H.R. 2965: Enhancing Small Business Research and Innovation Act of 2009

H.R. 2965

Enhancing Small Business Research and Innovation Act of 2009

July 8, 2009 (111th Congress, 1st Session)

Staff Contact

Floor Situation

H.R. 2965 is expected to be considered under a structured rule. The legislation was introduced by Rep. Jason Altmire (D-PA) on June 19, 2009. The bill was ordered to be reported, as amended, by the Committee on Small Business by a vote of 22-0 on June 26, 2009.

Bill Summary

Reauthorization: H.R. 2965 reauthorizes both the Small Business Innovation Research (SBIR) program and the Small Business Technology Transfer (SBTT) programs of the Small Business Administration through September 30, 2011.

SBIR provides subsidies to small business to expand their businesses. Currently, SBIR is a three-step process.  "Phase I" is the startup phase during which awards of up to $100,000 for approximately six months support exploration of the technical merit or feasibility of an idea or technology. "Phase II" includes awards of up to $750,000, for as many as two years, to expand upon Phase I results. "Phase III" is the period during which Phase II innovation moves into the marketplace. No federal funds support this final phase.

STTR is a program that reserves a specific percentage of federal research and development funding for subsidies to small business and nonprofit research institution partners.  Under this program, five federal agencies are required to reserve a portion of their research and development funds for awards to these partnerships. These agencies designate research topics and accept proposals. Agencies then make STTR awards and small businesses that receive awards begin a three-phase program similar to the SBIR process.

Increased Subsidy Levels: The bill increases the level of awards made under the SBIR and STTR programs from $100,000 to $250,000 for Phase I awards and from $750,000 to $2 million for Phase II awards.

Sequential Awards: The bill establishes that a small business that receives one phase II award is eligible to receive additional Phase II awards.  A Phase II award can be made only after a phase I award has been completed, or the small business has met certain requirements regarding technical merit and commercial potential.

Limitation of Certain Awards:  H.R. 2965 states that no federal agency shall exceed the award levels set forth for the programs reauthorized unless the agency notifies the SBA Administrator that it intends to issue awards in that Fiscal Year without regard to the award limits, and reports to Congress on the number of instances in which the agency issued an award that exceeds the maximum award limits and the justification for such.

Majority Venture Capital Owned Small Businesses: Regarding eligibility in the SBIR and STTR programs, this bill would allow majority venture capital ownership in a small business if not more than 50 percent of the firm is owned by one venture capital company and the employees of the venture capital company are not a majority of the firm's board of directors. If the venture capital company is controlled by a business with more than 500 employees, the small business is eligible only if not more than two large venture capital companies have ownership interest in the small firm and these large venture capital companies do not collectively own more than 20 percent of the small business.

Outreach: The bill authorizes the Federal and State Technology Partnership (FAST) program which provides grants to organizations to provide outreach designed to encourage increased participation in the SBIR program. $10 million in funding is authorized for this activity in Fiscal Years 2010 and 2011.

Commercialization Activities:  The bill requires agencies to establish procedures to encourage SBIR awardees to develop partnerships with other organizations, including prime contractors, venture capital companies, and large businesses to assist them in moving to Phase III.  "Express authority" is also provided to agencies for development of "fast track" programs to end time delays between completion of Phase I and the award of Phase II grants. The bill requires agencies to implement a commercialization program to assist SBIR awardees in Phase III.  $27.5 million is authorized for Fiscal Year 2010 for the SBA to transfer to the agencies for commercialization programs.

Oversight: The bill requires the SBA Administrator to submit annually to Congress a list of small businesses that, during the previous five-year period, received 15 or more Phase I awards and no Phase II awards, H.R. 2965 also authorizes funding for SBA administrative, oversight, and contract processing costs related to the SBIR program. $27.5 million is authorized for Fiscal Years 2010 and for 2011 for these activities.

Additionally, the bill requires each agency to create and maintain a public technology utilization database containing data supplied by award recipients. Finally, the bill requires the Director of the Office of Science and Technology at SBA to establish an Interagency SBIR/STTR Policy Committee and provide periodic reports to Congress.



H.R. 2965 extends through Fiscal Year 2011 the largest federal small business research and development programs, operated by the Small Business Administration (SBA)-the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR). The SBIR program was established by Congress in 1982 in an effort to increase federal funding for small companies with research and development activities with commercial potential. It was last reauthorized in 2000.


There is no Congressional Budget Office (CBO) cost estimate available yet for H.R. 2965.