you.
Senator ROSEN. Thank you, Madam Chair, thank you. Senator
Markey. I have a 3:30 and I didn’t want to miss, this is such a
great hearing and it’s so important. And I just want to thank you
all for your ideas, for your energy to bring them into reality and
to really think out of the box when you see a problem, be that those
real problem solvers, and it is very exciting. This is a great com-
mittee to see the entrepreneurship and the way people think.
And so, the SBIR, the STTR, the programs, they’re just critical
sources or capital for startups, and for people who see a problem
and think, how can I make it better? How can I fix it? How can
I find that solution? But unfortunately, some states aren’t receiving
their fair share of this vital R&D funding.
Like the Chair, State of Iowa, Nevada sadly is ranked in the bot-
tom third of SBIR and STTR award recipients. In 2023, we re-
ceived only 23 of the SBA awards compared to the national average
of 118 awards per state. I hope to maybe move that up. But the
Federal and State Technology Partnership Program was created to
address this gap. The FAST program provides funding to economic
development entities, research institutions, and that in turn pro-
vide that technical assistance and support to the small businesses
who are applying, you often just don’t know how to get started,
right? That’s a big issue.
So FAST Mission to strengthen the competitiveness of under-
served businesses seeking the SBIR/STTR grants, it’s critical. And
Congress, I believe must continue to support it alongside its inno-
vation initiatives. So, Mr. Strawhacker, as a FAST recipient, I
know you know how important it is, can you discuss the ways your
SBDC has better served businesses who struggle to navigate the
SBIR/STTR process. And what challenges are you facing that we
can address here?
Mr. STRAWHACKER. Thank you, Senator Rosen. You are abso-
lutely correct that the FAST program is tremendously valuable to
this overall equation, but it does play a complimentary role to the
business owners and the innovators. We are there to connect them
to resources, connect them to people who can ultimately invest in
these companies. But it’s their idea and their innovation that
drives us forward.
We have brought on a myriad of different proposal development
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possibly get to. And I’m confident in saying that the proposals com-
ing out of Iowa right now are as strong as they have ever been.
We have developed deeper partnerships with state agency, Iowa
Economic Development Authority, who provides some of the match-
ing funds. But there is still a lot of work to be done. I hope that
other states will look at implementing an entrepreneur expo where
they can bring firsthand agency representatives.
Senator ROSEN. I’ve already written that down. We’re going to
contact you on that.
Mr. STRAWHACKER. Happy to share any details. Thank you for
your question.
Senator ROSEN. Thank you. I want to talk a little bit about rural
business access to SBIR funding. Because we know small busi-
nesses are the key economic drivers in every Nevada community,
in fact, Nevada is known for our large, obviously, casinos in Las
Vegas, but to be honest, 99 percent of businesses in Nevada are
small businesses. They bolster our industries, they support the
good paying jobs, local jobs. It’s true both urban and rural.
And despite their importance, rural small businesses historically
face a lot of challenges accessing capital and small business re-
sources, I know you know this as well. So again, I’m going to stick
with you today, Mr. Strawhacker. What challenges do you think
the rural businesses have and how can we help them address that
maybe more specific need they have and the ways the FAST pro-
gram can really better connect our resource partners to the SBIRs?
Mr. STRAWHACKER. Thank you, Senator. It is often remarkably
difficult to physically get to certain parts of rural states.
Senator ROSEN. You’ve been to Nevada, so, you know, deep fron-
tier, rural states, most mountainous state in the lower 48, I might
add.
Mr. STRAWHACKER. I did not know that. Thank you. [Laughter.]
That is why we have utilized the longstanding success of the
SBDC network to come alongside the FAST program. We have 15
offices strategically located around the state of Iowa through 11
partnerships with community colleges. And then four centers
hosted by our three public institutions in the state.
Those people are in the community where those business owners
are developing their ideas. They’re constantly networking with dif-
ferent economic development agencies, different lenders. They
serve as the pipeline for that technology-based business into our
technology and commercialization center who can ultimately get
them to that finish line.
Senator ROSEN. Well, good. We might be reaching out to you for
some connection with Nevada.
Mr. STRAWHACKER. Absolutely.
Senator ROSEN. Thank you all for being here and what you do.
And thank you again, Senator Markey, Madam Chair.
CHAIR. Yes. Thank you so much, Senator Rosen. Next, we’ll go
to Senator Husted for five minutes of questions.
Senator HUSTED. Thank you, Chair Ernst. Appreciate that. So
business is hard. Many startups fail, particularly if you’re in tech
because there’s somebody else out there, all the time, who’s also in-
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And how do you go about the process of identifying who should
receive assistance, who shouldn’t? Because in a marketplace, it’s so
much easier in the sense that when it’s your real money and it’s
your decision, you are far more discerning than when it’s not. And
so, how does that process work right now? And how can we make
it more like how a real marketplace works? And I’m open to whom-
ever can answer that question the best.
Mr. CARR. I mean, I’ll jump in, it’s an elevator pitch. At the end
of the day, it’s a quick white paper with a quick summary, 1, 2,
3 pages, and that’s it. The reality is, the SBIR program has con-
tinuously gotten longer and longer and longer in regards to its pro-
posals. I can tell you with a team of three people working in a ga-
rage, I did not have time to write a hundred-page proposal. I have
an elevator pitch. And the question is, are you-as the person on the
other side, willing to buy into that elevator pitch or do you think
that something else should be awarded instead?
Senator HUSTED. And does the process that we’re using in this,
is it entrepreneurial enough? Does it work?
Mr. CARR. I think the bureaucracy, as much as I would love to
make it simpler, it forces you to be an entrepreneur. Because at the
end of the day, you got to figure out how to navigate the market.
And if you’re trying to navigate the U.S. government, you’ve got to
learn and be that entrepreneurial self to be able to figure out how
you complete that navigation.
And so, from my perspective I believe a lot of the proposals, sup-
porting, making that elevator pitch much easier for smaller compa-
nies to make it, you will continue to see more and more entrants
coming into the program to be able to validate whether it’s real or
not.
Senator HUSTED. As I was doing a little research on this, one of
the common complaints is that, hey, the people who do figure it out
are the ones who are getting all the money. And the people who
haven’t figured it out, you know, and there’s just a barrier that it’s
like a mystery of, what door I go into and how I do this? How do
we improve upon that?
Mr. ROTHZEID. Well, if I may, you know, I’ve been somebody on
the other side as a government evaluator. And a big part of it, be-
cause on certain areas, you get so many proposals that you try to
take the easy way out, and you say, who didn’t cross their t and
dot their i perfectly. And so that sort of sentiment certainly favors
those who have gone through the process before because they’re
able to rinse and repeat a lot of their proposals going forward.
And I think that’s why with Chair Ernst and her recommenda-
tions of putting a cap, sort of gets us away from being more process
oriented and more about the spirit of the idea. Because when the
same companies can submit 50 applications at a time in a given
window, and the resources to be able to evaluate all of the incom-
ing solicitations, there has to be a level of empathy for the reviewer
on the government side.
As a venture capitalist, I take pitches all the time. Right? I’ve
got three more scheduled later today on different companies. Most
of them are going to receive a no, and that’s just the reality. Be-
cause I’m looking at the competitive marketplace, the ins, you
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to sell into? These are difficult things that you learn over years and
reps. And our government stakeholders don’t necessarily have that
same background, but we just need to make it easier for them to
evaluate less companies.
Senator HUSTED. Thank you. My time is going to run out. And
I want to ask a question because I’m not sure how to do. Is it more
difficult the way we set up particularly for our contracting with the
U.S. military? I was told one time that small businesses—that the
big contractors welcome them as long as they stay in their box.
And if they can’t have a they really try to—we have bidding rules
that make it hard for a small business to do entry. Is that accurate
for anybody who’s worked on that?
Mr. CARR. I can jump up and say absolutely not. As a lawyer,
one of the best things I ever did was go to law school, because I’ll
tell you the NDAs that I signed with some of the big primes, they
take your IP, they absolutely take the knowledge, the idea, and
then they fit you into that box, and they force you into that box.
Senator HUSTED. And you must stay in that box.
Mr. CARR. You must stay in that box, which is completely
against the idea.
Senator HUSTED. Yes. Madam Chair, an opportunity maybe to
explore that issue on another occasion. Thank you.
CHAIR. Yes, absolutely. Thank you, Senator Husted. And Senator
Markey, we’ll go back to you.
Senator MARKEY. Thank you so much. And I agree with—listen,
this whole idea of the big companies, like Microsoft just swiped the
browser idea, you know, from Netscape, just swiped it. Oh, we’re
going to give it away. We’ve innovated it so we can give it away—
the Internet Explorer. Big companies actually don’t make break-
throughs, it’s just a joke, they steal it from younger companies,
whoever, they’ll buy it up. But a lot of stealing goes on. You got
to protect these people from the highway robbery of Silicon Valley
companies. They just put more police on that beat.
The SBIR and STTR programs provide small businesses early-
stage funding when private sector funding is less likely. Many
small businesses have said that without SBIR and STTR funding
their businesses and the technologies that they successfully develop
may not exist.
More often than not, companies utilize SBIR to develop tech-
nologies that ultimately reach the market to benefit Americans
across the country and provide critical technology to the govern-
ment. So, Dr. Mahmud, can you speak to the impact that SBIR and
STTR funding have had on Tritons ability to innovate technologies
that benefit everyday Americans?
Dr. MAHMUD. Thank you, Senator, for the question. So, as I had
mentioned at the beginning, just because of the passion of our em-
ployees, we do target benefiting the war fighter for a lot of the
technologies that we develop. And it turns out in many cases that
the technologies have a dual use. In fact, in our business model,
when the technology has a commercial use, we completely spin off
the company to go raise money in the venture capital market, as
has been discussed. Because the commercial market operates, you
know, the venture capital industry has very tight timelines and ex-
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So, one example that I can cite, which is benefiting everyday
Americans, is when we started and we created a spinoff for a sen-
sor technology, a location sensor technology, and the application—
the biggest application turned out to be for a heart pump. A heart
pump that is used as I had just mentioned, for Cardiac disease,
heart attacks and cardiac disease are the number one cause of
deaths, for Americans.
This heart pump used this sensor, they enabled the heart pump
to become the smallest heart pump and heart pumps are inserted
through the artery, it has to be very small. And so, it enabled this
technology and that heart pump is now widely used. So, this is an
example of something that has widespread application, but did
come from an SBIR technology that was targeting a different appli-
cation.
Senator MARKEY. Again, half all SBIR and STTR awards are
made by the defense department.
Dr. MAHMUD. Correct.
Senator MARKEY. The Defense Department has to approve these
SBIR awards, this is the technology the defense department wants,
to protect our country. And, ultimately our advantage over China
or any other country is that we’re technologically superior to them.
My mother would always say to me, when she was disappointed
in me as a boy, she would say, Eddie, your father and I are going
to donate your brain to Harvard Medical School, it’s a completely
unused human organ. Okay? So, you have to learn how to work
smarter, not harder. So that’s what technology is, and it has to be
the best technology if you’re going to surpass the Chinese, this is
a ruthless Darwinian world that we’re in right now.
So, in your opinion, doctor, does the Defense Department make
those kind of ruthless Darwinian decisions to enhance our defense
capability when they’re deciding who gets these SBIR awards?
Dr. MAHMUD. I can only speak to my company’s experience; I
can’t speak to DODs practices. In our experience, we tend to focus
on trying to understand what the gap is for the war fighter. We
focus a lot to understand that. Oftentimes the commercial applica-
tion may not be obvious to us. And when we do find a commercial
application, as I said, we spin off the company to raise money in
the venture capital market.
And as I’ve showed in our examples, when we understand the
problem, and I’ll give you the example of the F–35, there was two
problems there. One is of course sustainability costs, the source
was a foreign source, and then the second problem was that it was
causing a significant health hazard to the war fighter, the mainte-
nance depots, and the service depots.
And so, we worked with the primes, and as I mentioned, you do
have to work with the primes because they own the F–35. They
own most platforms. We work with the primes closely to incor-
porate this new material to solve this problem, which as the Air
Force has announced, is going to save them over a half a billion
dollars. So, I’m not sure if I answered your question.
Senator MARKEY. Well, you did. You have a technology that the
military’s going to use, would work smarter, not harder, saves
money, you know, it works better. It’s a smart technology. And you
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tion and you did it with the prime, but the prime itself wasn’t com-
ing up with the answer. And the SBIR incentivize you to find the
answer to the problem. Is that correct?
Dr. MAHMUD. That’s correct, Senator. And if I may add, you
know, cost savings that we bring to the government, like in this
case, and there are other cases, there’s another case where we save
$200 million for the F–22 platform. They do not show up in any
metrics. None of our metrics, SBIR metrics, success metrics, they
don’t show up.
So, it’s highly unlikely if we don’t solve this problem that anyone
else will do it. Because there’s no financial incentive for most com-
panies to take on a problem that has a low return for the company,
relatively speaking, versus the government.
Senator MARKEY. And if I may, so you are saying essentially ven-
ture capital money is looking to make a big profit. And here there’s
not a big profit, but there’s a big problem that has to get solved
by the Defense Department because of some medical condition that
they want to see solved.
Dr. MAHMUD. I will just say, you know, our spinoffs are very ac-
tive in the venture capital market, so we understand, you know,
how the venture capital market works very well. I will just say
that there are problems that are debilitating and life-changing and
very, very difficult for the war fighter. I just mentioned the hearing
loss problem. The hearing loss problem is a significant problem for
the war fighter.
The F–35 problem was really exposing them to a lot of toxic dust.
The bladder relief problem which we worked on, and is now being
evaluated by the pilots in the Navy and the long-range recon mis-
sions that the Air Force is running over our adversaries. You know,
there is no restroom for female pilots. There is no solution. You
know, some pilots practice tactical dehydration. It is not a good sit-
uation. And, you know, we came in with a solution that was opti-
mal for female pilots, female aviators actually. And also, for male
aviators now.
So, these are not problems that the traditional marketplace looks
to address because the market is too small. There’s only so many
pilots. There’s only so many—the market is just not big enough to
attract those investments. And those are the ones where we feel we
have brought tremendous benefit to the war fighter.
Senator MARKEY. Thank You, doctor. Thank you.
CHAIR. Thank you. And I now recognize Senator Shaheen. Thank
you.
Senator SHAHEEN. Well, thank you Madam Chair and Ranking
Member. I’m delighted that we’re doing this hearing on the SBIR
and STTR programs. Thank you to all the witnesses for being here.
I apologize for missing your testimony. I was at Armed Services
hearing subcommittee, so that’s why you weren’t there, Senator
Ernst. [Laughter.]
Senator SHAHEEN. But the reason I’m so enthusiastic about, one
of the reasons I’m so enthusiastic about the SBIR program is that
it was created by New Hampshire Senator Warren Rudman back
in the 1980s. And so, I’ve had a chance to see it up close from that
time to see how it’s grown and to see the difference that it’s made
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for small business in New Hampshire. And I know that you have
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stories about the differences that it’s making in Massachusetts and
Iowa and across the country.
And you may have already asked this question, question, Senator
Markey, because I just came in on the end of it. But as I under-
stand Dr. Mahmud, in your testimony, you described millions of
dollars in savings to the Defense Department from SBIR work that
your company has done. And do you know if those savings are
counted in statistics about the SBIR return on investment or on in
the commercialization data that’s provided?
Dr. MAHMUD. Thank you, Senator. I did, you missed that part,
that question was asked, but I will repeat that. Thank you for ask-
ing that. So, you know, cost savings that we realize for the govern-
ment and just as importantly benefits to the war fighter’s health,
preventing hearing loss, once a war fighter is exposed to noise, and
they are exposed to a lot, air crews are exposed to a lot of noise,
it is a permanent condition, it’s impossible to reverse it. It’s very
difficult to reverse it, I should say. It’s not impossible, it’s very dif-
ficult to reverse it.
And I also mentioned that the VA, there’s a million veterans
with hearing loss right now, and 2 million with tinnitus, which is
related. So, we have focused in terms of our support to the war
fighter on developing technologies for air crew protection that’s
being qualified for Army helicopters. And we are developing blad-
der relief for female pilots for long distance recon mission.
Senator SHAHEEN. I did hear you talking about that.
Dr. MAHMUD. Okay. Thank you.
Senator SHAHEEN. Apologize my attention because you were talk-
ing about hearing loss, and we have a New Hampshire company
that’s developed a new hearing protection helmet system for air-
craft carrier deck crew for that very reason. And they estimate that
the Navy’s going to save about $500 million because of their SBIR
award. So, it is something that I think we ought to think about
how we include that information in the statistics about the pro-
gram.
Mr. Strawhacker, I think you talked about working together with
neighboring states on the FAST program. Do you think more fund-
ing for FAST would help with those partnerships and or how can
we encourage that kind of collaboration?
Mr. STRAWHACKER. Well, I do think that that type of collabora-
tion should definitely be looked at being implemented everywhere
across the nation. Especially those FAST awardees who exist with-
in an SPDC program. We already have a nationwide network that
builds in geographic subgroups, that meet together some annually,
some quarterly. I know the Southeast area is very strong in the
SPDC network.
Those that have the FAST grant in addition to the SBDC pro-
gram, have that natural group already there. They just need to tap
into bringing the right advisors to the table and having that. The
FAST grant plays a complimentary role to the business owners,
they are the innovators, it’s their technology. They just need us to
support them and help them access the correct resources. Thank
you, Senator.
Senator SHAHEEN. Thank you. Dr. Mahmud, I know that there
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has been some discussion about limiting the number of awards that
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a business can get through the SBIR program. And I would ask you
and others on the panel, if that’s something that would be helpful.
I know that we have a number of companies in New Hampshire
that have been very successful at getting multiple awards, and I
would hate to have them be limited in what they could get. So, I
don’t know, maybe you could speak to that and others could speak
to it if you have a view on that issue.
Dr. MAHMUD. Sure, thank you, Senator, for the question. I think
one of the most powerful foundations of the SBIR program, it was
set up very wisely, that the agencies have a tremendous amount
of flexibility to adapt the program to their mission needs. So, they
have the flexibility to decide on limiting the number of applicants.
They have the flexibility to decide on how many open topics, they
have tremendous flexibility to adjust to what they need.
So, you know, from our view, we support the mission of the agen-
cies. And if we are allowed to, if we see a problem, we’ll put in our
idea. And if it is a good idea or the best idea, it is often recognized.
And if it’s not, its not. We think the tent is wide and we have a
shrinking defense industrial base. We have no opportunity to take
out good ideas. We are not going to win if we take out good ideas.
So, there’s no reason to cap good ideas.
Senator SHAHEEN. Thank you. I’m out of time, Madam Chair, but
I don’t know if anybody else would want to speak to that?
Mr. CARR. I would just add, so I’m a large proponent of putting
some type of cap in, especially for Phase I and Phase II. And the
specific reason for it, is we’re talking about small businesses here,
we’re not talking about primes. If you’re a small business, I can’t
chase 20, 30, 50, a hundred different technologies with different
market applications and different things. I can’t raise money for it.
These guys would never give me money. Because the reality is, I’ve
got to be super focused as an entrepreneur, to be able to scale that
capability into an actual product and then naturally into a com-
pany.
So, if we have companies that have hundreds of different prod-
ucts and technologies, what are they working on? And in fact, I
would argue that they’re absolutely getting disincentivized to be
able to take that one particular technology that we say.
Senator SHAHEEN. And do we have any that fit in that category?
Is there information that shows that we have multiple companies
that fit into that category?
Mr. CARR. I would argue that SBIR Mills would be the way to
do it.
Senator SHAHEEN. And do you also feel that way if it’s done not
simultaneously, but serially, so the company gets an award, is suc-
cessful, then applies again, and gets another award and is success-
ful or not, applies again. Are you concerned about that aspect of
it as well?
Mr. CARR. I mean, for us we actually—because of the dual use
aspect of the SBIR program going into, we actually diversified into
construction cranes and now stabilize loads on suspended cranes.
But it’s tangential technology specific to what we are building.
What I would argue there is that if it continues to be linear and
you go from one technology to the next, are you really exiting the
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new product at the bequest of the U.S. government, i.e., the SBIR
program, but never taking that to the final step, which is, Hey,
you’re my customer. How do I get this to you? And how do I get
it to you as fast as I can? But not just you, but the whole market
as a whole.
Senator SHAHEEN. Thank you. Thank you, Madam Chair.
CHAIR. Thank you. And Senator Budd, you are recognized for five
minutes.
Senator BUDD. Thank the Chair and thank you all for being here
today. Mr. Rothzeid, every day I hear from small businesses in
North Carolina particularly small businesses with innovative solu-
tions to real problems facing our war fighters who discuss chal-
lenges to working with the DOD. We hear it all the time.
So, the PPBE reform report, or the commission on Planning, Pro-
gramming, Budgeting and Execution, I’m sure you’re familiar with
it, highlights the barriers to new and emerging defense companies
in working with the DOD. Specifically, PPBE commission finds
that ‘‘A challenge SBIR faces, is that promising Phase II projects
are not deployed as often as would be preferred by the DOD.’’ So,
what do you see as the principal barriers to Phase II projects de-
ploying further within DOD?
Mr. ROTHZEID. Thank you, Senator Budd. And I would just recog-
nize that the managing partner of Shield Capital Raj Shah, was
one of the commissioners on the PPB and E.
Senator BUDD. You might have a little insight then.
Mr. ROTHZEID. So as far as you know, the transition rates which
I highlighted in my testimony being about 18 percent, moving from
Phase II to Phase III, is a low number. And I’m not here to argue
that it needs to be a hundred percent right. We’re talking about
seed innovation; we’re trying out ideas. The war fighters can pro-
vide feedback. If it’s not meeting a need or if it’s not a scalable
need, then there’s no need to continue it forward.
But I think one of the areas that really hampers the Department
of Defense is, while you can win an SBIR in the year of execution,
so within this current fiscal year, the planning programming and
budgeting, and execution is inherently a two year long process. So,
there’s no gap year to be able to fill that need, so that what the
war fighter likes and sees and wants to scale, they now have to
sort of sit on their hands and wait for the PPB and E to now catch
up for the ensuing fiscal year, often two fiscal years ahead.
And that can be a really big challenge for a company that is try-
ing to sell a product that is very specific to the war fighter. Now,
in a lot of cases in the companies that we invest in, they’re dual
use tech. So yes, we want them to sell to the Department of De-
fense National Security, we also want them to be selling to the
commercial environment. That sort of leverage provides them an
opportunity to stay afloat while the PPBE cycle catches up.
However, why should our war fighters have to wait for a solution
that they need today? Right? We’re working for a readiness that al-
lows us to be prepared tomorrow.
Senator BUDD. So, in simple terms, what’s the fix there? Other
than just getting cash flow, I imagine from the commercial applica-
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Mr. ROTHZEID. Absolutely. And so, one thing that the Depart-
ment of the Air Force came up with in March of 2020 was the
STRATFI/TACFI program. And it allows them to leverage addi-
tional SBIR funding up to 15 million with just SBIR funding, to
carry forward on promising technology that has matching funds. In
that so far as the DOD has non SBIR funding allocated to them,
and they’ve also erased third party venture capital.
Senator BUDD. Okay. So, you mentioned that 18 percent kind of
make that gap over to Phase II, right?
Mr. ROTHZEID. From Phase II to Phase III.
Senator BUDD. Phase II to Phase III. So, 82 percent don’t. So,
with this new system, if you will, in place that you just mentioned,
what does that number go to? It goes from 18 percent to—what
would you estimate it to be?
Mr. ROTHZEID. Well, with the reality of an opportunity cost,
where now more of that funding that would’ve gone to fund more
Phase I, more Phase IIs being put into this other bucket of
STRATFI or a bridge if you will, you’re probably going to see a
shrinkage of the amount of total number of SBIR Phase I, Phase
IIs, a larger number of opportunities to transition to Phase III. I
would expect it to go more to the 35 percent, ideally doubling.
Senator BUDD. And you’re saying in that 82 percent, which
would diminish in this scenario, the 82 percent fails. There’s a lot
of good useful things. It doesn’t, need to be a hundred percent that
passes, but the 82 percent that fails, there’s a lot of useful things
in there for our war fighters that are unnecessarily failing.
Mr. ROTHZEID. Unfortunately, that is the case.
Senator BUDD. Okay. The PBBE Reform Commission also rec-
ommended aligning the SBIR program to the DOD overall science
and technology strategy by ensuring that the programming and
budgeting process includes specific analysis of SBIR and STTR
projects as budget requests are being developed. So, can you speak
to your views on that recommendation?
Mr. ROTHZEID. I’m sorry, sir, I wasn’t quite following.
Senator BUDD. So, I think there’s the question of, they want to
align the PBBE Reform Commission, they want to align it with the
DoDs overall science and technology strategy. And they want the
budgeting process to include specific analysis of SBIR and STTR
projects as the budget requests are being developed. So, do you
have any thoughts on that?
Mr. ROTHZEID. I would just say that 11 of the 14 critical tech-
nology areas as identified by the Department of Defense, 11 of
them are commercially developed. We need to align our S&T strat-
egy with where the emerging market trends in the commercial sec-
tor are occurring, and make sure we are providing healthy amount
of financing in those areas for DOD programs.
Senator BUDD. That’s very helpful. Thank you all.
CHAIR. Thank you, Senator Budd. I’ll go ahead and start, if you’d
like a second round.
Senator MARKEY. If I may, if you don’t mind.
CHAIR. I’ll go ahead and—if you want to go ahead, I’ll close up
after you. Absolutely, Ranking Member, go ahead.
Senator MARKEY. No, I thank you so much. Two weeks ago, the
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House Small Business Committee held a hearing on SBIR and
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STTR where Chairman Williams in the house, talked about the im-
portance of preserving merit-based competition in the program. He
said, innovators thrive in an environment where competition reigns
supreme, where they are free from the limitations or caps on their
success. And I agree with that. We should prioritize merit without
adding extra layers of bureaucracy.
So, Dr. Mahmud, through Triton Systems we have seen great
success in meeting the increased commercialization benchmarks for
experienced small businesses. And I understand that the company
did not meet the increased transition benchmarks leading to a limit
on the number of Phase I and direct to Phase II awards Triton can
receive. How have these caps impacted your company’s strategy in
determining what you would be proposing in the future?
Dr. MAHMUD. Thank you, Senator, for the question. I think we
can all agree that the commercialization benchmark, this is what
everybody’s talked about, is very important. Everything needs to
have a purpose. Everything needs to—we need to maximize com-
mercialization. That’s how all companies should be measured, at
least in my opinion. The Phase I to Phase II conversion metric does
not have a commercialization meaning, you know.
For example, we just talked about bringing in more companies,
giving out a lot of Phase I awards. Air Force did that, by the way.
They gave out a lot of small Phase I awards, and then maybe they
had one or two Phase IIs in mind. I don’t know.
Senator MARKEY. Maybe they had one or two?
Dr. MAHMUD. Phase II’s in mind. Because they want to see
what’s out there. So, this is the idea, is to make small investments
and capture the best idea. So, I certainly don’t feel that the Phase
I to Phase II conversion metric carries any commercialization
meaning.
Having said that, the Phase II awards as was discussed here, it
was just discussed in a number of questions. Oftentimes the small
business has no control, the need may have gone away. The cus-
tomer no longer needs it, or the agency no longer needs it, or
there’s no funding. Or they will award many, many Phase Is and
determine one Phase II. So, what we have done based on these new
benchmarks is really become extremely risk averse and we only
focus now on Phase Is where we totally understand how to transi-
tion this, you know, what is the best endpoint——
Senator MARKEY. So, you just look now at surefire commer-
cialization?
Dr. MAHMUD. That’s right. We do not take high risk.
Senator MARKEY. You don’t focus as much on the breakthrough
technology that can be transformative because it’s not a surefire
commercialization yet. We need to be taking the risk to find the
breakthrough because, in China, they’re throwing tens of hundreds
of billions of dollars at the breakthroughs.
Dr. MAHMUD. Correct. We do not pursue high risk opportunities
even if we have a good idea because we are not sure what the out-
come is.
Senator MARKEY. Which is very, very helpful. And can you ex-
plain the process of transitioning from proof of concept, or a Phase
I award, to a Phase II award and how rigorous that process can
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be even for the most innovative technologies? Dr. Mahmud.
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Dr. MAHMUD. Would you like me to explain the process, or ex-
cuse me, I didn’t catch the question?
Senator MARKEY. The question is, can you explain the process for
transitioning from a proof of concept or a Phase I award to a Phase
II award? How rigorous is that process?
Dr. MAHMUD. I’d be delighted to. So, you know, the, the philos-
ophy of the SBIR program is to invest low in the Phase I’s and
then to see which of these proof of concepts is demonstrated. That’s
the process. But agencies have very different practices, as I just
mentioned. Some may have a path to a Phase II, some may have
no funds for a Phase II, this happens quite a bit. So, the agency
itself may not have a plan on moving it forward, and oftentimes
the need goes away.
So, the process for a general small business is understand, you
know, if you can show the concept in the Phase I, then compete to
demonstrate you have the best solution for the Phase II. And you
know, that’s the process. But as I said, because the agency prac-
tices are very different and the situations are different, the Phase
II may become irrelevant, and then the small business has no con-
trol.
Senator MARKEY. No, and I thank you for that. And I thank all
the witnesses. I thank you, Madam Chair. And I can just finish up,
if I may, just by saying that we’ve heard the word ‘‘Mills’’ thrown
around today disparaging some of the most innovative and dedi-
cated small businesses.
Massachusetts is proud of its mill culture. Our economy was
built off of the textile mills during the Industrial Revolution. The
only reason Thomas Markey left Ireland to go to Dover, New
Hampshire was the mills were in Dover, New Hampshire, where
Senator Shaheen’s husband was being raised. So that’s the only
reason I’m here—is those mills.
And today the Senate Republicans, they’re trying to paint a pic-
ture that innovative, ambitious, and productive small businesses or
‘‘mills,’’ as they like to call them, are bad. These mills that they
want to end, they’re small businesses that delve into novel ideas
and bring them to reality. They are small businesses that develop
cancer therapy technology and the world’s smallest heart pump.
Small businesses that save hundreds of millions of dollars for the
federal government and have a huge return on investments, small
businesses that advance the national security interest of our coun-
try.
If being a mill means being an efficient and effective small busi-
ness innovator, then I don’t think that’s a bad thing. And Massa-
chusetts and many other states are hubs of innovation, and that’s
why we produce such tremendous technology. And we don’t have
big businesses that much in Massachusetts that drive our economy,
we have small businesses that come up with good ideas that serve
our nation and save lives, especially in this defense sector. Okay,
this is where we specialize.
Department of Energy is high on the list as well, but 80 percent
as we know of the Department of Energy budget is just nuclear
weapons, nuclear management. Right? You need the smartest peo-
ple thinking about that, NASA all the way down the line. Those
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are the agencies that are asking for these technologies to be in-
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50
vested in, okay? And it’s to keep us ahead of our geopolitical rivals
in the rest of the world. It’s using our brain power, and we just
have to ensure that these small businesses are able to freely com-
pete for government funding and are not penalized for their excel-
lence. If someday they want to sell to a big company, Raytheon or
Lockheed, that’s their right.
But the innovation’s going to come for our defense and for many
other areas, from these smaller companies, and that has to be the
primary thing. Is it going to likely produce that breakthrough or
not? And does the Defense Department want to take a risk over
here with some breakthrough technologies that may or may not get
the result they’re looking for in the first or second round? Okay.
That’s the decision I think we have to make as a country. And
I thank you, Madam Chair, for this very valuable hearing.
CHAIR. Thank you. I do have just a couple of additional questions
and we’ll demonstrate why we think there is a need for reform.
And so, Dr. Mahmud, again, thank you for being here. And please
answer yes or no for this question. Are you aware of any ties be-
tween your leadership team, personnel, or spinoff companies with
foreign countries of concern?
Dr. MAHMUD. May I answer the question?
CHAIR. Yes.
Dr. MAHMUD. So, we are a cleared facility. We are audited by the
Defense Counterintelligence and Security Agency (DCSA). We work
closely with DCSA on vetting out any kind of foreign intrusion into
the company. As I had just mentioned, when our spinoffs go out in
the venture capital market, you know, we have no control of them.
The spinoffs, you know, they will go and raise money in the ven-
ture capital market. We have no say on that.
We have taken in consultation with DCSA incredible safeguards
to isolate our technologies and our personnel from everyone, includ-
ing the board and the management of our company. We have
worked very closely with DCSA to do that because of this exact
concern that spinoffs, we have no control over what they do.
CHAIR. So, you are aware though, that there have been ties to
countries of concern?
Dr. MAHMUD. I’ve read in the press. I am not personally aware,
but I’ve read in the press that, you know, one of the spinoffs, has
made—raised money globally. So, there is concern about that, and
we cut off all ties with those spinoffs a long time ago.
CHAIR. Okay. And just so for the record, Triton has received 902
SBIR/STTR awards, accounting for more than $350 million. And
that is really hard for me to explain to Iowans how someone who
has received over $300 million can still be considered a small busi-
ness. So that’s really difficult for me to explain in the Heartland.
So, I do want to enter into the record open-source data that I
found on ties between Triton CEO and joint ventures with Triton
spinoff companies. You did state that you can’t control those com-
panies, but they are ties between your spinoff companies and com-
panies in China, and without objections, so ordered.
CHAIR. So again, what we found in 2020, was that Tritons cur-
rent CEO then was appointed to serve on the board of CITIC Cap-
ital Acquisition Corporation, which is a Chinese financial service
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sponsored by a state-owned financial conglomerate in China. Fur-
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51
ther, FRX polymer, a spinoff again of Triton, received $22 million
from CITIC and pursued a joint venture with a Chinese company
in 2019. Tritons biotech division also merged to become Chinook
Therapeutics, which in 2021 pursued a joint venture with Pivotal
bioVentures China.
Triton, CEO was the chairman of FRX until last month, and was
a board member of Chinook Therapeutics. I would like to enter into
the record open-source data on these ties with China, and without
objection, so ordered.
CHAIR. I also want to point out the SBIR due diligence disclo-
sures require Triton to disclose joint ventures and foreign invest-
ment. Spinning these companies off to do joint ventures and taking
Chinese investment appears to be a loophole, and this track record
should be accounted for when Triton applies for SBIR awards.
Triton does not seem to care who they are selling taxpayer fund-
ed research to. This is a national security risk and why I’ve pro-
posed strengthening the due diligence evaluation standards, to
make sure agencies are catching all of this open-source analysis
and making prudent judgment calls on who they award repeat con-
tracts to.
So, again, the SBIR mills, I understand that while there may be
opportunity out there for these small businesses, I’m going to set
the record straight with this. Success is not measured in the num-
ber of SBIR awards a company wins, but rather the commercial
and mission impact made by leveraging SBIR dollars. I think a
number of you stated that. We should not reward firms that game
the system and use SBIR known by many as America’s Seed Fund,
as their primary revenue source, yet have fewer sales, fewer invest-
ments, and fewer patents as GAO reports.
SBIR mills push out innovators in the heartland states like mine
of Iowa, and like Senator Jackie Rosen’s in Nevada. I have a hard
time justifying again to Iowans that companies that can take hun-
dreds of millions of dollars of SBIR grants can still pass as a small
business. So those concerns outline exactly why I am pursuing
changes to the SBIR/STTR program. I do hope that we will have
a bipartisan bill that we will be able to move forward. We have
been joined by Senator Young. Senator Young, do you have ques-
tions before we close today’s hearing?
Senator YOUNG. Well, I do Chairman. Thank you so much, Chair
Ernst, I thank the Ranking Member for holding this important
hearing. Thank all of our witnesses for being here.
As Congress continues to consider reauthorizing this important
SBIR/STTR program, I think it’s critical that we take this oppor-
tunity to review the framework, look for ways in which we can im-
prove it. Relatedly, over the last year or so, I’ve had the privilege
of chairing a commission, the National Security Commission on
Emerging Biotechnology.
And one of the topics that will be included in our report to Con-
gress, is how China is outspending and out strategizing the United
States when it comes to critical technology investment, and devel-
opment of those technologies, especially in the area of bio-
technology. And, and so I asked Mr. Rothzeid, how can the federal
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government better ensure that funds of this program are trans-
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52
lating into material technology innovation, especially in the areas
that require sustained capital to scale?
Mr. ROTHZEID. Thank you, Senator Young. In my mind, the only
way that the U.S. can compete with China when it comes to tech-
nology is by leveraging its greatest asset, and that’s the private
capital marketplace, the envy of the world, because it attracts en-
trepreneurs both here in the United States and abroad to want to
come build here.
The days of the government being able to foot the bill with its
R&D budget are long gone past, but the systems and the programs
and the structures that we’ve put in place, were predicated on that
paradigm. Just going back to 1960, 24 percent of all the world’s
R&D expenditure were happening in government labs, today, it’s
less than 1 percent.
So, if we’re going to compete, we have to get smarter about how
we’re leveraging taxpayer dollars and leveraging third party capital
providers, to build technology companies of consequence. Thank
you, sir.
Senator YOUNG. Well, thank you. Your points of emphasis are
well received, especially in light of the fact that I’ve been working
with, I think every member of this committee, on something out-
side of the jurisdiction of this committee, but it’s to preserve re-
search and development deductions through the tax code for our
small businesses and frankly, for emerging high growth potential
businesses pre profitability, to offer them an R&D tax credit to
incentivize their early-stage R&D and then hopefully growth as a
company. Mr. Rothzeid, to continue, do you have additional
thoughts on how the SBIR/STTR program can better support Amer-
ican tech innovation and biotech and other critical sectors?
Mr. ROTHZEID. Yes. Senator Young, I think what Chair Ernst has
proposed with creating bridge programs within the SBIR program
to provide larger pots of funding for technology of consequence as
signaled by the federal agencies, similar to what the Air Force and
Space Force have done with STRATFI and the Army with Catalyst,
these are the types of signals that help ensure that the investors
can then understand what’s really important to the federal agen-
cies, provide additional capital to those companies so that they can
hire the right amount of people, invest in cutting edge equipment,
and continue to scale and grow.
Because if we’re not building companies that want to scale and
grow, then they won’t be able to meet the needs of national secu-
rity and outfitting thousands of soldier sailors, marines, airmen,
and guardians.
Senator YOUNG. Thank you for that. I have about a minute left
and would just like to briefly explore with you, Mr. Rothzeid, some-
thing related to DODs integration of open topic solicitations. My of-
fice has been impressed with these and their importance. These
allow small businesses to propose solutions, to more broadly define
problems. As we think about ways to support small businesses that
are working on innovative technologies, it seems like expanding
what departments and agencies can solicit open topic proposals for,
might make some sense. Can you offer any reflections on this topic?
Mr. ROTHZEID. Senator, I believe that the open topic is the rea-
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son why this convening is happening today, getting interest from
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53
venture capitalists like myself and startup founders, like Mr. Carr.
It’s because innovators are building solutions that the department
hasn’t even imagined.
If we leave it to the whims of the department, they’ll come up
with very bespoke requirements around the things that they’ve al-
ready thought of. But that’s a very small pool of people. Instead,
we need to open it up to open topics. What are the solutions to the
problems I didn’t even know I had, and let the entrepreneurial
class of America go to work.
Senator YOUNG. In light of the fact that I’ve already gone over
my time. Might I work with you on an ongoing basis to explore
ways to expand the scenarios and situations with which open topic
proposals can be utilized and related topics?
Mr. ROTHZEID. Senator Young, absolutely.
Senator YOUNG. All right, great. Thank you, Chair.
CHAIR. Thank you. Are there any additional questions? Okay.
And with no further questions, I want to thank the witnesses for
being here today. I ask unanimous consent that the record of to-
day’s hearing remain open for two weeks for members to submit
questions, revise, and extend their remarks, and submit additional
information into the record.
CHAIR. Without objection, so ordered. And with that, the Com-
mittee on Small Business and Entrepreneurship stands adjourned.
[Whereupon, at 4:11 p.m., the hearing was adjourned.]
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dmwilson on DSK7X7S144PROD with HEARING
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dmwilson on DSK7X7S144PROD with HEARING
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dmwilson on DSK7X7S144PROD with HEARING
Insert offset folio 160 here 59474A.078
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dmwilson on DSK7X7S144PROD with HEARING
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dmwilson on DSK7X7S144PROD with HEARING
Insert offset folio 162 here 59474A.080
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dmwilson on DSK7X7S144PROD with HEARING
Insert offset folio 163 here 59474A.081
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dmwilson on DSK7X7S144PROD with HEARING
Insert offset folio 164 here 59474A.082
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File and source
- File
- CHRG-119shrg59474.pdf
- Size
- 30,823,917 bytes
- SHA-256
- 5a09a2f0e53c445933cc741b2638bf75dab7fd817f218880d00e60dddaa02e66
- Our copy
- CHRG-119shrg59474.pdf
- Original
- www.govinfo.gov