Prioritizing Small Underserved and Rural Businesses in the Sbir/sttr Programs (House Small Business subcommittee hearing, June 23, 2021)
Summary
The printed record of a hearing before the Subcommittee on Underserved, Agricultural, and Rural Development of the House Committee on Small Business, Small Business Committee Document Number 117–020, titled Prioritizing Small Underserved and Rural Businesses in the SBIR/STTR Programs, held June 23, 2021 in the 117th Congress. The contents list opening statements by Hon. Jared Golden and Hon. Jim Hagedorn. The four witnesses are Dr. Joshua A. Henry of GO Lab, Inc., Nancy Min of ecoLong testifying for the Clean Energy Business Network, Dr. Angelique Johnson of MEMStim LLC and Dr. David Green of Physical Sciences Inc. testifying for the New England Innovation Alliance. Additional material for the record comes from Invent Together; questions and answers for the record are listed as none.
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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“Prioritizing Small Underserved and Rural Businesses in the Sbir/sttr Programs (House Small Business subcommittee hearing, June 23, 2021).”
Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/prioritizing-small-underserved-and-rural-businesses-in-the-sbir-sttr-p-43236181f8/
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PRIORITIZING SMALL UNDERSERVED AND RURAL
BUSINESSES IN THE SBIR/STTR PROGRAMS
HEARING
BEFORE THE
SUBCOMMITTEE ON UNDERSERVED,
AGRICULTURAL, AND RURAL
DEVELOPMENT
OF THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
HEARING HELD
JUNE 23, 2021
Small Business Committee Document Number 117–020
Available via the GPO Website: www.govinfo.gov
U.S. GOVERNMENT PUBLISHING OFFICE
44–849 WASHINGTON : 2021
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HOUSE COMMITTEE ON SMALL BUSINESS
NYDIA VELÁZQUEZ, New York, Chairwoman
JARED GOLDEN, Maine
JASON CROW, Colorado
SHARICE DAVIDS, Kansas
KWEISI MFUME, Maryland
DEAN PHILLIPS, Minnesota
MARIE NEWMAN, Illinois
CAROLYN BOURDEAUX, Georgia
TROY CARTER, Louisiana
JUDY CHU, California
DWIGHT EVANS, Pennsylvania
ANTONIO DELGADO, New York
CHRISSY HOULAHAN, Pennsylvania
ANDY KIM, New Jersey
ANGIE CRAIG, Minnesota
BLAINE LUETKEMEYER, Missouri, Ranking Member
ROGER WILLIAMS, Texas
JIM HAGEDORN, Minnesota
PETE STAUBER, Minnesota
DAN MEUSER, Pennsylvania
CLAUDIA TENNEY, New York
ANDREW GARBARINO, New York
YOUNG KIM, California
BETH VAN DUYNE, Texas
BYRON DONALDS, Florida
MARIA SALAZAR, Florida
SCOTT FITZGERALD, Wisconsin
MELISSA JUNG, Majority Staff Director
ELLEN HARRINGTON, Majority Deputy Staff Director
DAVID PLANNING, Staff Director
(II)
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CONTENTS
OPENING STATEMENTS
Page
Hon. Jared Golden ................................................................................................... 1
Hon. Jim Hagedorn ................................................................................................. 3
WITNESSES
Dr. Joshua A. Henry, President and Founder, GO Lab, Inc., Madison, ME ...... 5
Ms. Nancy Min, Founder, ecoLong, Albany, NY, testifying on behalf of the
Clean Energy Business Network (CEBN) .......................................................... 7
Dr. Angelique Johnson, Founder and Chief Executive Officer, MEMStim LLC,
Louisville, KY ....................................................................................................... 9
Dr. David Green, Chief Executive Officer, Physical Sciences Inc., Andover,
MA, testifying on behalf of the New England Innovation Alliance (NEIA) .... 11
APPENDIX
Prepared Statements:
Dr. Joshua A. Henry, President and Founder, GO Lab, Inc., Madison,
ME .................................................................................................................. 25
Ms. Nancy Min, Founder, ecoLong, Albany, NY, testifying on behalf of
the Clean Energy Business Network (CEBN) ............................................ 27
Dr. Angelique Johnson, Founder and Chief Executive Officer, MEMStim
LLC, Louisville, KY ...................................................................................... 42
Dr. David Green, Chief Executive Officer, Physical Sciences Inc., Ando-
ver, MA, testifying on behalf of the New England Innovation Alliance
(NEIA) ............................................................................................................ 46
Questions for the Record:
None.
Answers for the Record:
None.
Additional Material for the Record:
Invent Together ................................................................................................ 51
(III)
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PRIORITIZING SMALL UNDERSERVED AND
RURAL BUSINESSES IN THE SBIR/STTR PRO-
GRAMS
WEDNESDAY, JUNE 23, 2021
HOUSE OF REPRESENTATIVES,
COMMITTEE ON SMALL BUSINESS,
SUBCOMMITTEE ON UNDERSERVED, AGRICULTURAL,
AND RURAL BUSINESS DEVELOPMENT,
Washington, DC.
The Subcommittee met, pursuant to call, at 2:40 p.m., in Room
2360, Rayburn House Office Building, Hon. Jared Golden [chair-
man of the Subcommittee] presiding.
Present: Representatives Golden, Delgado, Williams, Hagedorn,
Stauber, and Tenney.
Chairman GOLDEN. Good afternoon. I call this hearing to order.
Without objection, the Chair is authorized to declare a recess at
any time.
I apologize to those joining us to testify today for the late start,
but we have been voting down on the House floor. I think we
should be good now. But I will just quickly note it is possible there
could be a series of votes on the floor during this hearing, in which
case we will stand in recess while we go vote. But I think we are
going to be good. So I appreciate your patience.
Let me first say that standing House and Committee rules and
practice continue to apply during hybrid proceedings. All members
are reminded that they are expected to adhere to standing rules,
including decorum.
House regulations require members to be visible through a video
connection throughout the proceeding, so please keep your cameras
on. Also remember to remain muted until recognized to minimize
background noise. If you have to participate in another proceeding,
please exit this one and log back in later.
In the event a member encounters technical issues that prevent
them from being recognized for questioning, we will move to the
next available member of the same party and later recognize that
member at an appropriate time slot provided they have returned
to the proceeding.
For those members and staff physically present in the Committee
room today, we will continue to follow the most recent guidance.
Masks are no longer required in our meeting space for members
and staff who are vaccinated. Members and staff who have not
been fully vaccinated are asked to wear a mask and to socially dis-
(1)
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tance. And we sincerely hope we can all do our part to protect each
other, but most importantly our staff.
Thank you for joining us for the hearing today.
In a world dominated by technology and innovation, the science,
technology, engineering, and math field, otherwise known as
STEM, is more vital than ever to our national interest.
STEM helps drive our economy forward. It creates life-improving
innovations. And it allows us to keep pace with global technological
transformation.
It also provides Americans with good jobs and the opportunity to
contribute to our Nation’s technological development.
In 2019, over 19 million employees were working in STEM, and
job growth in the sector continues to outpace non-STEM jobs. But
for many workers the barriers to entry into STEM are steep, and
certain groups are chronically underrepresented in the field.
With STEM research and development clustered around major
research institutions, often in urban commercial centers, it can be
difficult for rural small businesses to fully participate in the inno-
vation economy.
This is borne out by the overwhelmingly rural character of
underrepresented States in the SBA’s Small Business Innovation
Research, or SBIR, and Small Business Technology Transfer, or
STTR, programs, including Maine.
Compounded with the capital access challenges facing rural
small businesses, this underrepresentation risks stifling rural eco-
nomic development and also deprives Federal agencies of worthy
products and services.
Additionally, Black and Hispanic workers make up just a tiny
percentage of STEM workers compared to their percentage of work-
ers across all occupations. Further, women hold less than 20 per-
cent of U.S. tech jobs, and only 5 percent are in leadership posi-
tions at technology companies.
From urban population centers to rural areas, like Maine’s Sec-
ond Congressional District, too many entrepreneurs are being kept
out of our innovation ecosystem.
As technology continues to develop, STEM jobs will continue to
grow in importance. We can’t allow certain groups to lag as our
economy moves forward. And it is in our interest to ensure the 21st
century economy is as diverse and inclusive as possible.
That is why we should elevate the current Federal programs that
are driving diversification in the STEM field, including initiatives
like SBIR and STTR.
SBIR was created in 1982 to reduce risk of investment in small
businesses and encourage entrepreneurs to commercialize Federal
R&D innovations.
Ten years later, Congress created the STTR program to drive co-
operation between small firms and research institutions.
The Federal Government funds these programs through set-
asides of government agencies’ extramural research and develop-
ment funds.
These two programs play a substantial role in supporting innova-
tive small businesses and contribute tens of millions of dollars to
small firms annually. Both share the stated goal of fostering inclu-
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sion and diversification by encouraging program participation by
socially and economically disadvantaged firms.
By working to improve the reach and effectiveness of these pro-
grams, Congress can help make the STEM field more accessible
and ensure that more Americans benefit from our Nation’s techno-
logical development.
We will hear today from a diverse range of businesses during to-
day’s hearing about the challenges that they face operating in the
STEM field and their experiences with the SBIR and STTR pro-
grams.
Although statutorily required, participating agencies have strug-
gled to increase participation of rural business owners, women-
owned small businesses, socially disadvantaged businesses, and
businesses in underrepresented States.
Program statistics show that women-owned small businesses and
disadvantaged businesses make up approximately the same share
of awards as they did nearly a decade ago.
This lack of progress is concerning, and we must examine efforts
within the program for diversification.
We also must evaluate how the SBA research agencies and insti-
tutions are spreading program awareness. Small businesses can’t
take advantage of these programs if they aren’t aware of the offer-
ings.
Once aware, many small businesses depend on outside resources
to complete the onerous application.
Once they have won an award, small businesses rely on program-
specific technical and business assistance providers to maximize
the impact of their technology.
I hope that today’s hearing gives us the chance to examine how
SBA and Federal research agencies can better promote these initia-
tives and reach entrepreneurs in underserved communities.
The two programs have a proven track record of providing a re-
turn on investment in funding groundbreaking technologies that
can improve Americans’ lives, but high barriers to entry limit the
reach and impact of the program.
By increasing diversity in the STEM field, we can create a better
future for many Americans and regain our footing as one of the
world’s most innovative nations.
I will now yield to the Ranking Member, Mr. Hagedorn, for his
opening statement.
Mr. HAGEDORN. Chairman, thank you for holding the hearing.
It is good to see you today. And I appreciate our shared commit-
ment to rural development and small businesses in the rural com-
munities.
Today, we will discuss two vital programs to our Nation’s indus-
trial base, the Small Business Innovation Research, or SBIR, and
the Small Business Technology Transfer, or STTR, programs.
These two initiatives play pivotal roles in the development of
new technology to enable Federal agencies to meet program and
project goals while sparking significant job creation amongst Amer-
ican small businesses.
These programs have positioned thousands of small businesses to
create new technologies, commercialize products, and generate
high-wage jobs.
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We must continue to facilitate success while ensuring that tax-
payer dollars are utilized appropriately and efficiently.
Given the success and popularity of the SBIR and STTR pro-
grams, I believe our Small Business Committee should move swift-
ly and pass reauthorizing legislation far before their September
2022 expiration.
I appreciate, Chairman, that you are holding this hearing and
you are working closely with members on both the majority and the
minority so we can keep moving this issue along.
Without any additional cost to taxpayers, the Federal agencies
utilize SBIR and STTR programs to contract with small businesses,
to procure unique solutions to improved service to the American
people, and solve public sector challenges.
Success stories include development of a new, longer-lasting and
lighter Lithium battery to enhance the Air Force’s F-22; a new Na-
tional Cancer Institute treatment that has the potential of saving
thousands of lives; and a new piece of technology that enhances
safety for astronauts on the International Space Station.
These programs are delivering strong returns on investment. For
example, SBIR and STTR economic impact studies from the De-
partment of Defense and the National Cancer Institute have shown
economic returns in excess of $15 to $23 for every dollar spent.
That is in addition to improved military strength and capability,
significant cost savings, expanded sales of new products and serv-
ices for our small businesses, life-saving medical techniques and
products, and added sales and profits in our economy.
When administered appropriately, the SBIR and STTR are a,
quote/unquote, ‘‘win’’ for U.S. taxpayers, Federal agencies, and
small businesses.
To state it again, these are successful government programs that
deliver real results. I hope we can continue to encourage the acqui-
sition of technology and solutions to meet the Federal Govern-
ment’s needs while ensuring that small companies have equal ac-
cess to these programs and guarantee that taxpayer dollars are
being spent efficiently and effectively.
Thanks again, Mr. Chairman. I yield back.
Chairman GOLDEN. Thank you, Mr. Hagedorn.
I would like to take a quick moment to explain how the hearing
will proceed.
Each witness will have 5 minutes to provide a statement, and
each Committee member will have 5 minutes for questions. Please
ensure that your microphone is on when you begin speaking and
that you return to mute when finished.
With that, I would like to introduce our witnesses.
Our first witness is Mr. Joshua Henry, president and founder of
GO Lab, Inc., located in Belfast, Maine. GO Lab was founded in
2017 to develop and manufacture wood fiber insulation for the resi-
dential and light commercial construction markets.
In 2018, GO Lab won a Phase 1 SBIR award from the EPA to
further develop their technology.
In 2022, GO Lab will become the first company to make wood
fiber insulation in North America at its new manufacturing facility
in Madison, Maine.
Thank you, Dr. Henry, for sharing your story with us today.
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Our second witness is Ms. Nancy Min. She is the founder of
ecoLong, located in Buffalo, New York. EcoLong is currently work-
ing on Phase 2 of their project, advanced peer-to-peer transactive
energy platform with predictive optimization awarded by the De-
partment of Energy. Their technology aims to reduce the cost of
solar power and increase adoption of distributed energy resources.
Thank you, Ms. Min.
Our third witness is Dr. Angelique Johnson, founder and chief
executive officer—you will have to correct me if I am wrong, I am
sorry—of MEMStim, LLC, located in Louisville, Kentucky.
Dr. Johnson has used three SBIR grants from the National Insti-
tutes of Health to develop her 3D printing methods used to manu-
facture parts for cochlear implants.
In addition to her work in the lab, she is the CEO/founder of
Visionarium, an organization that promotes, trains, and equips
underrepresented entrepreneurs.
We greatly appreciate her expertise on today’s topic.
The Ranking Member, Mr. Hagedorn, will introduce his witness.
Mr. HAGEDORN. I am honored to introduce our final witness.
Dr. David Green is the chief executive officer of Physical
Sciences, Inc., or PSI, headquartered in Andover, Massachusetts.
PSI’s mission is to translate science into solutions that solve mis-
sion-critical needs for their customers.
Andover has been the headquarters and backbone of PSI since
1989. It is the largest and most extensive of the several locations,
hosting 68,000 square feet of office and laboratory space.
In addition to their technical capabilities, the site is also home
to their accounting, contracts, and technical publications depart-
ments, as well as their prototype manufacturing facility.
Dr. Green has participated in the growth of the PSI for 45 years,
emphasizing technical excellence in program performance and fo-
cusing on aggressive technology maturation to enable its rapid suc-
cessful transition to fulfill the needs of their government and com-
mercial customers.
Dr. Green, we welcome you today, and we look forward to your
testimony.
Chairman GOLDEN. Thank you.
We will now move to our witness testimony.
And, Dr. Henry, you are recognized for 5 minutes.
STATEMENTS OF DR. JOSHUA A. HENRY, PRESIDENT AND
FOUNDER, GO LAB, INC., MADISON, ME; MS. NANCY MIN,
FOUNDER, ECOLONG, ALBANY, NY, TESTIFYING ON BEHALF
OF THE CLEAN ENERGY BUSINESS NETWORK (CEBN); DR.
ANGELIQUE JOHNSON, FOUNDER AND CHIEF EXECUTIVE
OFFICER, MEMSTIM, LLC, LOUISVILLE, KY; AND DR. DAVID
GREEN, CHIEF EXECUTIVE OFFICER, PHYSICAL SCIENCES
INC., ANDOVER, MA, TESTIFYING ON BEHALF OF THE NEW
ENGLAND INNOVATION ALLIANCE (NEIA)
STATEMENT OF JOSHUA A. HENRY
Mr. HENRY. Thank you, Chairman Golden, Ranking Member
Hagedorn, and members of the Subcommittee on Underserved, Ag-
ricultural, and Rural Business Development.
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Good afternoon. My name is Joshua Henry. I am the president
of GO Lab, a Maine-based building materials company.
I am grateful for the opportunity to talk to you today about the
Small Business Innovation Research program, the vital support it
gave our company at its inception, and some of the ways we believe
SBIR can be strengthened.
Next year, at our production facility inside the former paper mill,
GO Lab will become the first company to manufacture wood fiber
insulation made in America.
Our products, marketed under the brand name TimberHP, will
include batt insulation for stud wall cavities, continuous exterior
insulation boards, and a blown-in loose fill, designed to work as one
comprehensive, above-grade system for the entire building enve-
lope, or as affordable, healthier drop-in replacements for foam, min-
eral wool, cellulose, and other traditional insulations targeting the
residential and commercial construction market.
While SBIR grants are modest monetarily speaking, they are
nonetheless critically important to early stage companies. The pro-
gram gives small businesses and entrepreneurs the freedom to re-
search and develop new technologies, often in partnership with
local universities, that are years away from commercialization.
When we founded GO Lab in 2017, insulation made from
softwood chips had already been a successful product in European
markets for over 20 years. Our SBIR grant allowed us to partner
with researchers at the University of Maine’s Advanced Structures
and Composite Center.
Using the center’s advanced machinery and equipment, we were
able to determine that we could make a more renewable, cost-com-
petitive, and higher-performing form of wood fiber insulation in
America by using alternative binding agents in the insulation man-
ufacturing process.
Too often, these sorts of research and design partnerships with
major universities and access to their highly specialized equipment
are more easily accessible in urban centers than in remote rural
communities, like the one where GO Lab’s production facility is
based.
Our SBIR grant, though small, helped validate the entire concept
at the heart of our business plan. We were able to use this hard,
verified data to begin the long process of raising private equity and
other financing to move our vision of wood fiber insulation, made
in America, towards reality.
And, by the end of the summer, we will have financed this
project with over $40 million of private equity and $85 million of
private bond equity into the project.
Expanding funding and partnership opportunities under the
SBIR program is critical if we hope to empower the kind of entre-
preneurship in rural communities that makes it easier for new in-
dustries to take hold, hire local people, and thrive.
I would like to end my remarks with two suggestions for improv-
ing SBIR based on our experience.
The program, as valuable as it is, could be made even stronger
by simplifying the application process. As a former college professor
with a Ph.D. in materials chemistry, I have applied for many
grants over the years.
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Nonetheless, a colleague, also an experienced grant writer, and
I found the application process far more bureaucratic and com-
plicated than it needed to be.
To complete our proposal, we ended up needing extensive help
from consultants and SBIR specialists hired by the State of Maine.
It still took many weeks to complete our application.
Simplifying the application process would be an important step
in the right direction.
Additionally, as a business launching in a community qualifying
for the New Markets Tax Credit program and within an Oppor-
tunity Zone, I strongly believe, as I noted earlier, that more incen-
tives are needed to ensure that a program as valuable as SBIR is
able to make more investments in underresourced rural areas
where public research and development resources are limited.
I think, potentially, if there could be incentives or bonus points,
if you will, for SBIR applications from these areas, that could be
an advantage and could serve as a stimulus for more companies
from these areas to take advantage of the program.
Thank you for your time, and I would be happy to answer any
of the Committee’s questions.
Chairman GOLDEN. Thank you very much for the testimony.
We will now recognize Ms. Min for 5 minutes.
STATEMENT OF NANCY MIN
Ms. MIN. Chairman Golden, Ranking Member Hagedorn, and
members of the Subcommittee, thank you for the opportunity to
testify today on the topic of prioritizing small, underserved, and
rural businesses in the SBIR/STTR program. It is an honor to be
here.
My name is Nancy Min, and I am the founder and CEO of
ecoLong, based in Albany, New York. Our mission is to build inter-
connected and resilient communities.
This mission is at the heart of everything we do, including devel-
oping a blockchain based energy marketplace that provides commu-
nities equitable access to clean energy.
We are fortunate beneficiaries of the SBIR/STTR program, hav-
ing received U.S. Department of Energy SBIR Phase 1 and Phase
2 from the Solar Energy Technologies Office to build out the plat-
form. The DOE SBIR funding provides critical support that is posi-
tioning us for growth.
Our path to the SBIR/STTR program wasn’t easy. It took a lot
of trial and error.
My entrepreneurial interests began in college when I first heard
of a new technology called blockchain technology that was the un-
derlying technology to this new thing called Bitcoin. The technology
and its application have evolved significantly since then. We now
use blockchain technology to decentralize and democratize the en-
ergy market.
All small business owners will tell you starting a company is
hard. But knowing what is next is harder.
Hearing about and participating in the National Science Founda-
tion Innovation Corp, or NSF I-Corp program, was a pivotal mo-
ment for us. The NSF I-Corp program taught me how to articulate
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my business idea and forced me to ‘‘get out of the building’’ to vali-
date that our technology was commercially viable.
However, the closest site that the NSF I-Corp program was ad-
ministered was in New York City. That meant we had to travel 3
hours from Albany to New York City, or 6 hours round trip, to at-
tend classes.
The first time writing a SBIR proposal is daunting. Thankfully,
the U.S. Department of Energy has a Phase 0 program that pro-
vides a variety of proposal support services for the first-time appli-
cant. All of these programs helped us to get the DOE SBIR awards.
In addition to the financial support of the SBIR, the program
managers of the DOE Solar Energy Technologies Office provided
integral support at every step of our development and commer-
cialization process.
The support of these communities continues even to this day
with the support that we get from business networks, such as the
Clean Energy Business Network, or CEBN, that plays a key role
in advocating for clean energy research, promoting business part-
nerships across the Nation, and nurturing small businesses like
ecoLong for growth.
Today, my testimony is about the power of communities and its
role in accelerating small, underserved, and rural businesses in in-
novation-driven programs such as the SBIR/STTR program.
The first point I will talk to is improving awareness and accessi-
bility to Federal innovation programs.
The NSF I-Corp program addresses the knowledge gap with
transformation of research into business ventures. However, aware-
ness and accessibility of this program is often limited to innovators
that are integrated with educational or research institutions or lo-
cated in urban areas.
Writing a proposal takes a lot of effort. Increasing the visibility
and accessibility of the DOE Phase 0 program or research for all
applicants is very beneficial for innovative firms, particularly for
underserved and rural businesses.
Community-based organizations are vital for innovators to ex-
tend their business network. For example, CEBN has been enhanc-
ing the accessibility of the SBIR’s funding solicitation across their
network and beyond.
More support for regional or national support organizations that
serve as community hubs on the ground would help small under-
served businesses and rural businesses get the support that they
need to be competitive in the SBIR/STTR programs.
The second point is promoting open collaboration and open
source to reduce the barriers to access technological innovation.
The barriers to small business innovation are not limited to ac-
cess to entrepreneurship programs. The development of technology
innovations often requires extensive technical community support
and resources.
A great example is open source technology. Businesses can sig-
nificantly reduce the expenses and time to develop a product from
scratch and focus their efforts on high-impact uniqueness and inno-
vation.
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As the Chair of the Linux Foundation Hyperledger Social Impact
Special Interest Group, I have seen firsthand small businesses ris-
ing from the open source community.
For example, the Department of Energy has encouraged and sup-
ported various open source projects, including Pacific Northwest
National Laboratory developed VOLTTRON, an open source dis-
tributed sensing and control software platform technology that
joined the Eclipse Foundation.
Researchers at Brookhaven National Laboratory developed world
leading privacy preserving artificial intelligence and will be con-
tributing it to the open source PyTorch community.
At the end of the day, the mission of the SBIR/STTR program is
to support scientific excellence and technological innovation to
build a strong national economy. This requires innovation on both
the technical and business or commercial end.
By improving the awareness and access to Federal entrepreneur-
ship programs, small businesses will have the tools to build suc-
cessful business ventures. By promoting open collaboration and
open source, small underserved and rural businesses across the
Nation will have a launch pad to catapult their technological inno-
vation to do their part in building a strong national economy.
Thank you again for the opportunity to testify. I look forward to
answering the Committee’s questions.
Chairman GOLDEN. Thank you.
The Committee will now recognize Dr. Johnson for 5 minutes.
STATEMENT OF ANGELIQUE JOHNSON
Ms. JOHNSON. Thank you so much.
I want to thank Chairman Golden and Ranking Member
Hagedorn for the opportunity to come and talk and testify to the
Committee on Small Business and the Subcommittee on Under-
served, Agricultural, and Rural Business Development during this
hearing, which is titled ‘‘Prioritizing Small Underserved and Rural
Businesses in the SBIR/STTR Programs.’’
My name is Dr. Angelique Johnson, as you have already heard,
and I testify today not only as CEO and founder of MEMStim, but
also as a leader in several STEM organizations, both at the NSF
and the NIH, as well as locally in the State.
Some of those organizations include the NSF Council on Engi-
neering Research Visioning Alliance, the Kentucky Statewide
EPSCOR Committee, the National Institute of Biomedical Imaging
and Bioengineering at the NIH, the NSF NNCI External Advisory
Board, and Medtech Color.
I have also given my opinions to several other Federal organiza-
tions and actual global international organizations, such as the
Eighth District of the Federal Reserve, the Royal Academy of
Science International Trust, the International Chamber of Com-
merce, and the United Nations Assembly on Women and Girls in
Science.
And I say all that to say that I represent not only my own opin-
ion, but also the opinions I have heard from countless members of
the African-American community in the STEM field and innova-
tion, as well as countless members of women innovators in the
field.
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While getting my Ph.D. in electrical engineering from the Uni-
versity of Michigan, I founded MEMStim, and MEMStim is a com-
pany that is developed to create advanced manufacturing practices
for neurostimulator devices for conditions such as hearing loss,
heart failure, chronic pain, Parkinson’s tremors, and much more.
Now, that is a lot. That is a mouthful. But if we think about the
human body, everything we think, say, and do is controlled by
nerves and neurons. And when there is any sort of problem in the
human body, in many cases it can be tied back to a nervous system
issue. And so the technology we are creating is very critical.
But we are not only just creating this technology. We are making
it cheaper, more affordable, to lower the healthcare costs in this
Nation, and we are innovating the technology so that we can in-
crease the performance.
At MEMStim we use 3D printing, as opposed to hand assembly,
to be able to make these devices, which not only will decrease
healthcare costs nationwide here in the U.S., but also allow us to
increase access to countries globally and export our technology.
Now, today I wanted to talk about my experience a little bit hav-
ing received SBIRs, and one thing I wanted to make very clear is
that my company would not have been able to be as innovative and
have done as much great work as we have done without funding
from the SBIR program.
However, the reasoning for this is because there is such a lack
of funding in venture capital, particularly for African-American fe-
males and Black business founders. Less than 1 percent of venture
capital goes to those founders, and less than 0.27 percent actually
goes to African-American female founders.
Now, the SBIR program is a wonderful example of a program
that can come in and fill this gap, but, unfortunately, it also suffers
from these less than 1 percent funding going to African-American
founders and even seeing worse numbers when you talk about Afri-
can-American female founders.
So some suggestions that I want to highlight are really these
four ones.
A, I think that we need to have an increase of representation on
the review committees, and that representation needs to be paid.
I know that there is a lot of recruitment for diverse representa-
tion, particularly Black faculty members, researchers, and
innovators, but they do have lower wages that they are receiving
and much more discriminatory things in terms of seed funding out-
side of the SBIR program. So pay should be included in that.
I also think that we should create a special fund to help Black
businesses acquire consultants and trainers in writing to help to
prepare the grants and the applications.
And then, also, I think we should have a special fund, an actual
award supplement, that would be a subcontract line of funding to
Black businesses that would not only provide an entry into the
SBIR program, but also provide monitoring and assistance as they
continue to contribute to the innovation economy through the SBIR
program.
And the last thing that I will say is I concur with some of what
the other speakers said in that we need to expand the reach be-
yond academia.
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It is no mystery that there is very poor representation of African
Americans, Hispanic, Latino faculty members in STEM, and that
is not due to those populations’ account. It is due to, unfortunately,
the low rates of achieving tenure and other systemic injustices.
So we need to be looking beyond academia for PIs to submit to
SBIR programs and providing training programs to help those indi-
viduals submit to it.
Thank you.
Chairman GOLDEN. Thank you.
And we will now recognize Dr. Green for 5 minutes.
STATEMENT OF DAVID GREEN
Mr. GREEN. Good afternoon, Chairman Golden, Ranking Mem-
ber Hagedorn, members of this Subcommittee and the House Small
Business Committee.
Thank you for the opportunity to speak today. It is an honor to
testify on behalf of the New England Innovation Alliance, a coali-
tion of small high-technology companies across the New England
area.
NEIA members, including Physical Sciences, Inc., have dem-
onstrated the benefits that small businesses can provide the Fed-
eral Government and America’s economy throughout the program’s
nearly 40-year history.
As mentioned, studies have shown that the SBIR program gen-
erates post-award revenues 15 to 23 times greater than the initial
investment. The program more than pays for itself.
I appreciate that this Committee is holding these hearings to
ramp up efforts to reauthorize these good programs.
SBIR is a flagship American innovation program that other coun-
tries seek to emulate. The formula for its success lies at its core:
competitive and merit based.
Innovative small business entrepreneurs from across the country
propose concepts addressing national priorities and commercial
needs.
There are many more ideas than awards. Selection at each phase
is based on the best concepts, best performance, and, above all else,
the best science.
This competitive, merit-based process leads to a very high suc-
cess rate for transition and commercial success. The best science
produces the best technology that is essential if the United States
is to remain a global leader.
Those best ideas can come from anywhere in the country. Using
the publicly available SBIR.gov website, I conducted an analysis
into SBIR awards by geographic location.
This analysis confirmed that citizens in each part of our country
have priorities and are motivated to improve what matters to them
in their daily lives. The analysis found that different parts of our
Nation pursue technology innovation in different areas.
To this point, the State of Maine wins over four times the na-
tional average per capita in Department of Agriculture SBIR
awards and three times the national average in Commerce Depart-
ment awards. Kansas and Wisconsin far exceed the national aver-
age in agriculture awards. Minnesota wins nearly three times the
national average in Department of Education awards and well
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above the national average per capita in health, agriculture, and
awards from NSF. New York exceeds the national average in edu-
cation awards.
Innovators in those States are motivated to address problems
that affect their daily lives. And with insight based on firsthand
knowledge, they achieve a high award rate.
Great SBIR ideas and compelling solutions arise from the trained
scientific and engineering minds, wherever those researchers re-
side. The SBIR program does not compel those minds to live in a
certain State.
What SBIR can do is give woman- and minority-owned and dis-
advantaged businesses a fair chance to compete, win, and see their
innovation succeed.
The current 3 percent administrative allocation that allows par-
ticipating agencies to promote outreach and diversity within the
program should continue.
A large community of support organizations exists to help with
all aspects of creating a winning proposal, from preparation to
identifying commercial applications. First-time proposal writers can
readily find the support they need to submit their great idea.
The NEIA is an informal group of companies, often competitors,
that share best practices to make each company stronger. This
mentoring for the common good brings benefit to all. NEIA has
helped establish similar alliances in other parts of our country.
We encourage the Committee to consider this model, a network
of competitive performers, to improve proposals.
Many NEIA members are employee-owned companies where
every employee owns a portion of the company and all employees
share in the success: women, minorities, service-disabled veterans,
no matter their ethnicity or sexual orientation.
In closing, NEIA respectfully urges the Committee to pass an
SBIR/STTR reauthorization bill this year affirming its core prin-
ciples. The program should be permanently reauthorized in its cur-
rent form to provide stability. The permanent reauthorization
should strengthen the commitment to a competitive, merit-based
participation and award structure.
The existing pilot programs, including the use of 3 percent of the
funds for administrative costs, permitting outreach to increase par-
ticipation by underrepresented communities, should be made per-
manent.
The reauthorization should include a quantitative assessment of
the merits of changes in a publicly available report to Congress.
NEIA commends this Subcommittee for holding this hearing.
SBIR has proven its value many times over. Please make it perma-
nent.
Thank you again. I look forward to answering your questions.
Chairman GOLDEN. Thank you.
And, with that, we will move to questions, and I will recognize
myself first for 5 minutes.
I think I will start—probably no surprise to folks—with our pan-
elist from Maine.
Mr. Henry, I am just curious. Could you remind us of the degree
that you hold?
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Mr. HENRY. I have a Ph.D. in physical and materials chemistry
from Cornell University.
Chairman GOLDEN. And you have also, I think—do I remember
correctly, you have been a professor?
Mr. HENRY. Yes. I was a professor in the chemistry department
at the University of Maine when we started this company.
Chairman GOLDEN. So I think it is fair to say you have a lot
of training and background in things that have helped you with
some pretty complex stuff, as well as experience helping other peo-
ple understand very complex issues that probably most of us here
in Congress don’t understand ourselves.
And, yet, you found the bureaucratic and complicated application
process for the SBIR program that GO Lab competed for and ulti-
mately did win to be pretty tough.
Can you just talk more about that experience? And do you have
any specific examples or recommendations about what we could do
to ease that process?
Mr. HENRY. Yeah. I mean, I am very curious to hear what the
other panelists have to say about their application experience. We
have full-time employees of about 15 at this point. When we were
doing the SBIR, it was only four or five of us at that point.
But another colleague of mine had about 20 years of experience
in government relations and grant writing, and we found the SBIR
application to be the hardest of the Federal grants to apply because
of the detailed nature of the application.
There are just so many—it varies from agency to agency, but we
found across agencies that there were numerous addendums to
every part of the application, so much so that the State of Maine
basically has full-time consultants working with the Maine Tech-
nology Institute, which is an industry advocate and funder of ad-
vanced technology companies.
They hire consultants to just help those companies through the
SBIR application process, help them with their budget, help them
with just submitting the application and making sure every box is
checked.
And I think the hard thing for small companies and companies
that are struggling with funding is the question—most grant pro-
posals are not successful, as Dr. Green pointed out.
To dedicate that much time to a proposal with the chance of it
being knocked out for some small sort of box not checked in the ap-
plication can be devastating for a company to spend that much
time and yield absolutely nothing from it, including no feedback
from reviewers. That can be tragic for a small company, and I
think it is not necessary.
And I am curious from the people who institute SBIRs why
this—I would be curious if I were a Committee member—your
Committee members to find out from the people who have insti-
tuted SBIR over the years why they find it necessary for all of
these various forms and things that need to be committed and that
they don’t see this as a problem of the program that a State like
Maine would need to hire consultants in order to get people
through the program.
I also think, being from a rural area, I can tell you that most of
the people where we are in the town of Madison have no idea what
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SBIR is, let alone the idea that they would reach out to—that they
would know that there are consultants there to be able to help
them through the process.
Of course I know about it, but I was a professor at the University
of Maine. But most business owners in the State of Maine, I am
sure, don’t have an understanding of SBIR, and certainly couldn’t
get through the application process, in my mind.
Chairman GOLDEN. Thank you. That is a very helpful start to
the conversation. I have a lot more questions for you, but also for
the other panelists.
But I am just going to go ahead and cede my 10 seconds remain-
ing here and recognize Mr. Hagedorn next. We will come back
later.
Mr. HAGEDORN. Thank you, Chairman.
I appreciate all the witnesses for being here. Very good discus-
sion so far.
Dr. Green, you seem to have some success with these programs
and have made some gains for Federal agencies along with your
own company.
Can you explain kind of in a nutshell how you are doing so well
and how you have utilized this and how it helps the taxpayers and
the government?
Mr. GREEN. We, from the outset at the proposal stage, focus on
the application and direct the program to achieve what the cus-
tomer has as his goal. At each step of the way, we define mile-
stones, reducing the greatest risks first, and then move the project
forward.
We have had many successes. And, through those successes, we
have learned that it is essential to address all aspects of the prob-
lem, as well as to decide on the best path to market.
That best path does not necessarily mean that your company de-
velops new skills along each step of the way. As various people
have noted, not just in proposal writing, but even when a tech-
nology is successful, there are many stages after that—the produc-
tion, the marketing, the market presence, the distribution. All of
these require additional skills.
What we decide is the best path to market. That often involves
partnering, and partnering with other small businesses which are
already active in that technology field, where we can transfer that
technology to them, and they already have in place the know-how
and other skills.
That allows our innovators to go back and to solve the next prob-
lem for the government.
Mr. HAGEDORN. Sounds like it is not a direct line and you have
learned some things over the years and probably had consultants
and other help helping you with that, and maybe just building a
better mousetrap when it comes to how to do this.
You talked about maintaining the 3 percent allocation and reau-
thorizing. You feel strongly about that. We should, the Committee
should move forward and reauthorize and make this permanent?
Mr. GREEN. Yes. I think that is essential.
First of all, the 3 percent each of the other speakers today has
addressed that. And I think it is important, because, as has been
noted, there is a barrier, and we need to work to overcome that
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barrier. And that can either be done by reducing the paperwork or
standardizing it in some manner, or by the additional help that is
provided by the agencies and by the private sector.
The benefit of making it permanent is both to the government
and to the small businesses. During the reauthorization period in
2008 through 2011, there were 14 continuing resolutions to keep
the program alive. During that time, awards were put on hold.
Small businesses, who had started with ideas, actually went out of
business waiting for decisions to be made.
From the Federal side, it allows there to be a defined program
budget that they can then plan and allow technology to be devel-
oped through Phases 1, 2, and 3. It also creates good career paths
for Federal employees to become deeply knowledgeable and become
good advisers in each agency to guide the program to help the
small businesses.
Mr. HAGEDORN. Thank you.
Real quickly. Mr. Henry, you were talking about the complicated
application process. And my understanding is these aren’t really
grants, they are awards. And, having worked at the Treasury De-
partment, I kind of have some background in how government
agencies have to justify for Congress and others their expenditures
and moneys that go out the door. So maybe that is some reason
why it is a little more complicated.
But you mentioned that you don’t receive feedback if you are on
the losing end, if you want to put it that, for one of these awards.
Help us understand that a little bit more. And do you think it
would be important for agencies to have to follow up?
Mr. HENRY. Well, I want to clarify that if you are on the losing
end, if your application is accepted and it goes through the process
and it is rejected, then you would receive some feedback, although
we have not always received feedback from every agency, which
they are supposed to provide but do not always, at least not in our
experience.
But if you were to not be able to submit on a technicality and
the application was rejected before that process, then that is cor-
rect, you would not get any feedback. It would not be—the applica-
tion simply would not be reviewed.
Mr. HAGEDORN. Okay. Thanks. I think that clears it up.
Chairman, I will yield back.
Chairman GOLDEN. Thank you.
Next, we will recognize Rep Pete Stauber from Minnesota 8.
Mr. STAUBER. Okay. Thank you very much.
Thank you to the witnesses for being here today.
Early in my time in Congress, I became familiar with the Small
Business Innovation Research program and the good work it can do
for our small businesses.
Lake Assault Boats in Duluth, Minnesota, which builds custom
fire and rescue patrol boats, applied for Phase 1 funding from the
Air Force’s SBIR program. Lake Assault intended to use the funds
to undertake a trial to improve improve patrol boat technology, ul-
timately reducing energy inefficiencies.
As Mr. Green noted in his testimony, it is fascinating to see how
the different parts of the Nation are inspired to pursue technology
innovation.
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With our many lakes in Minnesota, it makes sense that my con-
stituents would look for technology that improves the technology of
our patrol boats while keeping our lakes pristine for future genera-
tions.
Mr. Green, as we look toward reauthorization, what would you
caution Congress from adding or removing from a reauthorization
bill that might actually impede or harm the program?
Mr. GREEN. I would argue that we certainly don’t want to add
more barriers and make it more difficult to submit to the program.
The program has already made great strides in moving more quick-
ly, to make decisions quickly, and that allows the small business
to have continuity.
So I would urge the Congress to continue to make sure that
award decisions are made in a timely manner so that the small
business can make business decisions and move forward.
I think what is essential is that the program remain merit based,
because there are always many suggested solutions to any problem,
but we, as Americans, have to have the best solution so that we
can continue to remain the world technology leader. If we settle for
less than optimum solutions, that will result in us losing our lead-
ership.
Thank you.
Mr. STAUBER. [Inaudible].
Chairman GOLDEN. Thank you.
We will now recognize Representative Claudia Tenney from New
York 22.
Ms. TENNEY. Thank you, Chairman Golden and Ranking Mem-
ber Hagedorn, for taking the time.
And thank you to the witnesses for being here.
I represent New York’s 22nd Congressional District, which
stretches from the shores of Lake Ontario to the border of Pennsyl-
vania. We have a diverse collection of cities, rural area and subur-
ban areas. But we are also the home to a lot of innovation heritage,
including IBM was founded in my district. The Air Force Research
Lab Directorate is part of the former Griffiss Air Force Base. So we
do have quite a bit of innovation.
But I wanted to focus, Mr. Green, you said—and I thought your
testimony was interesting, just to kind of piggyback on what Mr.
Stauber had to say—you indicated that the State of Maine and
Kansas and others have twice the grants.
What can we do in New York to revitalize our innovation and be
able to have access to some of these tech grants and also innova-
tion transfer grants? How would you create a model that we could
get more innovation in New York and more resources to New York
that emulates the success of other countries? And how could we
make that a permanent issue, then something we could support in
reauthorizing this bill?
Mr. GREEN. Well, if I may, I think the government has already
put in place—through this 3 percent allocation—factors to provide
support. And as I have mentioned, there is a private sector commu-
nity to provide support.
But because I am speaking today on behalf of the New England
Innovation Alliance, I think it is essential for small businesses who
are competitors, are peers, to get together and share best practices.
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That doesn’t have to be just winning an SBIR grant. It can be
HR. It can be benefits. It can be hiring. All of these things are chal-
lenges that every small business entrepreneur faces.
And so by having this collective, open discussion with your com-
petitors, you end up building a better company and you end up de-
veloping a philosophy of how to respond and win grants.
And so we have helped create organizations in Ohio as well as
California that follow this model. And I think, beside Federal in-
volvement, private sector and peer involvement is a great way for
each company to improve its knowledge base.
Thank you.
Ms. TENNEY. Yeah. Thank you, Mr. Green.
Could I just add a quick anecdote to that? Do you think that the
fact that maybe some of our State regulations and the operation of
our State business community or the way that States handle inno-
vation and supporting these businesses has an impact?
For example, New York versus Maine, and, as you indicated,
Kansas as well has even more grants than we do. Is that some-
thing that is a factor in your experience?
Mr. GREEN. If I may clarify, that was more grants per capita.
Ms. TENNEY. Per capita. Okay.
Mr. GREEN. Yes. I mean, you can’t expect Wyoming to have as
many grants as California. There are a few more people in Cali-
fornia.
New York——
Ms. TENNEY. New York is huge.
Mr. GREEN. And New York has a fair amount of people, and
they also, as a State, make significant investments. I am aware of
NYSERDA and other such State-funded organizations that help
create, and stimulate commercial opportunities that complement
the SBIR program.
Ms. TENNEY. Thank you.
Mr. GREEN. So I think the State should, in addition, try to com-
plement and benefit the companies within their States, and that
will help attract people to those States to address problems in tech-
nology areas that are important for the citizens of that State.
Ms. TENNEY. Thank you. I appreciate that.
Just one quick question for Ms. Min.
In your testimony, you pointed out that many of these busi-
nesses, especially the Small Business Innovation Research experi-
ence, finds that a lot of these businesses have a tough time getting
through some of the technical and bureaucratic process.
Would you recommend that we either fund or provide technical
resources to businesses that are applying for these grants so that
they can use these funds and this assistance more effectively?
Ms. MIN. Thank you, Congresswoman.
Ms. TENNEY. [Inaudible.]
Ms. MIN. Oh, absolutely.
I think an example of a resource that we have taken advantage
of is the DOE Phase 0 program, which provides critical proposal
support services. And other things that you can select from a kind
of a la carte menu is technical support services as you are devel-
oping out your proposal.
Ms. TENNEY. Let me ask a quick question.
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So we have a huge interest and need in the broadband industry.
Would that be somewhere where we could actually get the tech-
nical assistance to help with trying to incentivize people to move
into that industry and that business? Quickly.
Ms. MIN. Absolutely. Yes. Absolutely.
Ms. TENNEY. Thanks so much. We appreciate it.
I yield back.
Chairman GOLDEN. Thank you.
We will now recognize Representative Roger Williams, the Vice
Ranking Member of the Committee.
Mr. WILLIAMS. Successful entrepreneurs will recognize needs in
their daily lives and work towards bringing solutions to the mar-
ketplace.
Something I think is beneficial about the SBIR program is that
it does not take on a one-size-fits-all Federal approach and runs
through different Federal agencies. This allows innovators in dif-
ferent States to be able to access the resources to best address their
needs in their own communities.
So, Dr. Green, as someone who represents numerous SBIR grant-
ees across the Northeast, is there any agency that administers this
program the best? And how can the other agencies adopt these best
practices to better help entrepreneurs?
Mr. GREEN. Again, a complex question, and I appreciate it.
I think many of the members of NEIA have interacted with the
Department of Defense, and I think they have a program that is
very effective because it ties the topics of the SBIR book to agency
needs. And, with that, they have a plan that they will award so
many Phase 1s, down select more than one Phase 2.
And then, if a project meets the metrics as put forth in the book,
the SBIR call, they promise that they will place some core program
funds against that topic to see that the technology is inserted into
the agency’s program.
I commend the National Institutes of Health. They have very
deep peer review, very thoughtful pee review councils, as does De-
partment of Energy. Oftentimes we will submit a proposal and get
six reviews on a single proposal. So I commend them all for the
care they take in trying to make a good selection.
Mr. WILLIAMS. Thank you.
Mr. GREEN. Thank you.
Mr. WILLIAMS. Several of you stressed the need to simplify the
SBIR application process. We don’t want to see small business
being deterred from commercializing their products and advancing
American technology because of too much bureaucratic red tape.
So, Dr. Henry, you mention in our testimony that you had to hire
outside consultants to help with your application and that it still
took weeks to complete. So could you elaborate on what specific
changes could be made to streamline the application process with-
out compromising fraud and abuse protections in the SBIR?
Mr. HENRY. Well, I think, just to clarify, as Dr. Min said, that
we utilized basically the Phase 0 program as well as consultants
that were hired by the State of Maine. We didn’t have to hire
those. I also pointed out that we had a colleague who was skilled
in grant writing and participated in that process.
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I was pointing that out just to show the level of depth of experi-
ence that we had in order to be successful. And I think that, in my
experience, there are a lot of innovative companies here in the
State of Maine that don’t have the benefit of people with grant-
writing experience that would be able to access these programs.
Dr. Green, for example, represents an organization that is suc-
cessful because they have a number of Ph.D. scientists that are ex-
perienced with the grant-writing process. And once you have the
experience of getting through it once, it is quite a bit easier than
the second and third and fourth time. It is that initial barrier to
get over it that I think is a problem.
I can’t really speak to the fraud issue. I don’t know why the proc-
ess is so complicated. And looking at other Federal programs—for
example, we won a Wood Innovations Grant from the USDA that
was for more money than the EPA SBIR that we were funded for,
and the entire proposal was all of five pages.
And I do think that that is not always possible for something like
SBIR. And I am not advocating simplifying the actual writing of
the proposal. The proposal should be extremely detailed, as Dr.
Green mentioned. It should lay out all of the aspects that need to
be laid out in order to verify the scientific veracity, engineering ve-
racity of the problem they are trying to solve and the market.
But the bureaucratic aspect of it seems to me somewhat unneces-
sary. There is a lot in there that a layperson or a person who has
never approached an SBIR program would not be able to get
through or understand.
And I am telling you that based on over a decade of experience
of winning grants from the National Science Foundation, from the
Department of Energy, from the Department of Transportation.
This was an unnecessarily complicated process relative to other
programs.
Mr. WILLIAMS. Thank you for that testimony.
I yield my time back.
Chairman GOLDEN. Thank you very much.
Assuming that we don’t have Representative Salazar on remote
anymore, we are going to move on to a second round. And I am
going to recognize myself.
I did want to just quickly, Mr. Green, PSI, it looks like, has got-
ten about 1,400 SBIR or STTR awards since 1983. I am assuming
that is when the company was started, but perhaps not. Maybe
that is just the first time.
So you are in Andover, Massachusetts. I think Mass has gotten
about 385 awards, I think, last year. But I think in the last 3 years
you have got over 100 contracts, 66 million, and 220 employees.
These are good things. So congratulations on that, and I know
that the company has been very successful.
But how did you start out? I mean, were you a smaller company
then? How do you compare to, let’s say, a startup company today
when you were just getting started back in the 1980s?
Mr. GREEN. Our company Physical Sciences began in 1973 dur-
ing the aerospace crunch after we had put man on the Moon. And
so we existed for a decade before there was an SBIR program, sup-
porting the government through research and development con-
tracts.
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In the early days of SBIR, the discretionary funds that had fund-
ed many companies were taken away and used for SBIRs. So ini-
tially SBIRs, in addition to serving the dual purpose of commer-
cialization, also continued to support national needs.
I think the reason that our company is successful is that we have
many people who are trained, as Dr. Henry has pointed out,
trained at writing grants. We have people that are rounded entre-
preneurs.
But also, PSI has realized that we are good at the research and
development. And so we, as I mentioned earlier, we make a deci-
sion that oftentimes it is better not for us to develop the produc-
tion, the marketing, sales, distribution, market presence, brand, it
is better for us to transfer and partner with another company who
has an existing technology, but this allows them a next-generation
technology.
And that allows the technology to get to the market efficiently
because there is a probability that a good idea could die at every
step in that process.
It is efficient. It is quicker. And, as a result, it produces a greater
return for the SBIR program. And then our serial entrepreneurs
can take their expanded skill sets and try and address the next
problem.
Chairman GOLDEN. All right. Thank you.
Some people were, I think, a little confused with some of the ear-
lier statistics when we were talking about per capita.
Maine got six awards, I think, most recently. If we could stack
that up against 800 in California, 258 in Massachusetts, I think
like 150-something in New York, Kentucky, where Ms. Johnson is
from, 16.
So per capita sounds impressive, but there are some pretty big
gaps there.
I am curious, Dr. Johnson, how would you propose that SBIR/
STTR outreach activities could be better designed to reach targeted
populations? I think Dr. Henry made the point that people in a
place like Madison, Maine, wouldn’t even know this program exists
unless there is someone there to help lead them to it.
Ms. JOHNSON. Yeah, I think that marketing of the program
needs to go beyond the academic campus. I know historically that
is where much of the PIs that apply for SBIRs come from. Even
presently there is a huge concentration there.
But marketing really needs to go beyond that to be [inaudible].
I mean, that really is where most of the businesses are being gen-
erated if you really think about today’s, the startup community or
the small business community, not actually coming from academic
institutions anymore.
So that would be my highest recommendation, that they need to
partner with startup ecosystems, provide training events, work-
shops in those startup ecosystems, as well as small business devel-
opment centers, and the like.
Chairman GOLDEN. Thank you. I appreciate that.
I have got about 30 seconds left, so I am going to reserve further
questions. And at this time, I will yield back and recognize Mr.
Hagedorn.
Mr. HAGEDORN. Thank you, Chairman. I appreciate that.
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Both Dr. Green and Dr. Johnson, you kind of waded into an area
about reauthorization.
And, Dr. Green, you were pretty explicit that in the future, if
these programs are going to work properly, that the best science
needs to win out, this needs to be a merit-based, totally competitive
process.
And, Dr. Johnson, you talked a little bit about how there maybe
needs to be more outreach so folks who are new into the process
or don’t have as much experience are aware of the programs and
maybe have some additional expertise provided to them as far as
going through the application and that type of thing.
What I would be concerned about as we look at reauthorization
is any concept that the actual awards be given based upon pref-
erence of identity or race.
Recently, with the Small Business Administration’s Adminis-
trator, I have spoken with her in one of our hearings and asked
about the Restaurant Revitalization Fund. I didn’t think that that
was quite fair. I thought it was discriminatory that we had a pri-
ority list.
And now we have basically everybody who wasn’t on the priority
list is not getting any money for their restaurants, and they hap-
pen to be, in this case, White men.
And then you had the Biden administration put out an executive
order saying that SBA needed to change its programs and make
them conform with equity standards, whatever that means. I have
asked her for an explanation of that, haven’t received anything
quite yet, although we just sent that letter.
Do you have any comments, Drs. Green and Johnson, as to
whether or not this should continue to be a competitive process
based upon merit, and also that maybe we still need to do some
more in order to help people understand what is out there for
them?
Ms. JOHNSON. Yes. So I think absolutely it needs to stay merit
based. I am not suggesting anything other than that.
When we think about merit, Dr. Green, I agree with some of his
comments and things like that. But we need to understand that
these are not research grants. These are Small Business Innovation
Research grants.
And so, unfortunately, if you look at the statistics, many of the
companies that come out of universities are not the ones creating
economic impact in the United States of America.
So when we talk about merit, it is not merit based off of how
sexy the innovation idea is, it is merit based off of can you trans-
late that innovation’s impact for the United States in terms of in-
novation, impact in the economy, impact in healthcare, impact in
the environment. And then also, can you translate that into a com-
mercial company.
And so, unfortunately, academic institutions have not shown a
stellar track record in comparison to other ecosystems, like the
startup ecosystem, small development ecosystem.
So I think it needs to be merit based. And my suggestion would
not be to change the merit or even the review per se of the grants,
but more so provide more assistance on the front end.
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For example, if you are looking at the academic institution or
even in the startup ecosystem, a lot of times minority business en-
terprises don’t have seed funding to actually do the early stage re-
search necessary.
So I would propose that we add to the Phase 0 programs that
we see for grant writing an actual Phase 0 program that provides
pre-seed funding so that people can produce minimally viable pro-
totypes for pre-early stage research so they could have a much
more competitive Phase 1 application.
So I think it definitely needs to stay merit based, but we need
to make sure that the metrics for merit are based off of economic
impact and innovation and not just pure basic science research.
Mr. HAGEDORN. Thank you.
I think I understand what you said. I am not sure that I com-
pletely agree with the last part of that.
Mr. Green?
Mr. GREEN. May I add?
So I agree with the fact that, of course, it should be merit based,
and I also agree that there should be additional assistance.
I believe that the 3 percent administrative funds now really are
adequate to address this problem. But what I would suggest is we
take a study to decide how they can best be deployed.
I understand that the SBIR road show has toured all the States,
and we should assess the benefit of that versus targeting particular
entities that could benefit more.
So we agree with reauthorizing the pilot programs, and I think
the Phase 0 and the I-Corp are part of those pilot programs. If they
are not already permanent, they should be made permanent. And
I think that the agency should look how to optimize the benefit of
their administrative allowance.
Thank you.
Mr. HAGEDORN. Thank you. I appreciate it.
I yield back.
Chairman GOLDEN. Thank you.
I do want to kind of dig a little bit further into the merit versus
economic benefit discussion. I am interested in that.
Mr. Henry, maybe I will give a little bit of time to you on this,
but I can also share a little bit of your story.
In my district, Madison, Maine, was a paper mill town; the mill
closed just a few short years back. And I think it is fair to say,
without those jobs, without that industry, the town was pretty
much on a path to being decimated. That look was not good at all.
The decision by GO Lab to not only choose Madison but also
move into that old mill space and redevelop it I think almost—it
is hard to gauge the impact there in bringing back. I think you are
on a path to probably something in the realm of, what, a hundred
jobs or more. Of course, this remains to be seen how successful you
will be.
But hard to, I think, gauge the benefit just dollar for dollar com-
paring an SBIR award in a place, let’s say, like Massachusetts,
versus Madison, Maine, that there has got to be a way to gauge
how meaningful that economic benefit is to, let’s say, rural Maine,
rural America.
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And as a result, spurring jobs, creating jobs in disadvantaged
communities, I would say it is pretty important from the perspec-
tive of taxpayers. Certainly if you are a taxpayer in rural Maine,
it has almost definitely got to be the perspective.
But could you, any one of you, talk a little bit about how you
might approach some kind of analysis, a way of adding weight in
the application process to the award that takes it into the dynam-
ics that I just discussed?
Mr. HENRY. Sure, yeah. I am not an economist, and so there are
economists that do studies on the impact of various businesses on
their community. I know in the forest products industry, we have
an impact factor of something like 16, that is a combination of for-
est products and manufacturing. That is a huge impact on employ-
ment and on a community compared to most other industries.
But I can’t really—it is really hard to say definitively anything
really valuable to that end.
I feel compelled to comment on Dr. Green’s comment that 3 per-
cent is adequate. A lot of facts have been thrown around. A lot of
numbers have been thrown around. But what proof do we have
that 3 percent is adequate on funding these kind of programs?
I can’t see things changing significantly in terms of how we dis-
tribute funds for research and development and innovation
throughout underrepresented areas, throughout underrepresented
communities.
I think, to Representative Hagedorn’s point, merit based is real-
ly—people will throw that around and want it to be some concrete
thing. But my mom was a professor in an Ivy League institution
for over 40 years. She graduated more African-American Ph.D.s
than any professor in the United States in her tenure, and she
graduated four.
So representation is an issue for many communities because
those various communities value different things. Rural areas
value different things than urban areas. And if the people who are
reviewing the applications are primarily from academic institu-
tions, as Dr. Johnson mentioned, they are going to value scientific
merit. They are not going to value economic merit.
Our company was rejected for most of our SBIRs because of our
scientific merit. They didn’t view there to be significant scientific
merit. But the impact of our future investment of $150 million on
a town like Madison is immeasurably larger than most, the impact
that it has on——
Chairman GOLDEN. Quickly, sir. Dr. Henry, if I could—I have
only got 30 seconds left there.
But that is a great point, talking about that perspective right
there, which is the economic merit versus just purely the scientific,
not just—the product that you are bringing is going to benefit,
There is going to be an economic merit across the country in re-
gards to lower home heating prices and other things. So I think
that is also something that could potentially be worked into a proc-
ess such as this.
But, Mr. Hagedorn, any other questions on your end?
Mr. HAGEDORN. No.
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Chairman GOLDEN. I will just give Dr. Johnson or Dr. Min, Dr.
Green, the opportunity to weigh in on this if you want. You don’t
have to.
And I think with that, we are——
Ms. JOHNSON. I would like to just comment.
I know that we use this term ‘‘merit,’’ and we are trying to figure
out what to evaluate. I actually serve on one of the review commit-
tees for one of the agencies that distribute SBIR and STTR. And
I don’t want to get lost in this discussion of merit that when it
comes to the committees, there is no consideration whatsoever for
the applicant coming from a rural area, being Black, White, His-
panic, Latino. There is no—none of that is applied into the review
process.
And so I think really what we are talking about is how do we
get applicants, a more diverse pool of applicants, doing more di-
verse innovation of higher quality into the program. And that
starts with equipping and enabling more individuals from diverse
backgrounds that are currently underserved to be able to do that.
So when we talk merit, yeah, when it gets down to brass tacks,
when you act in that review committee, we don’t see anything but
the application in front of us. But we really need to make sure that
everybody is given the opportunity to put the best application in
front of us, not just in the way that they write it but also in the
content, which is more so what we care about.
Chairman GOLDEN. Thank you.
Anyone else have any other thoughts on this particular issue?
Very good. Well, I want to thank you all for joining us for the
hearing today. I certainly appreciate your taking the time and your
patience, again, as we started a little bit late. The testimony is
very helpful, and I think that the Q&A was productive as well.
As we have heard today, not all small businesses have the
chance to succeed in the STEM sector, from rural technology com-
panies to women-run startups. In our metropolitan centers, a broad
range of entrepreneurs are at a disadvantage in the field.
SBIR and STTR offer good opportunities for developing tech-
nology and growing small firms, but we should work to make them
extend to a broader range of business owners.
Today’s witnesses provided us with critical insights, very helpful
insights into improving these programs and fostering greater diver-
sification.
I look forward to working with members of this Subcommittee to
implement these improvements and ensure that these critical pro-
grams are reaching as many small businesses as possible.
And with that, I would ask unanimous consent the members
have 5 legislative days to submit statements and supporting mate-
rials for the record.
Without objection, so ordered.
If there is no further business to come before the Committee, we
are adjourned.
Thank you.
[Whereupon, at 3:57 p.m. the Subcommittee adjourned.]
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APPENDIX
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Æ
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