Encouraging Small Business Innovation Act

IIB 116TH CONGRESS 1ST SESSION H. R. 206 IN THE SENATE OF THE UNITED STATES JANUARY 15, 2019 Received; read twice and referred to the Committee on Small Business and Entrepreneurship AN ACT To amend the small business laws to create certain require- ments with respect to the SBIR and STTR program, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 VerDate Sep 11 2014 22:50 Jan 15, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H206.RFS H206 kjohnson on DSK79L0C42 with BILLS 2 HR 206 RFS SECTION 1. SHORT TITLE. 1 This Act may be cited as the ‘‘Encouraging Small 2 Business Innovation Act’’. 3 SEC. 2. INCLUSION OF TESTING AND EVALUATION IN THE 4 DEFINITION OF RESEARCH AND DEVELOP- 5 MENT. 6 Section 9(e)(5) of the Small Business Act (15 U.S.C. 7 638(e)(5)) is amended— 8 (1) by redesignating subparagraphs (A), (B), 9 and (C) as clauses (i), (ii), and (iii), respectively 10 (and conforming the margins accordingly); 11 (2) by striking ‘‘means any activity which is’’ 12 and inserting the following: ‘‘means— 13 ‘‘(A) any activity which is—’’; and 14 (3) in clause (iii), as so redesignated, by adding 15 ‘‘and’’ after the semicolon at the end; and 16 (4) by adding at the end the following new sub- 17 paragraph: 18 ‘‘(B) any testing or evaluation in connec- 19 tion with such an activity;’’. 20 SEC. 3. INCLUSION OF SMALL BUSINESS INVESTMENT COM- 21 PANIES IN SBIR AND STTR. 22 Section 9 of the Small Business Act (15 U.S.C. 638) 23 is amended— 24 VerDate Sep 11 2014 22:50 Jan 15, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H206.RFS H206 kjohnson on DSK79L0C42 with BILLS 3 HR 206 RFS (1) by striking ‘‘or private equity firm invest- 1 ment’’ each place such term appears and inserting 2 ‘‘private equity firm, or SBIC investment’’; 3 (2) by striking ‘‘or private equity firms’’ and in- 4 serting ‘‘private equity firms, or SBICs’’; 5 (3) in subsection (e)— 6 (A) in paragraph (12)(B), by striking 7 ‘‘and’’ at the end; 8 (B) in paragraph (13)(B), by striking the 9 period at the end and inserting ‘‘; and’’; and 10 (C) by adding at the end the following new 11 paragraph: 12 ‘‘(14) the term ‘SBIC’ means a small business 13 investment company as defined in section 103 of the 14 Small Business Investment Act of 1958.’’; and 15 (4) in the heading for subsection (dd), by strik- 16 ing ‘‘OR PRIVATE EQUITY FIRMS’’ and inserting 17 ‘‘PRIVATE EQUITY FIRMS, OR SBICS’’. 18 SEC. 4. CALCULATION OF LEVERAGE OF SMALL BUSINESS 19 INVESTMENT COMPANIES THAT INVEST IN 20 SBIR OR STTR PARTICIPANTS. 21 Section 303(b)(2) of the Small Business Investment 22 Act of 1958 (15 U.S.C. 683(b)(2)) is amended by adding 23 at the end the following new subparagraph: 24 VerDate Sep 11 2014 22:50 Jan 15, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H206.RFS H206 kjohnson on DSK79L0C42 with BILLS 4 HR 206 RFS ‘‘(E) INVESTMENTS IN SBIR AND STTR 1 PARTICIPANTS.— 2 ‘‘(i) IN GENERAL.—Subject to clause 3 (ii), in calculating the outstanding leverage 4 of a company for purposes of subpara- 5 graph (A), the Administrator shall exclude 6 the amount of any investment made in a 7 SBIR or STTR participant, if such invest- 8 ment is made in the first fiscal year after 9 the date of enactment of this subparagraph 10 or any fiscal year thereafter by a company 11 licensed during the applicable fiscal year. 12 ‘‘(ii) LIMITATIONS.— 13 ‘‘(I) AMOUNT OF EXCLUSION.— 14 The amount excluded under clause (i) 15 for a company shall not exceed 33 16 percent of the private capital of that 17 company. 18 ‘‘(II) MAXIMUM INVESTMENT.— 19 A company shall not make an invest- 20 ment in any one SBIR or STTR par- 21 ticipant in an amount equal to more 22 than 20 percent of the private capital 23 of that company. 24 VerDate Sep 11 2014 22:50 Jan 15, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H206.RFS H206 kjohnson on DSK79L0C42 with BILLS 5 HR 206 RFS ‘‘(III) OTHER TERMS.—The ex- 1 clusion of amounts under clause (i) 2 shall be subject to such terms as the 3 Administrator may impose to ensure 4 that there is no cost (as that term is 5 defined in section 502 of the Federal 6 Credit Reform Act of 1990 (2 U.S.C. 7 661a)) with respect to purchasing or 8 guaranteeing any debenture involved. 9 ‘‘(iii) DEFINITIONS.—In this subpara- 10 graph, the term ‘SBIR or STTR partici- 11 pant’ means a small business concern that 12 receives contracts or grants pursuant to 13 section 9 of the Small Business Act.’’. 14 SEC. 5. ENCOURAGING PARTICIPATION IN THE MENTOR- 15 PROTEGE PROGRAM. 16 Section 9 of the Small Business Act (15 U.S.C. 638) 17 is amended by adding at the end the following: 18 ‘‘(tt) ENCOURAGING PARTICIPATION IN THE MEN- 19 TOR-PROTEGE PROGRAM.—The Administrator shall pro- 20 vide an increase to the past performance rating of any 21 small business concern that has participated in the SBIR 22 or STTR program that serves as a mentor under section 23 45 to a small business concern that seeks to participate 24 in the SBIR or STTR program.’’. 25 VerDate Sep 11 2014 22:50 Jan 15, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H206.RFS H206 kjohnson on DSK79L0C42 with BILLS 6 HR 206 RFS SEC. 6. ANNUAL MEETING FOR FEDERAL AGENCIES WITH A 1 SBIR OR STTR PROGRAM. 2 (a) IN GENERAL.—Section 9 of the Small Business 3 Act (15 U.S.C. 638), as amended by section 3, is further 4 amended by adding at the end the following new sub- 5 section: 6 ‘‘(uu) ANNUAL MEETING.— 7 ‘‘(1) IN GENERAL.—The head of each Federal 8 agency required to have a program under this sec- 9 tion (or a designee) and the Administrator (or a des- 10 ignee) shall meet annually to discuss methods— 11 ‘‘(A) to improve the collection of data 12 under this section; 13 ‘‘(B) to improve the reporting of data to 14 the Administrator under this section; 15 ‘‘(C) to make the application processes for 16 programs under this section more efficient; and 17 ‘‘(D) to increase participation in the pro- 18 grams under this section. 19 ‘‘(2) REPORTING.—Not later than 60 days after 20 the date on which an annual meeting required under 21 paragraph (1) is held, the Administrator shall sub- 22 mit to the Committee on Small Business and Entre- 23 preneurship of the Senate, and the Committee on 24 Small Business and the Committee on Science, 25 Space, and Technology of the House of Representa- 26 VerDate Sep 11 2014 22:50 Jan 15, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H206.RFS H206 kjohnson on DSK79L0C42 with BILLS 7 HR 206 RFS tives, a report on the findings of such meeting and 1 recommendations on how to implement changes to 2 programs under this section.’’. 3 (b) FUNDING FOR ANNUAL MEETING.—Section 4 9(mm)(1) of the Small Business Act (15 U.S.C. 5 638(mm)(1)) is amended— 6 (1) in subparagraph (I), by striking the ‘‘and’’ 7 at the end; 8 (2) in subparagraph (J), by striking the period 9 at the end and inserting ‘‘; and’’; and 10 (3) by adding at the end the following new sub- 11 paragraph: 12 ‘‘(K) the annual meeting required under 13 subsection (uu).’’. 14 SEC. 7. INCREASING PARTICIPATION OF UNDERSERVED 15 POPULATIONS IN THE SBIR AND STTR PRO- 16 GRAMS. 17 (a) IN GENERAL.—Section 9(mm)(2) of the Small 18 Business Act (15 U.S.C. 638(mm)(2)) is amended to read 19 as follows: 20 ‘‘(2) OUTREACH AND TECHNICAL ASSIST- 21 ANCE.—A Federal agency participating in the pro- 22 gram under this subsection shall use a portion of the 23 funds authorized for uses under paragraph (1) to 24 carry out the policy directive required under sub- 25 VerDate Sep 11 2014 22:50 Jan 15, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H206.RFS H206 kjohnson on DSK79L0C42 with BILLS 8 HR 206 RFS section (j)(2)(F) and to increase the participation of 1 States with respect to which a low level of SBIR 2 awards have historically been awarded.’’. 3 (b) CONFORMING AMENDMENT.—Section 9(mm)(6) 4 of the Small Business Act (15 U.S.C. 638(mm)(6)) is 5 amended by striking ‘‘paragraph (2)(A) and any use of 6 the waiver authority under paragraph (2)(B)’’ and insert- 7 ing ‘‘paragraph (2)’’. 8 Passed the House of Representatives January 14, 2019. Attest: KAREN L. HAAS, Clerk. VerDate Sep 11 2014 22:50 Jan 15, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H206.RFS H206 kjohnson on DSK79L0C42 with BILLS