House approves SBIR reauthorization, sending it to Biden's desk

By Briana Reilly / September 29, 2022 at 3:38 PM

A bill to reauthorize two small business programs that serve as key pillars within the military's broader innovation environment has won approval from the House, clearing both chambers of Congress just one day before the initiatives are set to expire.

The plan’s passage today brings a legislative conclusion to a behind-the-scenes debate over the Small Business Innovation Research program in which lawmakers and aides considered a host of front-end programmatic changes to the four-decade-old effort that has drawn concerns over foreign influence and so-called “SBIR mills.”

Rather than being included in the continuing resolution that senators unveiled this week to keep the government funded through Dec. 16, or the defense policy bill, which has yet to get through the Senate, the framework is a standalone one that was green-lit on a 415-9 vote.

Speaking on the floor Wednesday when the legislation was first taken up, Rep. Nydia Velázquez (D-NY), the House small business committee chair, said the plan bolsters oversight while informing “future program changes,” and she credited the “months-long bipartisan and bicameral negotiations” for producing the current framework.

“Unfortunately, S. 4900 does not include everything we wanted to accomplish during this reauthorization, but I remain committed to coming together again in the future to have those conversations,” she said.

Under the bill, which was advanced by the Senate via unanimous consent last week, both SBIR and the complementary Small Business Technology Transfer programs would see a three-year extension -- staving off another reauthorization debate through Sept. 30, 2025.

The timeframe under the proposal, from Sen. Ben Cardin (D-MD), the chair of the Senate small business committee, is shorter than the current five-year authorization period both programs are operating under, which was set in the Fiscal Year 2017 National Defense Authorization Act.

The legislation also includes a number of programmatic changes, products of negotiations among the so-called “six corners,” consisting of the House and Senate small business panels and the House science committee, that seek to boost the number of new entrants to SBIR and STTR while minimizing the presence of contractors who repeatedly win phase I and II awards but fail to commercialize their technology solutions.

For example, the bill features a requirement that would implement the use of open topics by allowing potential vendors to pitch solutions to Defense Department components at least once a year for the programs; set new transition standards for phase I and II awardees participating in the three-phase programs; and put in place a claw-back provision that would give agencies approval to recover funds in certain instances.

DOD and other federal agencies would also need to create “a due diligence program to assess the potential risk posed by foreign ties and obligations,” according to a summary of the legislation obtained last week by Inside Defense.

Concerns over those ties, vocalized by Sen. Rand Paul (R-KY), the ranking member on the Senate small business committee, came after the topic was publicly highlighted in a Wall Street Journal article that cited an April 2021 DOD report on SBIR recipients that dissolved their U.S. companies to join efforts backed by the Chinese military, as well as award winners that took venture capital dollars from firms controlled by Beijing. Paul had also sounded the alarm over SBIR mill considerations.

Rep. Blaine Luetkemeyer (R-MO), the ranking member of the House small business committee, said during a floor speech Wednesday that the legislation addresses both of those concerns, putting “a stop to the use of some of these programs as ATMs for different companies” and ending “the Chinese abuse of these programs as well.”

Other provisions of the bill would require the Government Accountability Office to review businesses that have won more than 50 phase II awards; conduct a series of studies comparing open versus conventional topics, in which government specifies its needs to industry; and assess the subcontracting practices and agreements of SBIR and STTR awardees.

Ahead of the legislation’s passage, the Defense Department -- one of 11 agency users of SBIR -- had already been bracing for a potential programmatic lapse, which would have prevented the posting of future solicitations and funding of ongoing or new projects.