[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
SBIR/STTR REAUTHORIZATION:
A REVIEW OF TECHNOLOGY TRANSFER
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON RESEARCH AND TECHNOLOGY
COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
__________
June 16, 2016
__________
Serial No. 114-84
__________
Printed for the use of the Committee on Science, Space, and Technology
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://science.house.gov
____________
U.S. GOVERNMENT PUBLISHING OFFICE
20-913PDF WASHINGTON : 2017
__________________________________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Publishing Office,
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center,
U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free).
E-mail, [email protected].
COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
HON. LAMAR S. SMITH, Texas, Chair
FRANK D. LUCAS, Oklahoma EDDIE BERNICE JOHNSON, Texas
F. JAMES SENSENBRENNER, JR., ZOE LOFGREN, California
Wisconsin DANIEL LIPINSKI, Illinois
DANA ROHRABACHER, California DONNA F. EDWARDS, Maryland
RANDY NEUGEBAUER, Texas SUZANNE BONAMICI, Oregon
MICHAEL T. McCAUL, Texas ERIC SWALWELL, California
MO BROOKS, Alabama ALAN GRAYSON, Florida
RANDY HULTGREN, Illinois AMI BERA, California
BILL POSEY, Florida ELIZABETH H. ESTY, Connecticut
THOMAS MASSIE, Kentucky MARC A. VEASEY, Texas
JIM BRIDENSTINE, Oklahoma KATHERINE M. CLARK, Massachusetts
RANDY K. WEBER, Texas DONALD S. BEYER, JR., Virginia
JOHN R. MOOLENAAR, Michigan ED PERLMUTTER, Colorado
STEPHEN KNIGHT, California PAUL TONKO, New York
BRIAN BABIN, Texas MARK TAKANO, California
BRUCE WESTERMAN, Arkansas BILL FOSTER, Illinois
BARBARA COMSTOCK, Virginia
GARY PALMER, Alabama
BARRY LOUDERMILK, Georgia
RALPH LEE ABRAHAM, Louisiana
DRAIN LAHOOD, Illinois
WARREN DAVIDSON, Ohio
------
Subcommittee on Research and Technology
HON. BARBARA COMSTOCK, Virginia, Chair
FRANK D. LUCAS, Oklahoma DANIEL LIPINSKI, Illinois
MICHAEL T. McCAUL, Texas ELIZABETH H. ESTY, Connecticut
RANDY HULTGREN, Illinois KATHERINE M. CLARK, Massachusetts
JOHN R. MOOLENAAR, Michigan PAUL TONKO, New York
BRUCE WESTERMAN, Arkansas SUZANNE BONAMICI, Oregon
GARY PALMER, Alabama ERIC SWALWELL, California
RALPH LEE ABRAHAM, Louisiana EDDIE BERNICE JOHNSON, Texas
DARIN LaHOOD, Illinois
LAMAR S. SMITH, Texas
C O N T E N T S
June 16, 2016
Page
Witness List..................................................... 2
Hearing Charter.................................................. 3
Opening Statements
Statement by Representative Barbara Comstock, Chairwoman,
Subcommittee on Research and Technology, Committee on Science,
Space, and Technology, U.S. House of Representatives........... 4
Written Statement............................................ 6
Statement by Representative Daniel Lipinski, Ranking Member,
Subcommittee on Research and Technology, Committee on Science,
Space, and Technology, U.S. House of Representatives........... 8
Written Statement............................................ 10
Statement by Representative Lamar S. Smith, Chairman, Committee
on Science, Space, and Technology, U.S. House of
Representatives................................................ 12
Written Statement............................................ 14
Statement by Representative Eddie Bernice Johnson, Ranking
Member, Committee on Science, Space, and Technology, U.S. House
of Representatives............................................. 16
Written Statement............................................ 18
Witnesses:
Dr. Pramod Khargonekar, Assistant Director, National Science
Foundation
Oral Statement............................................... 20
Written Statement............................................ 23
Dr. Michael Lauer, Deputy Director, National Institutes of Health
Oral Statement............................................... 27
Written Statement............................................ 29
Dr. Patricia Dehmer, Deputy Director for Science Programs, Office
of Science, Department of Energy
Oral Statement............................................... 38
Written Statement............................................ 40
Dr. Jilda D. Garton, Vice President for Research and General
Manager, Georgia Tech Research Corporation
Oral Statement............................................... 46
Written Statement............................................ 48
Discussion....................................................... 55
Appendix I: Answers to Post-Hearing Questions
Dr. Pramod Khargonekar, Assistant Director, National Science
Foundation..................................................... 72
Dr. Michael Lauer, Deputy Director, National Institutes of Health 80
Dr. Patricia Dehmer, Deputy Director for Science Programs, Office
of Science, Department of Energy............................... 88
Dr. Jilda D. Garton, Vice President for Research and General
Manager, Georgia Tech Research Corporation..................... 105
SBIR/STTR REAUTHORIZATION:
A REVIEW OF TECHNOLOGY TRANSFER
----------
THURSDAY, JUNE 16, 2016
House of Representatives,
Subcommittee on Research and Technology,
Committee on Science, Space, and Technology,
Washington, D.C.
The Subcommittee met, pursuant to call, at 9:41 a.m., in
Room 2318 of the Rayburn House Office Building, Hon. Barbara
Comstock [Chairwoman of the Subcommittee] presiding.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairwoman Comstock. Good afternoon. The Committee on
Science, Space, and Technology will come to order.
Without objection, the Chair is authorized to declare
recesses of the Committee at any time.
Good morning, and welcome to today's hearing titled ''SBIR/
STTR Reauthorization: A Review of Technology Transfer.'' I now
recognize myself for five minutes for an opening statement.
The foundation of America's future economic success is and
will continue to be our global leadership in science and
technology.
Taxpayer-funded basic research conducted through the
National Science Foundation, NASA, NIH, DOD, and other federal
agencies underwrites the breakthrough science and the key
discoveries that have created today's world: the internet,
wireless communications, lifesaving medicines, lasers,
artificial intelligence, and so much more.
Converting scientific breakthroughs into innovations
creates new industries, new businesses, and new jobs. Such
innovation transforms commerce, everyday life and our entire
society.
Risk-taking entrepreneurs and small businesses are the
catalysts for innovation. They are the catalysts for economic
growth, for generating the family and community-sustaining jobs
that we need so badly.
Congress enacted the Small Business Innovation Research, or
SBIR, program in 1982, followed by the Small Business
Technology Transfer, or STTR, program in 1992. These two
programs accelerate technological innovation and
commercialization of new products and services by small
businesses. They also help the Department of Defense and other
federal agencies meet their research and development needs.
Federal agencies with large extramural research budgets--
more than $100 million a year for the SBIR program and $1
billion for STTR--award competitive grants to small businesses
for technology development and commercialization.
Eleven agencies hit the $100 million research budget
threshold for SBIR. They are required to set aside three
percent of their extramural research budgets to support SBIR,
and that will rise to 3.2 percent in fiscal year 2017.
Five agencies, including NSF, NASA and DOE, surpass the $1
billion threshold for STTR. These five agencies also account
for about 98 percent of SBIR. These five agencies are required
to set aside 0.45 percent of their extramural research budgets
for STTR grants.
Since its inception, participating federal agencies have
awarded SBIR and STTR contracts and grants to small businesses
totaling more than $40 billion. A number of companies that use
SBIR are located in my Congressional district, and I hear often
about people who are both working in this program, have issues
on how it can better be utilized, and so I really do look
forward to that discussion. Just some of the companies I know
in my district are three Phoenix, Inc., Aurora Flight Sciences
in Manassas, and Mosaic ATM in Leesburg, Progeny Systems of
Manassas, Virginia and there are a number of others.
I do look forward to hearing from our panel of expert
witnesses this morning, including individuals who lead the
administration and management of three of the largest SBIR and
STTR programs and the Vice President of Research from one our
Nation's most prominent academic research universities.
[The prepared statement of Chairwoman Comstock follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairwoman Comstock. I now recognize the Ranking Member,
the gentleman from Illinois, Mr. Lipinski, for his opening
statement.
Mr. Lipinski. Thank you, Chairwoman Comstock, for holding
this hearing to review the SBIR and STTR programs, as well as
to examine national efforts to support commercialization of
federally funded research and development.
Those of you who follow this Committee know that I am
always focused on finding better ways to promote
commercialization of research, especially the great research
funded by the American taxpayers at our universities and
national labs.
This hearing is an important step in the reauthorization of
the SBIR and STTR commercialization programs, which our
subcommittee has jurisdiction over.
In the United States, where small businesses create 55
percent of all jobs, the success of the small business
enterprise is key to economic growth.
For almost 40 years, the SBIR program has been funding
small business innovation across all sectors of our economy.
There are many prominent success stories from SBIR grants. A
recent Air Force review of Phase II winners between 2000 and
2013 found that 58 percent of them had sales in excess of $1
million.
Importantly, many of the innovators who create these small
businesses are educated and trained in our Nation's great
research institutions, with support from federal research
dollars. And some even directly commercialize research funded
by federal dollars. The Federal R&D enterprise is truly an
ecosystem from basic research to commercialization.
Unlike any other program that I'm aware of, SBIR and STTR
are funded using a percentage of participating agencies'
extramural research and development budgets. That percentage
has increased by 30 percent since 2011, even as the larger
budgets have remained flat.
While the SBIR program has great value, we must look at it
in the context of overall agency budgets and missions.
Increasing the set-aside for SBIR and STTR as much as has been
proposed by some could come at the expense of support for other
critical research programs.
Perhaps my biggest concern is harm done to the pipeline of
STEM talent and innovators by increasingly lower research
funding levels. This is a difficult choice in tough budget
times because both research and commercialization activities
are highly valuable investments.
We must also look hard at assessments of the SBIR program
and consider ways to make it more efficient and help the
program better achieve its goals, and this hearing is a good
opportunity to talk about other ways to improve the
commercialization of federally funded research, including the
very successful Innovation Corps program started at NSF in 2011
and now expanding to other agencies, as well as the NIH's Proof
of Concept pilot program. I-Corps is essentially an
entrepreneurial education program. The I-Corps Node program
provides this education and other support for innovators at our
research universities, creating a true interconnected, national
innovation network.
I am pleased that Ms. Garton is joining us today, and I
look forward to her testimony regarding Georgia Tech's I-Corps
Node program and the challenges innovators face in seeking
early stage funding.
In the five years since the I-Corps program has been
running, it has clearly demonstrated its value in improving
tech transfer and commercialization, and we are beginning to
see that it makes the SBIR program more efficient as well.
Although it takes time to fully realize success in
commercialization, the early returns show I-Corps-trained teams
having more success than comparable teams without this
training. I think the time has come to talk about having some
kind of I-Corps program at every agency with an SBIR program,
as the two truly go hand in hand.
Finally, I want to mention language that I put in the 2011
SBIR Reauthorization bill which allowed for an NIH Proof of
Concept pilot program, utilizing a small portion of the funds
from the STTR set-aside, to give grants to researchers at a
pre-SBIR stage. This could be called SBIR phase zero.
Many university researchers are hesitant to start a
company, which often means leaving their university, so they're
hesitant without having confidence that the idea can work out.
The Proof of Concept pilot has led to programs at NIH such as
the NIH Centers for Accelerated Innovations and the Research
Evaluation and Commercialization Hubs, or REACH, programs. I
believe programs like these can be an important part of the
innovation ecosystem and I look forward to an update on the
pilot from Dr. Lauer.
I know the agencies here today are exploring many other
aspects of early stage commercialization, including how to
coordinate these efforts better with the SBIR program. I look
forward to this broader discussion about commercializing
federally funded research. I also look forward to your
testimony about how you've implemented new requirements and
flexibilities in the SBIR program since the 2011
reauthorization, and what our Committee should consider as we
take up the next reauthorization.
I would like to ask unanimous consent to enter into the
record the Administration's Principles for SBIR/STTR
Reauthorization and the letter dated May 10, 2016, from a
coalition of science organizations and universities.
Chairwoman Comstock. Thank you----
Mr. Lipinski. Can I get unanimous consent to put those in
the record?
Chairwoman Comstock. Without objection.
[The information was not available at the time of
publishing. ]
Mr. Lipinski. Thank you, and with that, I will yield back.
Thank you.
[The prepared statement of Mr. Lipinski follows:]
[GRAPHIC] [TIFF OMITTED] T0916.170
[GRAPHIC] [TIFF OMITTED] T0916.171
Chairwoman Comstock. Thank you, Mr. Lipinski, and I now
recognize the Chairman of the full Committee, Mr. Smith.
Chairman Smith. Thank you, Madam Chairwoman, and I
appreciate both your comments and the comments by the Ranking
Member.
The Small Business Innovation Research Act, or SBIR, was
signed into law by President Reagan in 1982 to help spur
innovation and increase small business participation in federal
research and development activity.
Since then, more than 100,000 small businesses in the
United States have received SBIR grants to convert taxpayer-
supported basic research discoveries into commercial
technological innovation.
The Small Business Technology Transfer program, or STTR,
was approved by Congress in 1992. STTR's unique feature is its
requirement for a small business to collaborate with a
nonprofit research institution in order to bridge the gap
between basic science and commercialization of resulting
innovations.
Both SBIR and STTR are funded through a tax on federal
agencies' research budgets. The SBIR tax on research began at
0.2 percent; that tax is now three percent, or 15 times higher.
Twelve federal agencies--those with annual external research
budgets of $100 million or more--are currently subject to the
SBIR tax.
The five federal departments and agencies with annual
external research budgets of more than $1 billion are also
taxed to provide funding for the STTR program. That tax is an
additional .45 percent on the three research agencies
represented here today: DOE, NSF, and NIH. These basic research
taxes currently amount to approximately $2.5 billion each year
for commercialization grants to small businesses.
Grant recipients run the gamut. Although about one-quarter
of the companies are first-time recipients, most participating
small businesses have received multiple SBIR grants.
Some former recipients of SBIR assistance have even become
very large international corporations, such as Qualcomm,
Sonicare, and Symantec.
SBIR and STTR companies have created parts for NASA's Mars
Rover, equipped our military men and women with key war-
fighting innovations, and generated a long list of lifesaving
medicines and health care treatments.
SBIR and STTR recipients have thousands of new patents and
created thousands of new jobs, many in new areas of technology.
In the leading-edge field of nanoscience, we're learning
that tiny particles can have very big effects. SBIR support
enabled Applied Nanotech of Austin, TX, to become a world
leader in nanotechnology breakthroughs: inventing cheaper, more
efficient solar energy cells, new materials for blast-resistant
structures and equipment, and low-cost, high-performance
metallic inks and pastes for ink-jet-printed electronics.
Xeris Pharmaceuticals, also Austin-based, has used SBIR
grants to develop new delivery systems for injectable medicines
that are not soluble with water. This includes a system for
injectable glucagon to treat congenital hyperinsulinism that
affects thousands of infants and young children.
The current legislative authorization for the SBIR and STTR
programs doesn't expire until September of next year. The
Science Committee is holding its first hearing today in order
to start the process of timely oversight and reauthorization
consideration.
There are still ways to improve SBIR and STTR and assure
taxpayers are getting the greatest return for the investments
of their hard-earned dollars. Instances of fraud and abuse
continue to be problematic.
Objective measurement of results across all participating
federal agencies is needed. It is also important to examine if
the current funding level--the taxes on basic research--are
hurting fundamental scientific research. Any increases would
necessarily reduce our Nation's primary investments in basic
research at a time when U.S. global leadership is threatened.
As the members of this Committee know, China is set to overtake
the U.S. in R&D spending as soon as 2020.
Madam Chairwoman, I look forward to hearing from our panel
of witnesses today, who are all experts in their own right, and
who represent federal agencies and research universities, about
these and other issues.
Thank you, and yield back.
[The prepared statement of Chairman Smith follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairwoman Comstock. Thank you, Mr. Smith, and I now
recognize the Ranking Member of the full Committee for a
statement, Ms. Johnson.
Ms. Johnson. Thank you very much, and good morning. I'd
like to thank you, Madam Chair, for holding this hearing today
to examine the Small Business Innovation Research program and
the Small Business Technology Transfer programs and related
technology transfer issues, and I'd like also to thank the
Chairman of the full Committee for ensuring that Science
Committee members have the opportunity to weigh in on
reauthorization of these important programs.
The United States has long been a nation that nurtures
innovation. The number of small businesses has grown by 49
percent since 1982, and today's 28 million small businesses
make up 54 percent of all U.S. sales. The invigorating startup
culture we have seen for the last decade and a half has
contributed to this growth and has given us extraordinary
economic and social benefits.
The first SBIR program was at the National Science
Foundation and was started in the mid-1970s to support small
high-tech firms' ability to compete for federal R&D grants.
This program grew to a government-wide program in 1982. Today
the program receives approximately $2.2 billion from funds set-
aside from the federal research and development budget. The
SBIR and STTR programs are funded from a set-aside from
agencies' extramural R&D budgets. They are the only R&D
programs that are funded in this market. While stability and
continuity in the programs are important goals, the SBIR and
STTR programs are just one tool in a much larger R&D toolbox
that agencies draw from to meet their missions.
The SBIR and STTR programs were last authorized from fiscal
years 2012 through 2017. During that time, the programs grew by
30 percent. In addition, the 2011 reauthorization introduced
many new requirements and flexibilities for the agencies.
Before we reauthorize the programs, it is the
responsibility of this Committee to review how the new policies
introduced in the last reauthorization have been implemented,
how well the programs are achieving their goals and how they
might continue to improve, and how the programs fit into the
larger federal research and development enterprise. Our job on
the Science Committee is to help ensure the health and
sustainability of this entire enterprise.
One particular issue I hope our witnesses can address is
women and minority participation. According to the National
Academies, agencies are doing well in all of the main goals of
the SBIR and STTR programs except for participation in
innovation by economically and socially disadvantaged groups. I
have spent my entire political career working on increasing
female and minority participation in STEM starting in the early
1970s, I might add. I'm glad to say that we are not doing much
better--I'm sad to say that we are not doing much better today
than when I started.
SBIR cannot solve disparities created earlier in the
pipeline. However, we know that women and minorities receive
less encouragement and support to become entrepreneurs. I'd
like to hear from our witnesses today how agencies can help
address this disparity through the SBIR and STTR programs.
I thank the witnesses for being here today and I look
forward to their comments and recommendations for future
legislation.
Thank you, Madam Chair, and I yield back the balance of my
time.
[The prepared statement of Ms. Johnson follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairwoman Comstock. Thank you.
And now let me introduce our witnesses. Our first witness
today is Dr. Pramod Khargonekar, Assistant Director for the
Directorate of Engineering at the National Science Foundation.
He was appointed to serve as Assistant Director in March 2013.
In this role, he leads the Engineering Directorate with an
annual budget of more than $900 million, which funds
engineering research and development and education, cultivates
an innovation ecosystem, and develops next-generation
engineers. He previously served as Deputy Director of
Technology at ARPA-E at the U.S. Department of Energy and
served as the Dean of the College of Engineering at the
University of Florida. He received his bachelor's degree at the
Indian Institute of Technology-Bombay and a master's in
mathematics and a doctorate in electrical engineering from the
University of Florida-Gainesville.
Our second witness today is Dr. Michael Lauer, Deputy
Director of Extramural Research at the National Institutes of
Health. In this role, Dr. Lauer serves as the principal
scientific leader and advisor to the Director of the NIH on all
matters relating to the substance, quality and effectiveness of
the NIH Extramural Research program and administration. Prior
to joining NIH, he served as a Division Director at the
National Heart, Lung and Blood Institute as a Board-Certified
Cardiologist. He received education and training at Albany
Medical College, Harvard Medical School, and Harvard School of
Public Health.
Our third witness today is Dr. Patricia Dehmer, Deputy
Director for Science Programs in the Office of Science at the
Department of Energy. The Office of Science supports research
at 300 colleges and universities nationwide, at DOE
laboratories, and at other private institutions. She has served
in a number of positions at DOE where she began her scientific
career as a postdoctoral fellow at Argonne National Laboratory.
She received a bachelor of science degree in chemistry from the
University of Illinois and a Ph.D. in chemical physics from the
University of Chicago in 1972.
Our final witness today is Ms. Jilda Garton, Vice President
for Research and General Manager at Georgia Tech Research
Corporation at Georgia Institute of Technology. She is
responsible for financial and business affairs including
licensing of intellectual property created at Georgia Tech. She
directs the activities of the Office of Sponsored Programs, the
Office of Research Integrity Assurance, and the Office of
Industry Engagement. Ms. Garton currently serves on the Board
of the University-Industry Demonstration Partnership and co-
chairs the UIDP's Contracts Accords Working Group. She has a
B.A. in biology from Vanderbilt University and an M.S. in
zoology from Louisiana State University.
I now recognize Dr. Khargonekar for five minutes to present
his testimony.
TESTIMONY OF DR. PRAMOD KHARGONEKAR,
ASSISTANT DIRECTOR,
NATIONAL SCIENCE FOUNDATION
Mr. Khargonekar. Good morning, Chairwoman Comstock, Ranking
Member Lipinski, Chairman Smith, Ranking Member Johnson,
Committee members. Thank you for this opportunity to testify
regarding the Small Business Innovation Research and Small
Business Technology Transfer programs at the National Science
Foundation. My name is Pramod Khargonekar. I am the Assistant
Director for Engineering at National Science Foundation. The
SBIR/STTR program at NSF is managed within the Division of
Industrial Innovation and Partnerships and the Directorate for
Engineering.
While NSF's primary mission is to advance the frontiers of
science and engineering through basic research, the SBIR/STTR
program is an integral part of the NSF strategy to stimulate
innovation and address societal needs. This is achieved through
the commercialization of results of fundamental research. We
fund small businesses at very early stages when the technology
risk is high and before the private sector is normally willing
to invest.
Since the NSF is not the ultimate customer of resulting
innovations, the NSF SBIR/STTR research topics are designed to
address existing and emerging needs of the U.S. marketplace and
the Nation as a whole. For example, NSF SBIR research brought
about Symantec, which is now a global leader in cybersecurity.
It was founded in 1982 by Gary Hendrix, who was funded by an
NSF SBIR grant. Qualcomm, a world leader in wireless
communications and computing technologies, also received NSF
SBIR funding during the 1980s in its early years as a small
business. Its co-founder, Irwin Jacobs, recently stated, and I
quote, ``With one of the grants, we developed some of the first
chips we did at Qualcomm, if not the first. Of course, making
chips for cell phones is now about 2/3 of our revenue today,
and that was the base.''
In the last four decades, NSF has been continuously
innovating and exploring new approaches to stimulating small
business-based technological innovations and commercialization.
In 1998, NSF SBIR introduced a new supplemental program called
Phase IIB. It is a platform to stimulate NSF-funded active
Phase II grantees to attract additional private-sector funding
for further technology commercialization.
In addition to providing funding in varying stages, we also
assist awardees by providing them with experiential
entrepreneurial education based in part on the NSF Innovation
Corps, or I-Corps program. I-Corps helps entrepreneurs and
their small businesses understand market needs and customers,
thus increasing their chances of successful commercialization
of new technologies.
Another program closely related to I-Corps is the
Accelerating Innovation Research, or AIR. We frequently find
that NSF-funded researchers apply for AIR grants first before
pursuing I-Corps training. We are seeing strong interactions
between these programs and our SBIR/STTR program where
researchers with NSF-funded fundamental research advance to AIR
first, then go through I-Corps, and then pursue SBIR/STTR
funding. This pathway is getting strong and working extremely
well.
We also many other translational research programs which
complement our significant investments in fundamental
scientific and engineering research.
SBIR and STTR are vital components of NSF's agenda to
enable commercialization of technology stemming from basic
research. We at NSF take great pride in having pioneered the
SBIR program concept and continue to innovate to expand its
impact.
Recently, there have been proposals to increase the set-
aside percentages for SBIR/STTR whose ultimate effect will be
to apportion a greater amount of the NSF research budget to the
SBIR/STTR program.
NSF is the lead agency for the support of basic research at
our Nation's universities. Our budget for basic research has
been flat during this decade, and any further diminution will
reduce the very discoveries that our country needs to remain an
economic powerhouse and a global leader. We do support future
growth in SBIR/STTR programs but urge that such growth be
enabled through an overall budget increase for NSF.
NSF strongly supports a permanent reauthorization of SBIR/
STTR and recommends that the annual set-aside percentages for
the programs be maintained at fiscal year 2017 levels.
Lastly, I should note that NSF participated in interagency
process to detail principles all the SBIR/STTR agencies can
support for reauthorization, which include permanent
reauthorization, growth in program through overall extramural
research growth, and maintaining flexibility.
Madam Chairwoman, this concludes my testimony. On behalf of
the National Science Foundation, the SBIR/STTR program, and our
awardees, I want to thank you for this opportunity to highlight
a program that provides small businesses with the means to keep
America on the forefront of innovation and stimulate U.S.
economic growth. We greatly appreciate the opportunity to work
with you on reauthorizing SBIR and STTR. Thank you.
[The prepared statement of Mr. Khargonekar follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairwoman Comstock. Thank you.
Now we'll hear from Dr. Lauer.
TESTIMONY OF DR. MICHAEL LAUER,
DEPUTY DIRECTOR,
NATIONAL INSTITUTES OF HEALTH
Dr. Lauer. Good morning. Chairwoman Comstock, Ranking
Member Lipinski, and members of the Subcommittee, it is an
honor to appear before you today to talk about how the SBIR and
STTR programs fit within the overall context of the NIH
research portfolio.
NIH has been advancing our understanding of health and
disease for more than a century. Scientific and technological
breakthroughs generated by NIH-supported research are behind
many of the improvements our country has enjoyed in public
health. Many recent breakthroughs stem from our Nation's
commitment from investing in basic research, which lays the
foundation for advances in disease diagnosis, and prevention
and is generally not supported by the private sector.
NIH supports a broad research portfolio that includes basic
science, translational science, clinical research, and
population-based research at universities, academic health
centers, and small businesses. Like any other investment
portfolio, the key to success is diversity, which maximizes the
likelihood that we will come up with transformative cures.
It is important to remember that many years and financial
resources are necessary to bring medical innovations into the
practice of medicine. It has been estimated that it takes 11 to
14 years and approximately $2.6 billion to bring a new drug to
market.
While basic science lays the foundation for advancing our
knowledge about the nature and behavior of living systems, this
knowledge must then be applied and translated and later
approved through the regulatory system before patients can
benefit. The small business community benefits form all of the
formative research supported by NIH.
Among the 11 federal departments and agencies that
participate in the SBIR and STTR programs, the NIH is the
second largest funder. Examples of the types of research that
we support include but are not limited to drug discovery,
medical devices, biosensors, nanotechnology, imaging, and
bioengineering. A successful example of a technology developed
through our programs is Lift Labs' Liftware, which creates
stabilizing technologies to help people with essential tremor
and Parkinson's disease.
Our programs have grown significantly with the increases
provided by the 2011 Reauthorization. Between fiscal years 2011
and 2016, the NIH budget increased by about 4.5 percent, while
our SBIR and STTR budgets increased approximately 30 percent,
or six times as much.
We are grateful for the financial and human resources
support provided through the administrative fund pilot
authority. We have used this authority to bolster and diversify
our program outreach efforts, reaching more than 24,000
individuals from all states in the past several years,
including 940 women-owned and 650 socially and economically
disadvantaged small businesses. Through these and other
efforts, we anticipated increased applications from these
groups in the future, further diversifying the programs.
The NIH strongly supports the SBIR and STTR programs. For
decades, these programs have served as vital sources of federal
funding for innovative American small businesses. The program
should be permanently reauthorized to provide us all with much-
needed long-term certainty.
However, future growth in SBIR and STTR programs should be
realized through overall extramural budget increases for each
agency. For example, the Congress provided NIH with a $2
billion increase this past year, which meant that our SBIR and
STTR budget increased by 12.4 percent from the previous year,
nearly twice the agency's increase.
Scholars have noted that the biomedical research enterprise
now suffers from hypercompetitiveness with increasing numbers
of researchers competing against each other for relatively
fewer available dollars. Historically, NIH success rates have
been about one in three, and they are now down to less than one
in five. We are concerned that dedicating an ever-increasing
proportion of NIH's extramural research dollars to these two
specific programs would threaten the diversity of the research
portfolio, a portfolio that succeeds precisely because it is so
diverse. In our judgment, it would be more effective for
overall R&D budgets to increase so all programs benefit.
Furthermore, it is imperative that NIH and other federal
agencies participating in the program be provided with the
resources necessary for effective administration, oversight and
outreach as well as reasonable flexibility on award size and
sequencing consistent with the diverse needs of small
businesses in different industries and technology areas.
This concludes my statement. Thank you for your attention,
and I look forward to answering any questions you may have.
[The prepared statement of Dr. Lauer follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairwoman Comstock. Thank you, and we'll now hear from Dr.
Dehmer.
TESTIMONY OF DR. PATRICIA DEHMER,
DEPUTY DIRECTOR FOR SCIENCE PROGRAMS,
OFFICE OF SCIENCE, DEPARTMENT OF ENERGY
Dr. Dehmer. Thank you, Chairman Comstock, Ranking Member
Lipinski, Chairman Smith and Ranking Member Johnson from the
full Committee, and members of the subcommittee. My name is Pat
Dehmer, and I am the Deputy Director of the Department of
Energy's Office of Science, where I oversee all of the science
programs. The DOE SBIR/STTR Program Office is one of nine
reporting to me.
The Office of Science has managed the Department's SBIR/
STTR programs since the formation of SBIR in 1982. We work with
the six science outlay programs in the Office of Science with
four applied energy technology offices, with the Office of
Environmental Management, and with the Office of Defense
Nuclear Nonproliferation with in the National Nuclear Security
Administration. These 12 offices together contribute about $200
million annually to SBIR/STTR, and the Office of Science is
about 2/3 of this funding.
Since its establishment as a separate agency within the
Department of Energy, the Advanced Research Projects Agency-
Energy, or ARPA-E, has managed its own small SBIR program,
about $8 million annually, with initial awards in 2012.
During the past few years, we have experimented with some
new approaches, some resulting directly from the
Reauthorization Act of 2011, which I'll talk about in a moment.
But first I want to mention one other program. In 2013, we
began something called the Technology Transfer Opportunities,
or TTOs, as part of our funding opportunity announcements. TTOs
enable small business to use technology that has been developed
using DOE funding at our national laboratories or at
universities. TTOs awardees are assigned rights by the
institution owning the technology to perform R&D on the
technology during Phase I or Phase II grants. In addition, the
research institute provides the awardee with a no-cost, six-
month option to license the technology.
In 2015, 10 Phase I and two Phase II TTO awards were made,
representing technologies from Michigan State University and
from four of our Department of Energy National Laboratories.
When the 2013 cohort, the first cohort completes, we will begin
an assessment of the outcomes of this particular experiment.
I'd like to turn now to some important features of the 2011
Reauthorization Act, particularly as they might relate to your
consideration of the forthcoming reauthorization. The 2011
Reauthorization Act created a pilot program that allowed
agencies to use up to three percent of SBIR program funds to
improve the administration of these programs. DOE used from .6
to .9 percent of program funds annually for some very important
improvements.
First is the improvement in our award timelines. By adding
small amounts of funding to accelerate the development of our
new Office of Science-wide web-based grants management system
and introducing a few process changes, we were able to reduce
the time from the close of a solicitation to Phase I actual
awards by a factor of two from eight months to four months.
That's a very substantial improvement, and the opportunity to
have this flexibility was critical to us.
A second thing that we did with this authorization was an
important outreach activity. We created a Phase 0 assistance
program to help under represented small businesses apply for
SBIR/STTR funding. In this program, we target applications from
states with historically low SBIR/STTR submissions and from
women and minority-owned businesses across the Nation. The
Phase 0 assistance program helps awardees with letter-of-intent
writing, Phase I proposal preparation, review and submission,
training and mentoring, communications and market research,
technology advice, and consulting on areas of intellectual
property. In just three funding opportunity announcements, we
received more than 500 applications for the Phase 0 assistance
program and we provided services to 165 participants. Again, we
plan to assess the effectiveness of this after a year or so of
this program being in operation.
The Reauthorization Act of 2011 also permitted us to make
sequential Phase II awards. These awards permit us to fund
additional R&D to complete Phase II research if necessary and
to assist with transition to commercialization. In 2015, 17
percent of our Phase II awards were sequential Phase II awards.
As you think about the reauthorization in 2017, we'd like
to take this opportunity to present our thoughts. We strongly
support permanent reauthorization to provide federal agencies
with long-term certainty and stability. We strongly support the
existing flexibilities provided on award size and sequencing
and, for example, that helped us innovate and begin the Phase
II assistance pilot program and, finally, like my colleagues,
we support maintaining the SBIR/STTR set-asides at the 2017
levels, which represent more than a 30 percent increase over
the fiscal year 2011 level.
Thank you very much for the opportunity to talk to you. I
appreciate the Committee's interest in this important topic,
and I will be happy to answer your questions.
[The prepared statement of Dr. Dehmer follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairwoman Comstock. Thank you, and I now recognize Ms.
Garton.
TESTIMONY OF DR. JILDA D. GARTON,
VICE PRESIDENT FOR RESEARCH
AND GENERAL MANAGER,
GEORGIA TECH RESEARCH CORPORATION
Ms. Garton. Good morning, Chairwoman Comstock, Ranking
Member Lipinski, Chairman Smith, and members of the
Subcommittee. My name is Jilda Diehl Garton, and I serve as the
Vice President for Research and General Manager of Georgia
Technology Research Corporation at Georgia Tech.
Georgia Tech is a comprehensive public university with more
than 25,000 undergraduate and graduate students. We reported
more than $765 million in research expenditures in 2015 with
research funding from a variety of federal and non-federal
sponsors. Private industry sponsors about 13 percent of the
total research activity at Georgia Technology, and includes
several dozen SBIR and STTR subcontracts. And we do a little
tech transfer at Georgia Tech. Georgia Tech is among the top 25
universities in the number of U.S. patents granted in 2014, and
over the past five years, 81 companies have been formed based
on Georgia Tech technologies.
SBIR and STTR programs are important to universities
because these are important to our technology transfer
ecosystems. America's universities create amazing new
inventions every day. My own institution will receive about 350
invention disclosures this year alone. As creators and stewards
of these inventions, we have an obligation to make them
available to the public in the form of new products, new drugs,
new assistive technologies and new services. University
technology transfer works with the private sector to move
technologies from the laboratory into companies that can
develop them, invest in them, and commercialize them. It's this
ecosystem that we want to develop.
Universities value the SBIR and STTR programs, and we
generally support their permanent reauthorization at their
current set-aside levels, and that's because these are
important parts of that ecosystem.
In thinking about how to discuss our experiences with the
SBIR and STTR programs, I thought it might be helpful to offer
an example that illustrates how the SBIR program in particular
interacts with other parts of the innovation ecosystem on my
campus to support new ventures that are trying to bring new
technologies onto market. I've given you a couple of examples
also in my written testimony including one woman-owned company.
Pindrop is an Atlanta-based company that markets a way to
combat telecommunications fraud through something they call
acoustic fingerprinting. The technology resulted from
Department of Defense-funded research that was conducted by a
professor in the College of Computing and to students. The
invention was closed to GTRC in 2010 and licensed to a new
company in 2011. Pindrop's management participated in and was
mentored by Georgia Tech's NSF I-Corps program. We're very
proud to have been one of those original three nodes.
The company went on to work with our SBIR assistance
office, which helps companies that are formed in our
environment reach out and identify opportunities in SBIR and
STTR programs at various agencies and prepare proposals and
submit them in a way that will help them get funded. Pindrop
won one of those SBIR awards, and went on to develop their
technology, and in January 2016, Pindrop received Series C
investment from Google Finance. They're on their way to being a
major company in this space.
Pindrop's story shows how development inside the university
readied the technology for the marketplace and de-risked it.
SBIR funds increased the likelihood that the company would
become successful. As it developed its technology, it became
more attractive for private-sector investment. Pindrop's story
also demonstrates how long it takes and how much investment is
actually needed.
You've asked us for advice in areas of potential
improvement as you consider the reauthorization of these
programs, and I would be remiss if I did not point out that
Pindrop would not have been possible without basic research. As
the federal investment in research and development conducted at
U.S. universities is constrained, it's important to acknowledge
that funding basic science and engineering has to be a priority
because that's what fills the pipeline of discoveries that feed
the innovation ecosystem.
Universities are interested in seeking balance. If I have
one thing to offer for your consideration, it would be to focus
on the overall fiscal budgets for the research funding agencies
and ensure robust investment in basic and applied research to
support the highest quality peer-reviewed research.
It remains the case that there's a funding gap that
sometimes prevents universities from moving new discoveries and
technology into the marketplace. Accordingly, members of the
higher education community have recommended creating the SBIR
program that would focus on commercialization that we often
call Phase zero. These awards could be used by universities to
engage in prototyping, mentoring, and supporting market
readiness initiatives.
Finally, I would like to suggest that we could all benefit
from additional information about the federal SBIR and STTR
funding. Dr. Lauer and Dr. Dehmer have talked about a number of
efforts at their agencies to analyze the success rates of the
programs and how the companies perform after award. These
objective measures of performance and indicators of performance
would be very welcome.
I'd like to thank the Subcommittee for the opportunity to
provide our insights from the university perspective on the
important question of reauthorization of the programs, and I
look forward to answering your questions.
[The prepared statement of Ms. Garton follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairwoman Comstock. Thank you.
I now recognize myself for five minutes for questions.
I guess this is a question to all of you. How do we measure
success with the SBIR and STTR programs? Is it things like job
growth, employment growth, patents? How do you judge it and
what are you looking at?
Dr. Khargonekar. I mean, that's an excellent question, and
the National Academies study does talk quite a bit about
metrics for success of the SBIR/STTR programs. We look at it as
a program as a whole, which is really aimed at taking discovery
in the lab to the real world, and we also think about I-Corps
and other innovation programs as part of the overall ecosystem.
So in that regard, it's Phase II, Phase IIB funding which
really makes it possible for the company's technology to become
a real-world company with employment and revenues, and there
the numbers are quiet encouraging. The vast majority of Phase
IIB companies go on to become very successful companies and
have revenues many years out into the future. We also look at
intellectual property generated by these companies, and
probably most importantly, it's the people because the people
who go through these experiences then go on and start new
companies throughout their careers. So I think one has to look
at the whole system and look at the metrics from that point of
view.
Chairwoman Comstock. And I know a lot of you had used the
word ``ecosystem'' which I think is very important, how we
create that innovative ecosystems so with our universities,
with our businesses, and how do we get that ecosystem, you
know, getting the input from the private sector too so as we're
investing in these things, there's sort of a leveraging factor
that gives it that extra oomph to start doing things. You know,
how do you all see that playing out in what you're doing?
Dr. Lauer. So for NIH-funded research, there are some
additional components of the ecosystem that are important for
success metrics, and those would include moving products on to
clinical trials, getting them through the regulatory system,
working with CMS and other payers to see whether or not a
product once eventually successful will be reimbursed in
clinical practice, and then also working with professional
societies to realize the incorporation of new technologies into
standard clinical practice.
Chairwoman Comstock. Good point. Thank you.
Dr. Dehmer. Well, we've had quite a bit of experience over
the last five to ten years of looking at success of non-
traditional research programs. We started something many years
ago called the Energy Frontier Research programs, and how do we
measure their success? We do it in part by the standard metrics
of counting publications, licenses, things like tech transfer
and how many small businesses and industries are involved. In
reality, it's an extremely topic to measure success of non-
traditional research and development programs. Not only have I
been involved with that, but for the past five years I've been
involved with measuring success of programs that do STEM
workforce development training, very difficult.
So one of the things that we've done actually in the last
year is bring a new person into the SBIR/STTR program, a Ph.D.
researcher, whose function is going to be to look at how we
measure success and to follow on with some of the programs that
we've started and that the traditional SBIR or STTR programs
do.
Chairwoman Comstock. Thank you.
Ms. Garton. One of the ways that we look at measuring the
success of our technology transfer efforts is to look at
whether or not our patents or our licensed intellectual
properties are being utilized at various points after they've
either been protected by patent or licensed under other
circumstances and ensuring that those technologies are still
being used at three, five and seven years after the license,
and I think that's one of the measures rather than counting the
numbers of patents per se but looking at whether or not those
technologies are being used by the private sector and being
used to either do additional research or being used and
incorporated into new products and services, so looking at
whether or not the intellectual property we're creating is
being used is one of the important metrics for success both of
the university technology transfer but also of the SBIR
receiving company because it will itself begin generating
intellectual property and we want to see if that's being used
as well.
Chairwoman Comstock. So I'm running a little over my time
but I did want to give a shout out to my local technological
community, the Northern Virginia Technology Council. It's very
good at working with all of our technology companies but they
also highlight emerging companies and doing things like that
and they're very good at publicizing it within communities, and
that in turn kind of helps get more support there. Are we
seeing that utilized too, having the kind of leverage there
that--or maybe since my time is up I'll just ask, is there any
way that we can have others such as, you know, NVTC in my
community that is very good at it but maybe I'd recommend, you
know, others to use that as a model because I think they're
particularly helpful in highlighting the whole ecosystem, and
that's what they're all about is that ecosystem and supporting
it. They support STEM education. They support the emerging
companies. They exist by virtue of a lot of support from the
big companies but really, everyone in it is driving the
ecosystem, and I know they work a lot with their universities
too, so looking at that as a model, I just throw that out
because they're a great group for us to work with.
I'm recognizing Ms. Johnson. We're going out of order here
so Ms. Johnson can have her questioning, and thank you.
Ms. Johnson. Thank you very much.
I'd like each of you to respond to the forth statutory
purpose of SBIR and STTR programs is to foster participation in
innovation and entrepreneurship with socially and economically
disadvantaged persons. The National Academies have consistently
found that agencies are struggling to achieve this. My concern
over the years has been integrating these populations. It's now
become of more concern because that's our growing population in
this country, and I'm concerned that a lot of our brain power
is not being utilized.
So could you comment on what you're doing or whether it's
difficult or what we could do to attract that population more?
Dr. Khargonekar. So I think that's a really excellent and
difficult question. We at NSF are very focused on this topic.
Our latest initiative, NSF Includes, which is a Foundation-wide
initiative, is aimed exactly at attracting women,
underrepresented minorities, people with disabilities, people
from low socioeconomic status, into science and engineering
fields. In addition, in the SBIR program, this has been a
really major area of focus and concern. As you correctly noted,
the progress has been quite slow.
There are several things we are doing. One of the ways in
which we use our administrative fee is for very strong outreach
programs with our program officers and there is a group of
program officers whose full-time job it is to run our SBIR/
STTR, go out to these communities in terms of outreach. The
Phase 0 program at NSF, it has two objectives, one of which is
explicitly to reach out to women and underrepresented
minorities in terms of forming companies.
So this remains a major priority for the Foundation, for
the SBIR program, and we would love to see faster and more--and
stronger progress, and we will continue to work on this problem
until we achieve success. Thank you.
Ms. Johnson. Thank you.
Dr. Lauer. Thank you, Congresswoman. This is a very high
priority for NIH. On an NIH-wide level, we've set up an Office
of Workforce Diversity, which his specifically focused on this.
The National Institutes of Minority Health has--is expanding
its RO-1 program. The--some of the institutes like the NHLBI
have actually set up specific units that are devoted to
increasing our profile in disparities research, and then within
SBIR, we also are engaged in using administrative funds for
extensive outreach efforts. The Phase 0 programs are also an
opportunity to bring in previously disadvantaged groups into
the fold and increase the likelihood of their success.
Ms. Johnson. Thank you.
Dr. Dehmer. Well, thank you for that question. In the
Department of Energy, we have a particular challenge with women
and underrepresented minorities because the work that we do is
primarily physical sciences, and the pipeline for bringing
those folks into physical sciences has never been cracked to
the extent that I would like to see it. And by the way, my own
personal time with this goes back to yours in the 1970s.
Within the SBIR/STTR program, we're doing several things.
We're definitely increasing our outreach to everyone as my
colleagues have mentioned, and one of the reasons we've started
the Phase 0 assistance program, which is somewhat different
than the other Phase 0 programs described, is specifically to
target women and socially and economically disadvantaged
persons. It's a huge challenge in the physical sciences. You
know, I've observed in my own career, which dates back to the
early 1970s, thanks to my bio, which didn't expunge the date of
my Ph.D., I can remember when I was a student and my
colleagues, who were women and minorities, talked of quotas for
medical school and other kinds of professional schools, very
small quotas, in the few percents, not double digits. Today,
medical schools graduate 50 percent women. Veterinary schools
graduate nearly 100 percent women. But the physical sciences
have not kept pace at all with that. So that's one of the
things the Department of Energy is particularly keen to crack,
and we've done so both in the core research programs and our
workforce development programs and in our SBIR/STTR programs.
Ms. Johnson. Thank you.
Ms. Garton. Georgia Tech as a public institution really
takes its mission in economic development in Georgia very
seriously. We have what we call the Enterprise Innovation
Institute, which has a number of offices. The Advanced
Technology Development Center is one of the oldest university-
based incubators in the country, and it is open to companies
from our entire area. Within EII, we also have the SBIR
assistance office, which helps small businesses identify SBIR
and STTR opportunities, learn about the programs, and learn how
to apply to those programs, so that is an office that's
available to support all companies that are created in the
environment access SBIR and STTR funding. We also operating the
Manufacturer Extension Partnership, which helps businesses in
Georgia become more competitive and sustainable.
Ms. Johnson. Thank you very much. My time's expired.
Chairwoman Comstock. Thank you, and I now recognize Mr.
Westerman for five minutes.
Mr. Westerman. Thank you, Madam Chair, and thank you to the
witnesses for sharing with us today.
Ms. Garton, you shared the success story of Pindrop, and I
appreciate your testimony because it gives us a real-life
example that makes it easier to understand the importance of
research.
Bill Gates once said--who is obviously one of the great
innovators of our time. He said that governments will always
play a big part in solving big problems. They set public policy
and are uniquely able to provide the resources to make sure
solutions reach everyone who needs them. They also fund basic
research, which is a crucial component of the innovation that
improves life for everyone.
Having an engineering background and sitting on this
Committee, I've really enjoyed getting to go see where this
research is being done. I made a trip out to the Berkeley
National Research Lab and I saw some very exciting research
there in biofuels and creating economical methods to use our
bioresources to make all kinds of fuels and chemicals. I saw
some innovative research with nanotechnology with a material
that it's envisioned that if you could create a filter out of
this material, you could essentially clean the entire stack
emissions from a coal-fired plant, very exciting stuff.
In my home state, the institutions of higher learning are
doing some neat research. The University of Arkansas Institute
for Nanoscience and Engineering Technology, just amazing some
of the things that they are doing.
What I would like to ask you, we've talked about some
success stories but could you share with us maybe one exciting
new innovation that's on the horizon that's taking place at
your organizations and how close are we to seeing those become
reality, and I'll start with you, Dr. Khargonekar.
Dr. Khargonekar. I think one of the areas that we are very
excited about in the Engineering Directorate is our focus on
advanced manufacturing. First of all, historically, NSF has
made pioneering contributions in that area. The whole 3D
printing industry came out of NSF-funded research in the 1980s.
In recent years, last two or three years, we've been investing
in cyber manufacturing that will shape the factories of the
future by leveraging cyber technologies, communications,
computation, networks and things of that nature. We are
investing in cellular biomanufacturing, so as cells become
therapies, how do we manufacture those? So we are sort of
creating basic research in manufacturing of cells.
And a third area we are making some very exciting
investments is in scalable nanomanufacturing, so we invested a
lot of funds in nanotechnology and nanoscience, and the
question we are asking is, how will we manufacture the products
at scale and at cost. So one example is, we funded some
research that will use roll-to-roll printing as a way to
manufacture this product, which if it works will be extremely
cost-effective and produce products that will have big impacts.
So these are some of the examples that we are very excited
about.
Mr. Westerman. Thank you.
Dr. Lauer?
Dr. Lauer. Thank you, Congressman. This is a very exciting
time for biomedical research, and two themes are high
throughput technologies and big data, so looking at complex
systems and taking advantage of current exploding information
technologies.
So some examples include three-dimensional mapping of
neurons within the central nervous system in health and
disease, quantification of DNA and gene sequencing
technologies, drug screens for rare diseases, there are
literally millions of political compounds that could be
effective for diseases, and we're now being able to figure out
ways in which we could identify potentially beneficial targets
in a short period of time.
And then another interesting one from a different side,
from a purely clinical side, would be the incorporation of
patient-reported outcomes into electronic health records.
Mr. Westerman. Thank you.
Dr. Dehmer. Well, in preparing for this hearing, I looked
at a number of examples of outcomes from SBIR investments. I
don't see them all because I don't look at them day to day, but
one of them struck me as extremely important, and that is a
small company in Lansing, Michigan, near Michigan State
University called Niowave Incorporated. They received a number
of SBIR/STTR awards over the last ten years or so to build
superconducting linear accelerators, which sounds kind of
techy, but one of the things that they did in 2015, they
produced Molybdenum-99, Moly-99, by fissioning uranium using
one of the superconducting linear accelerators. So the decay
product of Moly-99 is Technetium-99, and that's used in 30
million diagnostic imaging procedures annually. The United
States has no production of Moly-99. It's all imported. And so
Niowave is going to begin, I hope, in a couple of years, 2016
or 2017, producing Moly-99 using this linear accelerator
technology. If so, it would be a remarkable achievement. So
that's the one that struck me as potentially the most
impactful.
Ms. Garton. Well, as you can imagine, at Georgia Tech there
are technologies emerging all over the place. As with Dr.
Dehmer, it's hard to keep up with all of them. A couple of the
areas where we really see the next technologies emerging that
we're all going to be talking about in 5 or ten years or areas
like cell-based manufacturing where we're beginning to be able
to reduce these technologies to practical application. Some of
the numbering technologies for carbon sequestration, similar to
the examples that you cited, are probably going to go a long
way toward helping us deal with controlling the emissions out
of our carbon-producing factories and other sources of carbon
in the atmosphere. And there's other technologies that are
closer to the market like our new drug delivery technologies
that will allow us to deliver vaccines across the world using
delivery methods that don't require refrigeration and can be
self-administered. So there's technologies that are emerging
all across the spectrum that are just waiting to burst out
there.
Mr. Westerman. Thank you.
Thank you, Madam Chair, for indulging a little extra time.
I yield back.
Chairwoman Comstock. Thank you.
I now recognize Mr. Lipinski.
Mr. Lipinski. Thank you. I mentioned in my opening that
early returns show that Innovation Corps, I-Corps teams have
shown more success in the SBIR program. So I wanted to ask the
witnesses what they could tell us about what they have seen or
their thoughts moving forward, and I'll start with Dr. Lauer
because I know that you are using--you are making I-Corps
available to SBIR grantees at NIH.
Dr. Lauer. Yes. Thank you, Congressman. So, so far 38
companies have gone through the I-Corps program. We've had two
cohorts. Our next cohort is kicking off on June 19th with 21
companies, and we're planning an additional two cohorts in
2017, and what we would say so far, it's still too early on in
the program to talk about long-term outcomes but the responses
have been quite positive. Over 90 percent of the participants
have considered the experience to be worthwhile or excellent,
and we've seen some interesting examples. One is a company
called Cross Life Technologies, which is working on diagnostic
tests for viruses like dengue, and some of the work that
they're doing may also apply to Zika as well.
Mr. Lipinski. Thank you.
Dr. Khargonekar, do you have anything to add to that? I
know you mentioned where that sort of fits in what a lot of
researchers will do.
Mr. Khargonekar. So we have been very excited about the I-
Corps program. It is having tremendous impact on the research
community. We constantly hear that those who have gone through
the program are transformed by the experience and they think
about their research quite differently than they did before. We
are partnering with a number of federal agencies to share what
we have learned about I-Corps including NIH and DOE but many
others. We are also scaling it nationally. We have--has plans
for up to eight to nine nodes, and 71 sites and 230 teams. The
State of Ohio has adopted I-Corps methodology. So we feel that
there is tremendous opportunity for the Nation to take the
learning from I-Corps and the program that NSF has pioneered
and really make it available to all scientists and engineers
who want to take part in it.
Mr. Lipinski. Ms. Garton, do you have anything to add about
how I-Corps can help those SBIR grantees?
Ms. Garton. I believe the I-Corps program actually is a
good entree to entrepreneurship for a lot of faculty and
graduate students who have an invention and are trying to think
about a way to commercialize it. So the I-Corps program really
does provide that entree for those individuals who are
developing the technology in the direction of creating a
startup company and launching it, so I think that's a very good
way to pull people into the program that leads to SBIR funding.
And so I really view that as a piece of the continuum of the
development of technologies.
One of the most exciting things I think I've seen really
comes out of the Pindrop example where we have a laboratory
that successfully launched a startup company, developed it
through the I-Corps program, received SBIR funding, and then
went on to be successful in the private sector. The graduate
students who are coming along as the next cohort of students in
that laboratory are bringing invention disclosures forward.
They've got philanthropic funding and other funding that
they're taking advantage of, and they're going to be your next
I-Corps cohort, so you've created an example that others can
follow.
Mr. Lipinski. And Dr. Dehmer, I know you--the National Labs
don't have I-Corps but something very similar, Lab Corps. Have
you seen the impact of this, or what do you hope to be the
impact?
Ms. Dehmer. Well, actually, we're also a participant in I-
Corps. Early on, the Office of Energy Efficiency and Renewable
Energy, which is one of the largest contributors to SBIR,
signed a one year MOU with NSF to participate in I-Corps. They
subsequently extended that to five years, and they've been
sending cohorts to that for the past few years. That same
office also began Lab Corps, and it's my understanding that
it's been very well received and very popular with the
laboratory scientists. So yes, we're part of both I-Corps and
Lab Corps.
Mr. Lipinski. Very quickly, another connected subject. Ms.
Garton, NSF has come out with a solicitation to continue
funding for the I-Corps nodes. I'm glad that this is
continuing. However, it's noteworthy that the solicitation--in
the solicitation, the funding for nodes drops to a small
fraction of its original amount by the fifth year of the award.
I understand the idea is that other sources of funding for the
nodes will step in as federal funding declines. I have some
concerns about this. I was wondering what your thoughts were on
this. Has Georgia Tech identified other sources of funding for
its node that could step in if federal support declines?
Ms. Garton. We certainly would endeavor to work in that
direction is that is the direction for the program, and I would
have to get back with you specifically and talk with the folks
that are developing the proposal about specific sources of
funding that have been identified. Maybe I could take that
question for later, but we would certainly--if those are--if
that's the direction we want to go, that's what we will try to
do, but it will be a challenge.
Mr. Lipinski. Thank you.
I'm way over time. I yield back. Thank you.
Chairwoman Comstock. Thank you.
I now recognize Mr. Palmer.
Mr. Palmer. Thank you, Madam Chairman.
Mr. Khargonekar, the idea for the Small Business Innovation
Research is to fund innovative technologies that the private
sector may not be inclined to fund, in other words, address the
problem of underinvestment in R&D. Is the program serving this
purpose of it is focusing on proposals that are based on
commercial viability, technical merit, or an agency's agendas?
Dr. Khargonekar. So the NSF SBIR program is very much
focused on technology risk, very early stage where there is a
discovery or invention that has some commercial potential but
it's very far from being worthy of private-sector investment.
So that's where we come in and put funding to the Phase I,
Phase II, Phase IIB to be sequenced to see if the technology
risk can be reduced or even eliminated, and once that happens,
private sector feels more comfortable coming in because that
risk has been removed, so I would say absolutely. Our
investments have been very much focused on reducing the
technology risk and making the technology more mature so that
private sector at that point can come in and scale the
technology and commercialize it.
Mr. Palmer. But are any of these grants grants or research
dollars the private sector would have provided? Are you
displacing private-sector investment?
Dr. Khargonekar. In my opinion, no. I mean, I think a great
example of that is our Phase IIB programs. Let's say you are an
inventor or a discoverer. You come up with something. You go
through the Phase I and Phase II. In Phase IIB, we require a
two-to-one match, so it's only at that point that the private
sector is brought in--the private sector feels that they can
come in but the risk has been reduced substantially, and so I
don't think it's displacing the private sector, at least at NSF
because we are at such early stage of the technology creation.
Mr. Palmer. Is any of it driven more by an agency's agenda?
And Dr. Lauer, you can respond to that as well.
Dr. Lauer. Thank you, Congressman. There has been some work
that's been done looking at whether or not NIH support is
crowding out private investments, and we'd be happy to share
some of that with you in follow-up, but it seems that most
people are concluding that the answer is no and that the work
that NIH is supporting is indeed work that otherwise would not
have been supported by private sector.
Our primary goal is to enhance our understanding of the
knowledge of living systems and then apply that knowledge to
improve health and reduce burdens of disease. That's our
agenda, and as best as we can tell, we're meeting that.
Mr. Palmer. Thank you.
Dr. Dehmer, are any of the grants primarily determined by
the Department of Energy's agenda or are they strictly looking
at the research or the project?
Dr. Dehmer. The way that we determine topical areas that
are funding opportunity announcements is----
Mr. Palmer. Can you get a little closer to the microphone?
Dr. Dehmer. The way that we determine the topical areas for
the funding opportunity announcements is by going out to all of
the programs and having them suggest the topical areas and the
subtopics that we put out in the FOAs. I can't speak to all of
the subtopics but certainly in the Office of Science, there are
a number of topics that probably the private sector wouldn't be
investing in in the very early stages.
Mr. Palmer. This is a question for all of you. The
Inspectors General at federal agencies seem to identify and
pursue instances of fraud and abuse in these programs with a
fairly high degree of regularity. Are there facets of the
programs that seem to invite wrongdoing? Are there identifiable
characteristics that you look for for bad-apple applicants? Is
there a way to vet these applicants to avoid fraud?
Dr. Khargonekar. We at NSF certainly are very focused on
this and try to do our very, very best to make sure that the
amount of fraud is as minimal as possible. We have an extensive
process of vetting the companies and looking at the financials
and making sure that these are legitimate businesses with
accounting and so on and so forth, so we can give you more
detail about the process we follow at NSF to ensure that our
recipients are worthy companies.
Dr. Lauer. I would say the same. Our SBIR grants go through
the same rigorous vetting and review and oversight as all the
grants at NIH.
Dr. Dehmer. Yeah, I'll echo that. I actually engaged in a
discussion on this with the Director of the SBIR/STTR programs
office just this week, and it's a complicated topic. We'd be
happy to get back to you on that if you like.
Mr. Palmer. What I'd like to know, Madam Chairman, in these
cases where there have been abuses of the program, what our
remedies are, if there's any effort to recover this, because we
are talking about oversight over taxpayer money ----
Chairwoman Comstock. Okay. Thank you.
Mr. Palmer. --without----
Chairwoman Comstock. We're going to have votes here at
11:15 to 11:30 so I'm going to have to move on.
I now recognize Ms. Bonamici.
Ms. Bonamici. Thank you, Chair Comstock and Ranking Member
Lipinski, for holding this hearing.
To our witnesses, the SBIR and STTR programs have helped
universities and small businesses not only in my State of
Oregon but of course across the country. TomegaVax is one
example, an Oregon Health Science University-based startup
that's received funding from the programs. They are developing
vaccines and immunotherapies for chronic and recurring viral
infections and they're now based on this research recruiting
the first human volunteers for a clinical trial on a promising
HIV vaccine. So great programs, but I had a conversation
recently with our institutions of higher education and some
innovative small businesses, and a couple things came up, and
I'm going to ask you about those.
First, I heard about a woman who has a Ph.D. in cancer
biology, decided not to go back to work after her kids were
born because science funding is complicated and tenuous. I also
heard from a small business--a creative small business owner,
very innovative, who said that they don't even look at the SBA
for funding because application process is complicated and
time-consuming. This is someone who's a patent attorney with an
MBA, so if it's not user-friendly to somebody like that, the
first issue is, what is being done to address the complication
and the, I guess, tenuous nature of science funding in general?
The second issue that came up that I'll ask you to address
is the funding gap between Phase I and Phase II, and we heard
about up to 6 to 9 months can go by between Phase I and Phase
II, and if it's a small business with just a couple of
employees, they don't know what to do for that time, and
they're really--it's really killing some efforts and what could
be some very innovative products.
So I guess I'll start with Dr. Khargonekar, if you could
discuss the whole process and how complicated it is and
uncertain and the funding gap, please, between Phase I and
Phase II. Thank you.
Mr. Khargonekar. So the Phase I/Phase II gap has been a
significant focus for the Foundation. Prior to 2015, we added a
Phase IB supplement to Phase I grantees so that they would have
some additional dollars so that the gap could be addressed to
some extent, but in 2015 and 2016, we made a significant
change. We did several things. We increased the Phase I
duration to 12 months. We increased the Phase I amount to
$225,000 from 150 so that gives you more dollars and longer
runway. And then we changed the deadlines so that you can
submit the Phase II grant after 8 months of Phase I start so
that allows--it doesn't completely eliminate the gap but it
allows it to be much smaller than it has traditionally been.
And I'll add one final point. We rely a lot on the Phase I
interim report to know if the technology is really viable
because we want to be responsible stewards of taxpayer dollars.
So with these changes and making sure that the Phase I interim
report guides us in terms of the Phase II decision, we feel
that we have taken a number of steps that would address the
funding gap that you point out, and it's an area that we will
continue to work on.
Ms. Bonamici. Thank you.
Dr. Lauer?
Dr. Lauer. Thank you, Congressman. We do recognize that it
takes too long for applications to be processed and so
beginning about a year ago, we made a number of administrative
steps to streamline the SBIR application process, and we hope
to have some promising metrics available for you before too
long.
Regarding the Phase I/Phase II gap, we have a mechanism
called Fast Track where one can apply for combined Phase I/
Phase II at the same time. The idea is that if you meet certain
metrics through Phase I, you automatically move into Phase II,
and that has been growing. It's now--about 25 percent of our
Phase II programs go through Fast Track, go straight from Phase
I to Phase II.
Ms. Bonamici. Great. Thank you.
Ms. Dehmer. We've done similar things to what's just been
described. We have a fast track program, and we've made a
number of changes in how the awards are handled to reduce the
gap. Also, in terms of the complications of application, we've
tried using a new electronic application system to streamline
that somewhat, and as I mentioned in my own testimony, we
reduced the time from the close of the FOA to the actual award
by a factor of two, and so we're trying very hard to make
things easier for the applicants.
Ms. Bonamici. Thank you.
Ms. Garton?
Ms. Garton. Well, we don't--Georgia Tech as a university is
not a direct recipient of SBIR funds, so the funding gap is
less obvious to us. But in our subcontracting practices, we
certainly do notice the discontinuity between Phase I and Phase
II and try to work with our SBIR companies that are funding us
under subcontracts to support their proposal efforts.
Ms. Bonamici. And are you sensing the same sort of
discouragement that I heard from a couple of people in this
conversation about it's so complicated and tenuous? And for the
record, I was not in Congress when the Budget Control Act
passed, not part of the sequestration and those, you know,
across-the-board budget cuts, but are things getting better out
there or----
Ms. Garton. It is very, very tough on the basic science
side. The pay lines are such that it is very hard for faculty
to get their basic and applied research programs funded, and
that's really the balance part of the question. Do we have
enough funding going into overall research programs, and what
are the pay lines? It is very difficult. I think Dr. Lauer
talked about it in his testimony.
Ms. Bonamici. He did. We got that message clearly in Dr.
Lauer's testimony.
Ms. Garton. And yes, we are----
Ms. Bonamici. Thank you.
My time is expired. I yield back. Thank you, Madam Chair.
Chairwoman Comstock. Thank you.
I now recognize Mr. LaHood for five minutes.
Mr. LaHood. Thank you, Madam Chair, and I want to thank the
witnesses for being here today and your testimony. I want to
take a brief moment just to highlight the impact of the SBIR
program in my home state of Illinois. The SBIR program is an
important source of investment in new technology for the State
of Illinois. Since the program's inception, Illinois has
received over $600 million in SBIR funding, creating thousands
of new jobs, new products and new services.
As others have mentioned, the recent National Academy
reports on the SBIR and STTR program in the civilian agency
side a very strong record of commercialization and return on
investment as well as strong linkages to the university and
basic R&D infrastructure within the country, which is clearly
evident in the State of Illinois.
With the past successes of this program in mind, as we look
to reauthorization of SBIR and STTR, what top recommendation
would each of you make for improving the SBIR and STTR programs
to more efficiently and effectively promote innovation and job
creation? Doctor?
Dr. Khargonekar. Yes. So we support permanent
reauthorization. We support maintaining the flexibility in the
program. That I think has been very, very important, at least
for the National Science Foundation, to maximize the value to
society and to the taxpayer of SBIR-funded research. Those are
some of the top recommendations that I would make is
maintaining the flexibility in the SBIR program.
Mr. LaHood. Thank you.
Dr. Lauer. Yes, I would echo that flexibility, which is
especially important to biomedical research because of the
additional challenges of getting a product into clinical
practice. We also strongly encourage the continuation and
strengthening of Phase zero, and the administrative support.
Dr. Dehmer. Absolutely. I echo that completely. The
flexibility, the option to have a small fraction of the budget
for administrative support are the key things that we would
recommend.
Ms. Garton. I agree. I think the flexibility that the
agencies have, the ability to continue to expand the Phase 0
sorts of pilots and make those more generally available, and to
maintain the set-asides at their current levels would be my
major recommendations.
Mr. LaHood. Thank you for that.
In terms of measuring success or the metrics used to do
that under both SBIR and STTR, can you comment a little bit on
how you measure success in those two programs?
Dr. Khargonekar. So as I described earlier, we think of
SBIR/STTR as part of a portfolio that connects discovery in the
lab, invention in the lab, with real-world commercialization.
So it's a piece of an ecosystem involving Innovation Corps
program that we talked about earlier in this testimony as well
as many of our research centers--ERCs, RUCRCs, science and
technology centers. In terms of success, one has to look at
ultimately formation of companies, creation of new
technologies, and I really emphasize people. I mean, ultimately
it's people who go through these programs, they become lifelong
contributors and inventors and discoverers that will add to the
economic competitiveness of the Nation. So I would look at
people who are changed by these programs.
Mr. LaHood. Thank you.
Dr. Lauer. I would say in addition to the traditional
metrics for biomedical research, we would consider two
important factors. One is incorporation into clinical practice;
does it actually benefit real patients in the real world. And
then the second is, some of our SBIR work goes into developing
tools for research researchers can use to advance science, and
we have seen examples where tools have led to advances in
knowledge that otherwise could not have happened.
Mr. LaHood. Thanks.
Dr. Dehmer. One of the things that we've done in our STEM
education--science, technology, engineering and mathematics--
workforce development is to set up systems that will track
students, participants over a long period of time and enable us
to look at outcomes five, 10 and more years down the road, and
I think if you really want to do these kinds of assessments
properly, you can't look at short-term outputs; you have to
look at the long term. And so those would be my
recommendations.
Mr. LaHood. Thanks.
Ms. Garton. And I think one of the major purposes of the
SBIR and STTR programs is to help universities, at least from
our perspective, is to help us get the research results, the
things that come out of our laboratories, into the marketplace
so that the public can benefit from them. So I look at whether
or not the technologies that we create and we launch through
these companies are actually being used and are they available
to the public.
Mr. LaHood. Thank you.
Those are all my questions, Madam Chair. Thank you.
Chairwoman Comstock. Thank you.
And I now recognize Ms. Clark for 5 minutes.
Ms. Clark. Thank you, Chairwoman Comstock and Ranking
Member Lipinski, for this hearing, and thank you to all of our
witnesses today. We are delighted to have you, and I think your
testimonies have underscored the immense value of the SBIR and
STTR in making sure we're taking that research out of the labs
and into the private sector. We're very grateful for you being
here.
Dr. Dehmer, I'd like to go back to a program that you
mentioned, which is the Phase 0 assistance program. As we see
women increasingly--we're up to 30 percent of women who are
owning their own businesses, and it's one of the fastest
growing sectors, but we're not where we should be, especially
with women of color, and I wondered, as one of the primary
focuses of these programs is to encourage participation women
and minority-owned businesses, I wondered if you could go into
a little more detail on how the Phase 0 program benefits
businesses that may be submitting a proposal for the first time
and how you see the Phase 0 encouraging women and minority-
owned businesses.
Ms. Dehmer. Well, so there's two parts to that. The first
is outreach to women and minority-owned businesses, and we're
working hard to increase our outreach through various
mechanisms, through physically getting on the road, through
webinars and so forth, and the second is enabling people
through small investments to be better prepared to write
successful SBIR grants for the first time, and I think that's
very important. This actually goes beyond just SBIR. This goes
to enabling people who have never submitted a research grant to
be able to do it successfully, and so our Phase 0 program--
there's many different Phase 0 programs so they're not all the
same. But ours specifically provides people with help in
navigating the federal system, the application system, and
giving them help in letter-of-intent writing. If you don't
write a good letter of intent for the programs, you're out
right away, at least in some of the research programs, how to
write a Phase I proposal, how it gets reviewed, how you're
going to submit it, communication and marketing research,
technology advice and so forth.
So what I've personally observed with young people
submitting proposals for the research programs, and that
applies to first-time applicants to SBIR, is that they will
need help navigating the federal system and learning the basics
of how to do something successfully, and frequently they aren't
successful just because they don't know.
Ms. Clark. Do you know how many Phase 0 program
participants have been successful in securing SBIR or STTR
awards?
Ms. Dehmer. Yeah. So it's--so it's a new program, and the
only thing we know so far is that the success rate for people
who have been through the Phase 0 program is about the same as
the success rate for others, and at first blush, you might
think that that wouldn't be the case because the people
submitting for the first time would be less successful. But I
think it's actually going to take a lot more statistical
analysis with control groups and so forth to know for a fact
that the Phase 0 program is helping, but we do know that the
success rate is about the same for first-time applicants who
have been--or for recent applicants who have been through the
Phase 0 program compared to those who do not.
Ms. Clark. Thank you.
And Dr. Lauer, the National Academies 2015 assessment of
the SBIR/STTR at NIH found that women and minority
participation is ``low and declining.'' Are you aware of any
changes or approaches that are being taken at NIH to address
this problem?
Dr. Lauer. Congresswoman, yes. We are aware with the
finding in the NAS report and we are quite concerned about that
as well. Our SBIR office is engaged in a number of outreach
efforts, which I mentioned specifically in my opening
testimony. We're also looking, similar to my colleague here, at
how the Phase 0 programs can help, and we'd be happy to follow
up with some more details.
Ms. Clark. Thank you very much.
And just very generally, Dr. Khargonekar, have you seen the
discrepancy between NSF's overall funding level increases and
the SBIR/STTR funding? Has that had an effect on NSF's mission?
Mr. Khargonekar. I mean, I think what it has done is, since
the growth in our basic research budget has not been as strong,
it has reduced the amount of funding we have available for
funding over core research programs in all areas of science and
engineering, and that's the reason why we are saying that let's
not increase the set-aside percentages as a way to increase the
SBIR/STTR program, let's grow the entire research budget, which
allows SBIR/STTR to grow. So yes, it has had impact.
Ms. Clark. And I agree with you. I think we need to
increase the pie, not reallocate the slices.
But thank you all. Thank you for your testimony and your
work, and I yield back.
Chairwoman Comstock. I now recognize Mr. Tonko for 5
minutes.
Mr. Tonko. Thank you, Madam Chair.
I for one am excited that we're holding this hearing today
because I very strongly believe that reauthorization of the
SBIR/STTR program is of the utmost importance. In fact, it
should be broadened and extended and enhanced. I so much
believe in it. This program has proven to be one of the most
successful federal programs for technological innovation in our
history, delivering more than 70,000 patents and valuable
innovations in agriculture and defense and energy, health
sciences, homeland security, space transportation and other
fields. You can't get better results than that.
Through Phase I and Phase II, SBIR countless jobs have been
created in the capital region of New York that I represent. It
is through programs such as SBIR that my district has developed
the underpinnings of support for a boom in high-technology
innovation and economic development. I would cite International
Electronic Machines Corporation in Troy as a stellar example of
all of that.
Let me begin with Dr. Lauer. The 2011 reauthorization
allows NIH, DOD and the Department of Education to conduct a
pilot program to allow a small business to receive a Phase II
without having received a Phase II award, also known as the
Direct to Phase II pilot. I have some concern that allowing
companies to skip Phase I would shut out some small businesses
from competing for SBIR award funding. Can you elaborate,
Doctor, on Direct to Phase II funding and efforts to prevent
marginalization of some small businesses out there?
Dr. Lauer. Thank you, Congressman. I think part of the
reasoning for that is that we've observed that it's rare that a
project goes from Phase 0, Phase I, Phase II, Phase IIB and
then final approval and marketing. The process in the real
world is not that linear, and often there are, for example, two
Phase II awards that ultimately lead to development of a
product. So the idea of Direct to Phase II was to consider
other pathways by which a product may eventually make it.
Mr. Tonko. So there shouldn't be a risk of marginalization?
Dr. Lauer. Well, we certainly don't want that to happen,
and that, I think, gets to the point that a number of your
colleagues have made, which is that we have to track metrics
very carefully, and that we are doing.
Mr. Tonko. Okay. I appreciate that.
The research and development of technologies in the biotech
field, the energy sector, as well as other technology areas
require large investments of capital in the range of hundreds
of thousands if not to millions of dollars. The 2011
reauthorization provides increased flexibility to agencies in
the amount of funding they award to small businesses under
SBIR.
Additionally, I'm informed that the timeline for innovation
does not necessarily fit neatly into the Phase I, Phase II and
Phase III approach used by our SBIR program. The last
reauthorization also allows agencies more flexibility to
structure the funding award at their discretion. So I would ask
each of our witnesses, how have each of your, you know,
agencies or sections, your divisions, implemented these new
flexibilities?
Mr. Khargonekar. As I mentioned earlier in this testimony,
we certainly have used the flexibility. For example, we've
increased the Phase I award size. We have increased the
duration of Phase I. We have increased the Phase II and Phase
IIB sizes. We have used Phase IIB to attract more private-
sector funding through the two-to-one match requirement. So if
you want to get Phase II funding from NSF, private sector has
to come in with the two-to-one--twice the amount that NSF would
provide. So we certainly have used the flexibility that have
been afforded to us to increase the overall impact of taking
discovery and invention and commercializing it to the real
world.
Mr. Tonko. Thank you, Dr. Khargonekar.
And Dr. Lauer?
Dr. Lauer. So at NIH, two examples would be the Phase IIB
awards as well as the bridge awards, which the National Cancer
Institute has implemented, and these awards enable up to three
years of funding, a million dollars a year, and this is
particularly important when you're trying to move a product
into clinical trials.
Mr. Tonko. Thank you. And Dr. Dehmer?
Ms. Dehmer. Yeah. I think you've heard a lot of examples
from me in DOE and from my colleagues. I think the bottom line
here is that increased flexibility enables an agency to do
experiments that are targeted at the kinds of small businesses
that the agency wants to develop, and without that flexibility
that allows experiments, you simply are going to be locked into
a structure which may not fit everyone. I've observed in my own
research career and in my management career at DOE watching
several groups of the same kind that are funded at very
different places evolve in different ways because we allow them
the freedom to evolve, and what you find are best practices and
innovation, and that then can be ported from one group to
another. So the flexibility to allow experimentation is
extremely critical in this program, and the 2011 authorization,
which provided that, was terrific.
Mr. Tonko. Thank you.
And Ms. Garton?
Ms. Garton. The flexibility that the agencies are using
helps our companies. The companies that we create follow a non-
linear path, as somebody just said. It really is variable
across a sector and across the technology development pathway
because things come up in the development of those
technologies, and having that flexibility to have a second
Phase II, to have bridge funding, that's really critical for
those companies because that gives them flexibility.
Mr. Tonko. Well, I think harnessing the intellect of this
Nation in the midst of an innovation economy is an awesome
assignment. You're doing that and doing it very well.
And with that, Madam Chair, I yield back.
Chairwoman Comstock. Thank you, and I'd like to thank the
witnesses today, and thank you for your passion, for your
important work, and the importance of basic research and our
role in that, and really appreciate your support for the
innovation economy and how we're going to do that, and I did
note that we have a number of students here. Are these students
that we have? If you're a student, raise your hand. Great. It's
been very nice to have students here, and I hope you appreciate
all the good work that's going on here, and see a lot of the
support, and if you're science students and STEM students in
any of those fields, we are definitely interested in making
sure you stay in those fields. We need you in those fields, and
these are the leaders that you'll want to be watching over the
years and hopefully joining.
So thank you, students, for being here today, and again,
thank our witnesses for all they do in this very innovative and
exciting field, and we are now adjourned.
[Whereupon, at 11:22 a.m., the Subcommittee was adjourned.]
Appendix I
----------
Answers to Post-Hearing Questions
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
[all]