[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]



 
                             SBIR TURNS 40:
                         EVALUATING SUPPORT FOR
                       SMALL BUSINESS INNOVATION

=======================================================================

                                     
                                     

                                HEARING

                               BEFORE THE

                SUBCOMMITTEE ON RESEARCH AND TECHNOLOGY

                                 OF THE

                      COMMITTEE ON SCIENCE, SPACE,
                             AND TECHNOLOGY

                                 OF THE

                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 6, 2022

                               __________

                           Serial No. 117-52

                               __________

 Printed for the use of the Committee on Science, Space, and Technology

                                     
                                     
                                     
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]                                     
                                     

       Available via the World Wide Web: http://science.house.gov
       
       
       
                          ______
 
              U.S. GOVERNMENT PUBLISHING OFFICE 
 47-331 PDF          WASHINGTON : 2023       
       
       
       

              COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY

             HON. EDDIE BERNICE JOHNSON, Texas, Chairwoman
ZOE LOFGREN, California              FRANK LUCAS, Oklahoma, 
SUZANNE BONAMICI, Oregon                 Ranking Member
AMI BERA, California                 MO BROOKS, Alabama
HALEY STEVENS, Michigan,             BILL POSEY, Florida
    Vice Chair                       RANDY WEBER, Texas
MIKIE SHERRILL, New Jersey           BRIAN BABIN, Texas
JAMAAL BOWMAN, New York              ANTHONY GONZALEZ, Ohio
MELANIE A. STANSBURY, New Mexico     MICHAEL WALTZ, Florida
BRAD SHERMAN, California             JAMES R. BAIRD, Indiana
ED PERLMUTTER, Colorado              DANIEL WEBSTER, Florida
JERRY McNERNEY, California           MIKE GARCIA, California
PAUL TONKO, New York                 STEPHANIE I. BICE, Oklahoma
BILL FOSTER, Illinois                YOUNG KIM, California
DONALD NORCROSS, New Jersey          RANDY FEENSTRA, Iowa
DON BEYER, Virginia                  JAKE LaTURNER, Kansas
CHARLIE CRIST, Florida               CARLOS A. GIMENEZ, Florida
SEAN CASTEN, Illinois                JAY OBERNOLTE, California
CONOR LAMB, Pennsylvania             PETER MEIJER, Michigan
DEBORAH ROSS, North Carolina         JAKE ELLZEY, TEXAS
GWEN MOORE, Wisconsin                MIKE CAREY, OHIO
DAN KILDEE, Michigan
SUSAN WILD, Pennsylvania
LIZZIE FLETCHER, Texas
                                 ------                                

                Subcommittee on Research and Technology

                HON. HALEY STEVENS, Michigan, Chairwoman
MELANIE A. STANSBURY, New Mexico     RANDY FEENSTRA, Iowa, 
PAUL TONKO, New York                     Ranking Member
GWEN MOORE, Wisconsin                ANTHONY GONZALEZ, Ohio
SUSAN WILD, Pennsylvania             JAMES R. BAIRD, Indiana
BILL FOSTER, Illinois                JAKE LaTURNER, Kansas
CONOR LAMB, Pennsylvania             PETER MEIJER, Michigan
DEBORAH ROSS, North Carolina         JAKE ELLZEY, TEXAS

                         C  O  N  T  E  N  T  S

                             April 6, 2022

                                                                   Page

Hearing Charter..................................................     2

                           Opening Statements

Statement by Representative Haley Stevens, Chairwoman, 
  Subcommittee on Research and Technology, Committee on Science, 
  Space, and Technology, U.S. House of Representatives...........     8
    Written Statement............................................    10

Statement by Representative Randy Feenstra, Ranking Member, 
  Subcommittee on Research and Technology, Committee on Science, 
  Space, and Technology, U.S. House of Representatives...........    11
    Written Statement............................................    12

Written statement by Representative Eddie Bernice Johnson, 
  Chairwoman, Committee on Science, Space, and Technology, U.S. 
  House of Representatives.......................................    13

                               Witnesses:

J. Stephen Binkley, Ph.D., Acting Director, Office of Science, 
  Department of Energy
    Oral Statement...............................................    15
    Written Statement............................................    17

Dr. Ben Schrag, Program Director and Policy Liaison, SBIR/STTR 
  Program, Directorate for Technology, Innovation and 
  Partnerships, National Science Foundation
    Oral Statement...............................................    22
    Written Statement............................................    24

Dr. Maryann Feldman, S.K. Heninger Distinguished Professor of 
  Public Policy, Department of Public Policy; Professor of 
  Finance, Kenan-Flagler Business School; Research Director, 
  Kenan Institute of Private Enterprise; The University of North 
  Carolina at Chapel Hill
    Oral Statement...............................................    34
    Written Statement............................................    36

Mr. George Caravias, Chief Executive Officer, Geofabrica Inc.
    Oral Statement...............................................    43
    Written Statement............................................    45

Dr. Nigel Reuel, Associate Professor, Jack R. and Carol A. 
  Johnson Faculty Fellow, Director of Graduate Education, Iowa 
  State University
    Oral Statement...............................................    57
    Written Statement............................................    59

Discussion.......................................................    66


                             SBIR TURNS 40:

                         EVALUATING SUPPORT FOR

                       SMALL BUSINESS INNOVATION

                              ----------                              


                        WEDNESDAY, APRIL 6, 2022

                  House of Representatives,
           Subcommittee on Research and Technology,
               Committee on Science, Space, and Technology,
                                                   Washington, D.C.

    The Subcommittee met, pursuant to notice, at 10:18 a.m., 
2318 of the Rayburn House Office Building, Hon. Haley Stevens 
[Chairwoman of the Subcommittee] presiding.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Chairwoman Stevens. This hearing will come to order. 
Without objection, the Chair is authorized to declare recess at 
any time.
    Good morning. Thank you to our witnesses. Thank you to 
Members for bearing with us. We are here in the Science 
Committee room doing what was supposed to be a hybrid that has 
now turned into a Zoom hearing due to technical difficulties of 
the hybrid functionality which we have been successfully using 
all term, but for some reason today the sound was out, so we 
will be doing this hearing on Zoom.
    People, Members should remember the conduct of a Zoom 
hearing. You will be responsible for your own microphone. You 
will need to mute at your own convenience when you're not 
speaking. And Members should keep their video feed on as long 
as they're present for the hearing. And of course if Members 
have any documents they wish to submit for the record, please 
email them to the Committee Clerk, whose address was circulated 
prior to the hearing.
    So, again, welcome to today's hearing of the Subcommittee 
on Research and Technology to discuss the very important merits 
and challenges of the Small Business Innovation Research, or 
SBIR for short, and the Small Business Technology Transfer 
(STTR) programs. Starting a little bit late, but so necessarily 
given the importance of this hearing topic and for the overall 
success of the U.S. economy for technology, research, and other 
development enterprises.
    We're going to welcome our distinguished panel of 
witnesses. I want to thank them for joining remotely. I also 
want to just mention a very special witness for--to me, Mr. 
George Caravias, the Chief Executive Officer of Geofabrica 
based in my home State of Michigan, based in my district 
actually just around the corner and a place that I had a chance 
to go visit.
    And many of you know I do a program called Manufacturing 
Monday. It's the fly out day, go visit a manufacturer on the 
Monday of the fly out. I've had a chance to visit with Mr. 
Caravias and his staff and just have a lot of fun geeking out 
with their technologies and what they're producing. And this 
Manufacturing Monday program really is just a showcase of the 
innovation economy for Michigan. And so seeing them at the tail 
end of last year was just a real treat, and obviously it's very 
exciting to have him here with us today for this important 
hearing. And we obviously look forward to hearing the comments 
of everyone on SBIR and how this program can be strengthened to 
provide opportunities to encourage small businesses take risks 
and pursue innovative research for technology 
commercialization.
    So for what's bringing us here today, SBIR's impact on our 
communities, it continues to be a very timely topic. It is in 
alignment with the ongoing conversations about how to sustain 
America's scientific and manufacturing leadership, the 
manufacturing economy, which is so robust, exciting, and 
engaging throughout our country and certainly in the hotbeds 
across the Midwest.
    We know about the America COMPETES Act, which contains 
important provisions from this very Subcommittee seeking to 
reinvest in America's future, supporting innovative small 
companies and an essential part of our vision for America's 
innovative future. The Small Business Innovation Research 
program is a vehicle to take discoveries made in the lab and 
explore how they can be transformed into a product. Many brand-
new businesses use the program to de-risk their ideas and 
springboard them into private investment.
    But not all SBIR recipients are startups. We know that. And 
the program is also a tool for small manufacturers to de-risk 
innovation and enter new markets or--it's also a tool for other 
science-based companies to de-risk, science and technology-
based companies. So over the last 5 years the SBIR program has 
awarded small businesses just as an example because this isn't 
all about Michigan, although I would love for it to be all 
about Michigan but just as an example of Michigan has been 
awarded $348 million in funding for R&D (research and 
development). Geofabrica, as I mentioned at the beginning, is 
just one of so many stories in Michigan alone. And SBIR funding 
to small companies in my home State has also led to the 
development of handheld technology that enables farmers to 
accurately detect nitrates in their own fields, saving farmers 
money and protecting our freshwater systems from toxic algal 
blooms and the testing of ligand for PET imaging of the brain 
during clinical trials for new memory disorder drugs.
    So, overall, 11 agencies support small business innovation 
through the SBIR program. It's important to recognize the 
diversity of missions and needs across those agencies when 
considering reauthorization.
    At the end of the spectrum is the National Science 
Foundation (NSF), which uses the program to support innovation 
and new businesses broadly. At the other is the Department of 
Defense (DOD), which uses SBIR largely to generate mission-
critical technologies. So we got these 11 agencies, you got NSF 
on one side and DOD on the other. We don't have a lot of these 
interagency initiatives. This is one of them, and it's working 
very well, we think. We're here to learn more, and we want to 
foster improvements to the program while maintaining 
flexibility. Flexibility is very key, especially in this COVID 
age to meet each agency's requirements.
    Despite its many strengths, the SBIR program has some, you 
know, challenges, and here's where I believe Congress can help. 
I'm hoping to hear ideas today about how we can better prepare 
first-time entrepreneurs, how we can bring in and support more 
women- and minority-owned small businesses. I've heard from 
minority small--minority-owned small businesses in Michigan's 
11th District, some who are tapping into SBIR and some who 
would be greatly benefited to learn more about the opportunity 
of SBIR and also for how agencies can be more responsive to the 
needs of small businesses. In short, we want to ensure that all 
communities and would-be entrepreneurs can participate in the 
program and that businesses with great ideas are prepared to 
succeed.
    I was very proud to cosponsor a bipartisan bill last June 
with Congressman Baird to further strengthen the SBIR and STTR 
programs. H.R. 4033, the Small Business Innovation Research and 
Small Business Technology Transfer Improvement Act of 2021. 
What an honor to do this alongside my dear friend Congressman 
Jim Baird. The bill seeks to address some of these programmatic 
challenges. We must use all of the tools we have to tackle the 
societal challenges of today and tomorrow, including the 
challenge of creating safe, sustainable technologies of 
environmental remediation, of creating revolutionary new 
approaches to medicine, and much more. As an investment in a 
vibrant entrepreneurial ecosystem in our country, the SBIR is a 
premier and resounding tool.
    [The prepared statement of Chairwoman Stevens follows:]

    Good morning and welcome to today's hearing of the 
Subcommittee on Research and Technology to discuss the merits 
and challenges of the Small Business Innovation Research, or 
SBIR for short, and Small Business Technology Transfer 
programs. I'd also like to welcome our distinguished panel of 
witnesses joining us remotely.
    I would like to give a special warm welcome to Mr. George 
Caravias, Chief Executive Officer of Geofabrica, based in my 
home state of Michigan. Since I was elected to Congress, I 
devote time every Monday to visit a manufacturer or business in 
my district--Michigan's 11th District -that showcases 
southeastern Michigan's innovation economy. In December, I had 
the privilege of visiting the team at Geofabrica to hear from 
Mr. Caravias of about his company's exciting DOD-funded SBIR 
work. I am looking forward to hearing more from him on how the 
SBIR program could be strengthened to provide opportunities 
that encourage small businesses to take risks and pursue 
innovative research for technology commercialization.
    As for what bring us here today--SBIR's impact in our 
communities -continues to be a very timely topic. It is in 
alignment with the ongoing conversations about how to sustain 
America's scientific and manufacturing leadership. The America 
COMPETES Act, which contains important provisions from this 
very subcommittee, seeks to reinvest in America's future. 
Supporting innovative small companies is an essential part of 
that vision of our innovation future.
    The Small Business Innovation Research program is a vehicle 
to take discoveries made in the lab and explore how they can be 
transformed into a product. Many brand-new businesses use the 
program to de-risk their ideas and springboard them to private 
investment. But not all SBIR recipients are start-ups. The 
program also is a tool for small manufacturers to de-risk 
innovation and enter new markets.
    Over the past five years, the SBIR program has awarded 
small businesses in Michigan more than $348 million in funding 
for R&D. Michigan's Geofabrica is just one of so many stories 
in Michigan alone. SBIR funding to small companies in my state 
have also led to the development of a hand-held technology that 
enables farmers to accurately detect nitrates in their own 
fields, saving farmers money and protecting our freshwater 
systems from toxic algal blooms; and the testing of a new 
ligand for PET imaging of the brain during clinical trials for 
new memory disorder drugs.
    Overall, eleven agencies support small business innovation 
through the SBIR program. It's important to recognize the 
diversity of missions and needs across those agencies when 
considering reauthorization. At one end of the spectrum is the 
National Science Foundation, which uses the program to support 
innovation and new businesses broadly. At the other is the 
Department of Defense, which uses it largely to generate 
mission-critical technologies. We hope to foster improvements 
to the program while maintaining the flexibility to meet each 
agency's requirements.
    Despite its many strengths, the SBIR program has some 
ongoing challenges, and here's where I believe that Congress 
can help. I'm hoping today to hear ideas for how we can better 
prepare first-time entrepreneurs, how we can bring in and 
support more woman- and minority-owned small businesses, and 
for how agencies can be more responsive to the needs of small 
businesses. In short, we want to ensure that all communities 
and would-be entrepreneurs can participate in the program and 
that businesses with great ideas are prepared to succeed.
    I was proud to cosponsor a bipartisan bill last June with 
Congressman Baird to further strengthen the SBIR and STTR 
programs. H.R. 4033, The Small Business Innovation Research and 
Small Business Technology Transfer Improvements Act of 2021. 
This bill seeks to address some of these programmatic 
challenges.
    We must use all of the tools we have to tackle the societal 
challenges of today and tomorrow, including the challenge of 
creating safe, sustainable technologies, of environmental 
remediation, of creating revolutionary new approaches to 
medicine, and much more. As an investment in a vibrant 
entrepreneurial ecosystem in our country, the SBIR program is 
one such tool.
    I want to thank the witnesses for being here today. I 
greatly look forward to hearing your expertise, your 
experiences, and your feedback on our legislation and any 
additional ideas Congress should consider for improving the 
SBIR Program.

    Chairwoman Stevens. So we're going to hear from the 
witnesses shortly. I believe that Ranking Member Feenstra is 
with us on Zoom. We are now fully Zoom although I am in the 
hearing room using the headphones. Mr. Feenstra, would you like 
to give your opening remarks? OK. We're going to pause because 
technology is not on our side today. So I'm going to move to 
the intros and then--OK. That's--yes, I'm moving to the intros. 
Is Mr. Feenstra here, Mr. Feenstra from Iowa, my good friend? 
He's from a northern district in Iowa.
    Mr. Feenstra. Yes, I am here.
    Chairwoman Stevens. Here we go.
    Mr. Feenstra. I'm here.
    Chairwoman Stevens. OK. We can hear you. It's great. Thank 
you, sir.
    Mr. Feenstra. All right. Thank you, Chairman Stevens, and 
thank you for our witnesses for joining us today to share your 
expertise--expert testimony on Small Business Innovation and 
Small Business Technology Transfer programs. SBIR and STTR are 
the Federal Government's largest source of early stage 
technology development and commercializing funding for small 
businesses. Our witness panel today represents a variety of 
perspectives which will be valuable to our Committee as we 
think about SBIR, STTR, and reauthorization.
    With the programs set to expire at the end of September, we 
have to--work to do to ensure that we can continue to make 
these investments in small businesses that can propel American 
innovation moving forward. The programs provide an opportunity 
for small businesses to be involved in Federal research and 
development and to help transfer federally funded R&D into 
innovative products and services.
    It is for this reason that these programs are sometimes 
referred to as America's seed fund, investing in research and 
emerging tech ideas that are too risky to raise capital in 
private--in the private sector. The programs are funded from 
set-asides of the extramural research budgets at Federal 
agencies, 3.2 percent from SBIR grants and just less than .05 
percent from STTR. These set-asides sound small, but they add 
up to about $3.3 billion for both of these programs.
    The--this is a huge taxpayer investment, so it is important 
for Congress to ensure that the programs are working 
efficiently as we consider reauthorization. My esteemed 
colleagues, Dr. Baird and Chairwoman Stevens, are leading a 
bipartisan bill which would improve these programs by enhancing 
accountability, providing agencies flexibility, and 
prioritizing successful policies. This bill, H.R. 4033, 
presents a path forward for both of these programs' 
reauthorization, and I look forward to working with both Dr. 
Baird and Ms. Stevens on this legislation.
    If America wants to maintain its competitive edge in 
technologies of the future, we must make sure that Federal 
investments in R&D are made across the country, not just in 
Silicon Valley. These programs provide a unique opportunity for 
middle America small businesses to become more involved in 
Federal R&D. States like Iowa have recognized the opportunity 
for these programs and what they provide for our State 
economies. Last year, Iowa received our most award year ever to 
date for a total of $11 million federally invested in Iowa's 
small business through these programs.
    One of our witnesses today, Dr. Nigel Reuel, a professor 
from Iowa State University located--is located in my district. 
Iowa State is doing a great work to foster the entrepreneurial 
spirit on campus. This hard work is paying off. The Princeton 
Review recently ranked Iowa State 11th in the Nation for 
student entrepreneurship. I am thrilled to have Dr. Reuel with 
us today to discuss Iowa State's work and to share his own SBIR 
stories.
    I'm also looking forward to hearing from Dr. Binkley and 
how the Department of Energy's (DOE's) national labs like Ames 
Laboratory are utilizing both of these programs. Investing in 
both of these--investing in these basic research help NSF, DOE, 
and NASA (National Aeronautics and Space Administration) and 
other agencies to create scientific breakthroughs, and 
investments like SBIR and STTR are key to supporting jobs and 
retaining talent and leveraging State and private funding in 
America's heartland.
    I am proud to work with my colleagues to encourage 
innovation and to give our businesses the resources they need 
to thrive. We must take every opportunity to strengthen 
investment in R&D so we can continue breaking boundaries and 
moving forward in our economy.
    Thank you, Madam Chair, for hosting this event, and I yield 
back.
    [The prepared statement of Mr. Feenstra follows:]

    Thank you, Chairwoman Stevens, and thank you to our 
witnesses for joining us today to share your expert testimony 
on the Small Business Innovation Research and Small Business 
Technology Transfer programs.
    SBIR and STTR are the Federal Government's largest source 
of early-stage technology development and commercializing 
funding for small businesses. Our witness panel today 
represents a variety of perspectives which will be valuable to 
our Committee as we think about SBIR and STTR reauthorization. 
With the programs set to expire at the end of September, we 
have work to do to ensure they can continue to make investments 
in small businesses that can propel American innovation 
forward.
    The SBIR and STTR programs provide an opportunity for small 
businesses to be involved in federal research and development, 
and to help transfer federally funded R&D into innovative 
products and services. It is for this reason that these 
programs are sometimes referred to as America's seed fund, 
investing in research and emerging tech ideas that are too 
risky to raise capital in the private sector.
    The SBIR and STTR programs are funded from set-asides of 
the extramural research budgets at federal agencies--3.2% for 
SBIR grants and just less than half a percent for STTR. These 
set asides sound small, but they added up to around $3.3 
billion for SBIR and $429 million for STTR in 2019. This is a 
huge taxpayer investment, so it is important for Congress to 
ensure the programs are working efficiently as we consider 
reauthorization.
    My esteemed colleagues, Dr. Baird and Charwoman Stevens, 
are leading a bipartisan bill which would improve these 
programs by enhancing accountability, providing agencies 
flexibility, and prioritizing successful policies. This bill, 
H.R. 4033, presents a path forward for SBIR and STTR 
reauthorization, and I look forward to working with both Dr. 
Baird & Ms. Stevens on the legislation.
    If America wants to maintain its competitive edge in the 
technologies of the future, we must make sure federal 
investments in R&D are made across the country, not just in 
Silicon Valley. These programs provide a unique opportunity for 
middle America small businesses to become more involved in 
federal R&D.
    States like Iowa have recognized the opportunity SBIR and 
STTR provide to their state economies. Last year, Iowa received 
our most awards year to date for a total of around $11 million 
federally invested in Iowa small businesses through these 
programs.
    One of our witnesses today is Dr. Nigel Reuel, a professor 
from Iowa State University located in my district. Iowa State 
is doing great work to foster the entrepreneurial spirit on 
campus. This hard work is paying off--the Princeton Review 
recently ranked Iowa State 11th in the nation for student 
entrepreneurship. I am thrilled to have Dr. Reuel with us today 
to discuss Iowa State's work and to share his own SBIR story.
    I'm also looking forward to hearing from Dr. Binkley about 
how the Department of Energy's National Labs, like Ames 
Laboratory, are utilizing the SBIR and STTR programs.
    Investing in basic research at NSF, DOE, NASA and other 
agencies has led to key scientific breakthroughs. And 
investments like SBIR and STTR are key to supporting jobs, 
retaining talent, and leveraging state and private funding in 
America's heartland. I am proud to work with my colleagues to 
encourage innovation and give our businesses the resources they 
need to thrive.
    We must take every opportunity to strengthen investment in 
R&D so we can continue breaking boundaries and moving our 
economy forward.
    Thank you, again, Madam Chair for hosting this hearing. I 
look forward to hearing from our witnesses and I yield back the 
balance of my time.

    Chairwoman Stevens. Great. If there are other Members who 
wish to submit additional opening statements, your statements 
are going to be added to the record at this point.
    [The prepared statement of Chairwoman Johnson follows:]

    I want to thank Chairwoman Stevens and Ranking Member 
Feenstra for holding this hearing on the SBIR and STTR 
programs. I would also like to welcome our witnesses to today's 
hearing and thank them for sharing their expertise with us on 
these important programs.
    Even as the United States faces increasing global 
competition in science and technology, we remain the envy of 
the world for our culture of discovery and innovation. That 
culture begins with our nation's talent, including the 
entrepreneurs who move scientific advances along the 
challenging path from lab to market. But as brilliant as they 
may be, these entrepreneurs cannot achieve their goals without 
financial and other kinds of support.
    Private sector investors are risk averse. They want to see 
clear proof-of-concept and market viability before they invest. 
That is where the Federal government, and specifically the SBIR 
program, comes in. Just a modest amount of early stage support 
for new ideas can propel them forward and open the door to 
significant private sector investment and commercial success.
    The SBIR program authorization expires at the end of this 
fiscal year, after having been extended 5 years without a 
comprehensive review of policy. The America COMPETES Act has a 
provision to extend the program again for 5 years, without any 
policy changes. It is my intention to keep that provision on 
the table for conference as a backstop. However, it is 
Congress's responsibility to take up a full reauthorization 
with due consideration given to all potential program 
improvements, and I am hopeful we can do that this year, in 
collaboration with our colleagues on the Small Business 
Committees.
    To that end, a few years ago, the Science, Space, and 
Technology Committee developed bipartisan legislation to 
reauthorize the SBIR program. I want to thank Rep. Baird and 
Rep. Stevens for reintroducing that legislation this Congress 
as H.R.4033, the ``Small Business Innovation Research and Small 
Business Technology Transfer Improvements Act of 2021.'' H.R. 
4033 reflects long-standing priorities of this committee, 
including flexibility for the agencies to meet their respective 
missions, efforts to diversify the applicants and awardees, and 
support for various pilot programs that were developed over 
time and have proven their value.
    Specifically, H.R. 4033 would support making the 3 percent 
administrative fee a permanent feature of the program, and it 
would also extend Phase 0 and Direct to Phase II authority to 
all relevant program agencies. In general, we support the 
agencies continuing to experiment with evidence-based 
approaches to improve the outcomes of the program and want to 
ensure the authorizing statute gives them such flexibility. 
Through hearings such as this and other forms of oversight, we 
can track how agencies are doing and to what extent their 
efforts are strengthening the program.
    I look forward to an informative hearing, and I appreciate 
the witnesses being with us to share their insights and 
legislative recommendations.
    Thank you, and I yield the balance of my time.

    Chairwoman Stevens. I now would like to introduce our 
phenomenal witnesses, and thank you so much again for being 
with us this morning and for slightly bearing with us as we 
conduct this hearing now on Zoom platform.
    Our first witness is Dr. J. Stephen Binkley. Dr. Binkley is 
the Acting Director and Principal Deputy Director in the Office 
of Science at the U.S. Department of Energy. In this capacity, 
Dr. Binkley is the senior career science official in the Office 
of Science, which is the third-largest sponsor of basic 
research in the United States of America. Prior to his 
experience in various leadership positions in the Department of 
Energy, Dr. Binkley has held senior positions at the Department 
of Energy's Sandia National Laboratories, a favorite of this 
Committee, and the Department of Homeland Security.
    Our next witness is Dr. Ben Schrag. Dr. Schrag is an SBIR/
STTR Program Director and Policy Liaison at the National 
Science Foundation. He joined NSF as a Program Director in 
2009, leading the advanced materials and instrumentation 
portfolios. Prior to NSF, he was the Director of Research and 
Development at Micro Magnetics and served as a visiting 
scientist at Brown University.
    Our third witness is Dr. Maryann Feldman. Dr. Feldman is 
the Heninger Distinguished Professor in the Department of 
Public Policy and Professor of Finance at the Kenan-Flagler 
Business School at the University of North Carolina. We see 
that Congresswoman Ross is clapping vehemently, hailing from 
North Carolina herself. From 2014 to 2017 she held the joint 
appointment at the National Science Foundation as the Science 
of--the Science of Science and Innovation Policy Program 
Director. Dr. Feldman co-chaired the National Academies of 
Sciences, Engineering, and Medicine's recent assessment of the 
SBIR/STTR programs at DOE and the NIH (National Institutes of 
Health).
    Our next witness is Mr. George Caravias. He is the Chief 
Executive Officer of Geofabrica, Inc., in Michigan. Mr. 
Caravias is an experienced Chief Executive with an almost 40-
year career in engineering and applied technology. He must've 
started as a child. He began his career developing computer-
aided manufacturing/computer-aided design systems in the 
defense industry and successfully managed multiyear, 
multimillion dollar projects for manufacturing in information 
technology applications. Prior to establishing his current 
business, Geofabrica, Mr. Caravias founded and helped to lead 
two technology ventures, one which grew to over $200 million in 
sales.
    Our final witness is Dr. Nigel Reuel, and I would like to 
recognize my colleague Congresswoman Feenstra to introduce Dr. 
Reuel.
    Mr. Feenstra. Thank you, so much, Madam Chair. I am very 
pleased to welcome Dr. Nigel Reuel, Associate Professor of 
Chemical and Biological Engineering at Iowa State University to 
testify before our Subcommittee today. In addition to being a 
professor, Dr. Reuel is also a Jack R. and Carol A. Johnson 
Faculty Fellow and Director of Graduate Education at the 
College of Engineering Entrepreneurial Fellow. In his time at 
Iowa State, Dr. Reuel has been involved in the national I-Corps 
program and also participated in three separate Iowa State I-
Corps site cohorts. Additionally, Dr. Reuel has contributed to 
several successful IBR, SBIR, and STTR award applications. One 
of these successful awards helped ensure the realization of a 
startup called Skroot Laboratory established in 2018 and 
initially incubated in Iowa State's Roy J. Carver Co-Lab on the 
north side of the campus. Additionally, Dr. Reuel has been 
involved with SBIR-awarded small businesses--a small business 
that was recently acquired through the Biotechnology, Inc. He 
maintains that the progress and ability to connect to this 
acquisition partner was made possible through SBIR funds. I 
want to thank Dr. Reuel for taking the time out of his busy 
schedule to join us today, and we are looking forward his 
testimony. I yield back the balance of my time.
    Chairwoman Stevens. Great. And as our witnesses should 
know, you're each going to have 5 minutes for your spoken 
testimony. We can't wait to hear it. Your written testimony is 
included in the record for the hearing as well. And then when 
you've completed your spoken testimonies, we'll begin with 
questions, and each Member is going to have 5 minutes to 
question the panel.
    We will start with Dr. Binkley.

            TESTIMONY OF J. STEPHEN BINKLEY, PH.D.,

              ACTING DIRECTOR, OFFICE OF SCIENCE,

                      DEPARTMENT OF ENERGY

    Dr. Binkley. Thank you, Chairwoman Stevens, Ranking Member 
Feenstra, and Members of the Subcommittee. I am pleased to join 
you today to discuss the Department of Energy's programs for 
Small Business Innovation Research and Small Business 
Technology Transfer and how legislation like the proposed Small 
Business Innovation Research and Small Business Technology 
Transfer and Improvements Act of 2021 can contribute to the 
Department's innovation and technology transition goals.
    The SBIR/STTR programs are an important Federal 
contribution of our Nation's innovation enterprise. They 
address a critical stage of technology development where 
innovations may stall because of a lack of access to funding, 
particularly for those where commercialization times can be 
long. SBIR/STTR funding enables small businesses to prove 
feasibility and demonstrate successful working prototypes after 
undergoing scientific peer review.
    The programs help to catalyze relationships. Small 
businesses build with research institutions, larger businesses, 
and the investment community. DOE uses its SBIR/STTR program to 
address innovation opportunities in its mission areas such as 
clean energy and scientific instrumentation to support 
discovery science.
    Within DOE, the Office of Science has managed the SBIR/STTR 
program since they were first authorized in 1992. The programs 
work collaboratively with research and development program 
offices throughout the Department to leverage their technical 
expertise and identify opportunities for small business 
innovation that are aligned with the DOE missions. ARPA-E 
(Advanced Research Projects Agency--Energy) independently 
manages its own SBIR/STTR programs.
    In Fiscal Year 2021, DOE obligated $353 million for SBIR 
and STTR programs, issued 465 phase I awards, 229 phase II 
awards, and the awards were made to small businesses across 44 
States and the District of Columbia.
    Over the last 10 years, Congress has made important changes 
to SBIR/STTR programs that have allowed DOE to improve 
commercialization outcomes of its awardees, including the 
introduction of second phase II awards authorized in 2012 and 
third phase II awards enabled by the Commercialization 
Assistance Pilot Program authorized in 2019. In addition, the 
2019 expansion of technical and business assistance (TABA) 
provided more funds and greater flexibility in using these 
funds to support commercialization. Finally, the Administrative 
Funding Pilot Program has enabled DOE to offer Energy I-Corps 
training to its phase I awardees.
    Past evaluation of the programs by the National Academy of 
Science, Engineering, and Medicine have found the DOE does--
needs to do more to improve participation by underrepresented 
groups. Our first major initiative in this area was the 
introduction in 2014 of our phase 0 application assistance 
program targeted at underrepresented groups, women-owned small 
businesses, socially and economically disadvantaged small 
businesses, and small businesses from underrepresented States. 
We have since expanded this program to include all first-time 
applicants, but 2/3 of the participants in this program 
continue to come from underrepresented groups.
    The programs have focused attention on underrepresented 
groups during the award selection process in Fiscal Year 2021 
and implemented diversity promoting policy factors in Fiscal 
Year 2022, leading to consistent improvement in the percentage 
of awards going to underrepresented groups. In Fiscal Year 
2021, women-owned small businesses and socially and 
economically disadvantaged small businesses each made up more 
than 10 percent of our phase I awardees up from close to 5 
percent in 2013. We recognize--with all that said, we recognize 
that we need to do much more to encourage women and socially 
and economically disadvantaged individuals to explore 
entrepreneurial STEM careers.
    From a broad policy perspective, we note that the strength 
of SBIR/STTR programs has been the flexibility provided to 
agencies to adapt the programs to serve their respective 
missions, and we encourage Congress to continue to provide 
agencies with such flexibility.
    Chairwoman Stevens, Ranking Member Feenstra, and Members of 
the Subcommittee, thank you again for the opportunity to speak 
about DOE's SBIR/STTR program and for your continued efforts to 
enhance the Nation's ability to apply innovative discoveries to 
Federal agency missions. I look forward to discussing the 
program further.
    [The prepared statement of Dr. Binkley follows:]
    
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    Chairwoman Stevens. Excellent. With that, we're going to 
move to Dr. Schrag, please.

                  TESTIMONY OF DR. BEN SCHRAG,

              PROGRAM DIRECTOR AND POLICY LIAISON,

                       SBIR/STTR PROGRAM,

                  DIRECTORATE FOR TECHNOLOGY,

                  INNOVATION AND PARTNERSHIPS,

                  NATIONAL SCIENCE FOUNDATION

    Dr. Schrag. Chairwoman Stevens, Ranking Member Feenstra, 
and Members of the Subcommittee, thank you for this opportunity 
to testify on the Small Business Innovation Research and Small 
Business Technology Transfer programs at the National Science 
Foundation. My name is Ben Schrag, and I'm a Program Director 
and Policy Liaison with NSF's SBIR/STTR program.
    NSF has funded research and researchers, innovations and 
innovators, and infrastructure that have provided incredible 
benefits to the Nation. The internet, Google, Qualcomm, 3-D 
printing, the economic theory underpinning spectrum auctioning 
and kidney exchanges, and even the discovery of the enzymes at 
the heart of the polymerase chain reaction, the chemical 
reaction that enables COVID-19 tests that have been critical in 
the fight against the pandemic. NSF investments have been 
foundational to all of these.
    NSF's mission is to support fundamental research across all 
fields of science, technology, engineering, and mathematics and 
all levels of STEM education. Given this unique role in 
supporting innovators, the agency recognized early on the 
potential for greater and faster commercialization of NSF-
funded research. That is why in the late 1970's NSF created the 
SBIR program. The program is an integral part of the NSF 
strategy to stimulate innovation and address societal needs 
through the commercialization of the results of fundamental 
research.
    Our strategy for the SBIR and STTR programs is to focus 
primarily on supporting early stage startup companies and 
especially firms new to government funding. We seek to support 
these firms long before private investors or customers are 
ready to provide financial support. This approach allows our 
funding to have maximum impact on each awardee and also allows 
our funding to impact the community of innovators and 
entrepreneurs as broadly as possible.
    In recent years, the large majority of our phase I awardees 
are firms with fewer than 10 employees and that were founded in 
the preceding 5 years. In Fiscal Year 2021, over 85 percent of 
our phase I SBIR and STTR awards represented the first ever 
award received by the applicant's small business from any 
Federal agency.
    We have used multiple strategies to encourage new 
applicants to participate and to help maximize their chances of 
success. For example, our project pitch is a short pre-
application review covering key aspects of a potential project, 
giving every new applicant an accessible and fast way to get 
feedback on whether their proposed project is a good fit for 
the program. We have also changed the administrative and 
compliance-checking processes for phase I proposals to allow 
proposers to fix most administrative mistakes in their 
proposals. This has lowered the percentage of phase I proposals 
that are not considered from about 15 percent, which was 
typical a decade ago, to about 2 to 3 percent in recent years.
    NSF has also designed several supplemental funding 
opportunities to spur the commercial success of its SBIR 
companies. The flagship amongst these is the phase IIB 
supplements, which provides up to an additional $500,000 on top 
of the $1 million phase II award for a firm generating 
marketplace traction for the first time.
    In addition to providing funding, NSF uses experiential 
education to help researchers gain valuable insight into 
starting a business or industry requirements and challenges. 
For example, just under 2,100 NSF SBIR and STTR phase I awardee 
companies have participated in a condensed version of NSF's 
Innovation Corps program called the Beat the Odds Boot Camp.
    Although our focus is on the earliest and riskiest 
projects, our portfolio of awardees has had strong 
commercialization success in recent years. Over the past 6 
years, we have seen about 200 confirmed exits where our awardee 
organization has had an initial public offering or undergoes a 
successful merger or acquisition and about $14 billion in 
follow-on private funding.
    For over 40 years, NSF has helped startups and small 
businesses across the country transform their ideas into 
marketable products and services through our SBIR and STTR 
programs. NSF is always assessing its performance against the 
broad goals of the SBIR and STTR programs, and this process has 
led to new supplements, new outreach, and enhancements to other 
NSF programs. NSF is focused on helping these startups address 
all the potential risks, whether technical, market, team, or 
financial, that they may face in their commercial journey.
    On behalf of the National Science Foundation, the SBIR/STTR 
programs, and our awardees, I want to thank you for your 
support of NSF and for this opportunity to highlight programs 
that provide startups and small businesses with the means to 
keep America on the forefront of the technological innovation. 
I would be pleased to answer your questions.
    [The prepared statement of Dr. Schrag follows:]
    
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    Chairwoman Stevens. Great. With that, we're going to hear 
from Dr. Feldman. We've got to unmute you. There we go.

               TESTIMONY OF DR. MARYANN FELDMAN,

             S.K. HENINGER DISTINGUISHED PROFESSOR

         OF PUBLIC POLICY, DEPARTMENT OF PUBLIC POLICY;

                     PROFESSOR OF FINANCE,

                 KENAN-FLAGLER BUSINESS SCHOOL;

               RESEARCH DIRECTOR, KENAN INSTITUTE

                     OF PRIVATE ENTERPRISE;

        THE UNIVERSITY OF NORTH CAROLINA AT CHAPEL HILL

    Dr. Feldman. Great, very good. Well, thank you for inviting 
me to address the Committee today. I'm honored to have this 
opportunity to talk about my research. I realize I've spent my 
career studying innovation, and the SBIR/STTR programs have 
been very important to the American system of innovation. It 
has been my pleasure to serve as the Co-Chair for the National 
Academies' assessment of the programs, and we've organized a 
dream team of scholars to look at this program. And overall, we 
find that the programs are effective public-private 
partnerships, and they play an important role in the 
commercialization of science and in sparking the American 
innovation economy. The programs have been successful on a 
variety of different measures, and they deserve your continued 
support.
    Now, these programs are so important to local innovative 
ecosystems that virtually every State has initiated programs to 
help win SBIR awards, and half of U.S. States provide matching 
funds that top off the SBIR award. But this program does much 
more than simply provide money. They also provide the context 
for developing cutting-edge technology for connecting small 
firms to one another, connecting them to universities, and to 
Federal agencies and labs.
    In each of our reports, we found that the programs are 
effective in stimulating small business research and 
experimentation and innovation. For DOE, our committee found 
that SBIR contributes to the agencies' R&D needs and advances 
the national energy system. But, importantly, we found that 
these awards have significant technological spillovers, and 
that means that firms that are located in the same State 
actually benefit greatly when an award is given to one firm. So 
these are very extensive benefits.
    For NIH, we've found that the program really is conducting 
such rigorous and commercially relevant research that 
contributes to U.S. leadership in the life sciences. And so in 
fact from 1996 to 2020, 12 percent of new drug approvals and 18 
percent of orphan drug approvals were associated with SBIR/STTR 
awardees.
    But each of our reports recommends ways the programs might 
be improved to improve commercialization, and I want to 
highlight some of these. For NIH, there's a need to reduce the 
timeframes used for reviewing and selecting awardees while 
emphasizing more on the commercial potential. And here's where 
Congress could act to remove the requirement that applicants 
are subject to the same identical scientific review as the more 
basic projects.
    We also would encourage DOE to allow their technical and 
business assistance, that is TABA funding, to be used to hire 
in-house experts. What we've found is that DOE firms are 
staffed with managers with technological expertise, but they 
lack management expertise that allow them to pursue and grow 
their companies strategically.
    As far as participation by women and socially/economic 
disadvantaged people, what we find is that the programs could 
be improved, and this is specifically greater outreach to 
minority-serving institutions. DOE has a pipeline problem as 
there are fewer women and minorities in technical fields. For 
NIH, there are a large number of women and minorities, but 
their participation has not improved over time. And for both 
programs, you could work with the HBCUs. (historically Black 
colleges and universities) They're an untapped resource. 
Collaborations between HBCUs and small businesses are rare, and 
their faculty are not selected as reviewers. Now, there's also 
the time lags associated with getting an award, which more 
adversely affect women and minorities because they're less 
likely to get money from the private sector.
    I want to address this question of mills. And so while we 
have many proposals to limit the amount of awards, let me just 
say that complex innovation requires multiple and reinforcing 
awards. And I've done research with my students looking at this 
multiple-award-recipient problem. And the firms are very 
actively engaged in patenting. I would caution you in trying to 
ferret out waste, fraud, and abuse, that we don't want to 
adversely affect incentives and distort the overall functioning 
of the innovation system.
    You know, periodic evaluations that we do are great, and 
they can improve the operations of the program, but here's 
where we could use your help to ensure that the appropriate 
data are collected and available. For example, in the NIH 
assessment by the National Academies there are rigorous 
evaluations of the proposals, but this information is not 
available in all our congressionally mandated studies.
    I've been trying to talk more like a New Yorker and less 
like a Southerner, but let me just conclude by saying over the 
past 40 years these programs have played a critical role in 
advancing the U.S. innovative ecosystem, and they have really 
helped small businesses contribute to U.S. competitiveness. 
Thank you for this opportunity.
    [The prepared statement of Dr. Feldman follows:]
    
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    Chairwoman Stevens. Nice. That's great, thank you.
    And with that, we'll hear from Mr. Caravias. We've got to 
unmute you. There we go.

               TESTIMONY OF MR. GEORGE CARAVIAS,

            CHIEF EXECUTIVE OFFICER, GEOFABRICA INC.

    Mr. Caravias. Well, there we go. OK. Thank you, Chairwoman 
Stevens, Ranking Member Feenstra, and Members of the 
Subcommittee on Research and Technology. It is an honor and a 
privilege to join you today to testify on the SBIR and STTR 
programs. My name is George Caravias. I am the Chief Executive 
Officer of Geofabrica, Inc., a small technology business based 
in Michigan that develops and builds manufacturing systems.
    Before I begin, allow me to tell you how highly I regard 
the SBIR and STTR programs. They are gems among government 
programs for small businesses. I appreciate all that you do to 
make them possible. So on behalf of Geofabrica and the many 
other SBIR/STTR awardees, I thank you.
    Geofabrica is known for its work in additive manufacturing, 
otherwise known as 3-D printing. We're currently pursuing two 
major efforts. One is the development of an expeditionary 
manufacturing systems, transportable 3-D printers that can 
operate at forward operating bases, at disaster sites, and on 
ships and trucks. We're also pioneering large-scale additive 
manufacturing. That involves making 3-D printers to build parts 
that are as large or larger than the chairs and desks that you 
are sitting at today. We've performed many phase I and phase II 
SBIRs and are in the midst of completing a phase III SBIR 
funded by one of the suppliers to the DOD.
    The following is an abbreviated list of my recommendations 
for these programs. First, I suggest creating incentives to buy 
and use the prototypes resulting from the R&D. I suggest that 
SBIR/STTR programs create incentives for Federal agencies, DOD 
program offices, and large corporations to buy and use the beta 
prototypes resulting from phase II efforts. Built-in beta users 
would go a long way to helping firms overcome the valley of 
death at the end of an SBIR or STTR.
    Two, accelerate the pace of SBIR/STTR project development. 
These projects take 4 to 6 years from conception to 
commercialization. Six years is an eternity in terms of 
technology lifecycles. Six years is too long to wait for a 
solution. In 6 years, too many market opportunities have 
vanished.
    Three, opportunities should be expanded for open-topic 
calls. The Air Force and the NSF have increasingly solicited 
very open or very broad topic calls. I believe this is a good 
trend that should be encouraged across all agencies.
    Four, expand access to companies owned by women and 
socially or economically disadvantaged persons. I applaud the 
efforts of this Committee to foster SBIR/STTR participation by 
women and socially or economically disadvantaged persons.
    And fifth, I encourage innovation in manufacturing. I 
strongly support the act's language encouraging manufacturing 
innovation and prioritization of manufacturing in the United 
States. Support for manufacturing innovation should be expanded 
across all agencies. Federal funding should give high 
priorities to companies demonstrating a commitment to building 
products in the United States.
    Small businesses are at the heart of our economy and are 
vital participants in our rich culture of innovation. Small 
companies are nimble, innovative, and willing to make bold 
moves to commercialize new technologies. The SBIR/STTR programs 
are one of the better ways of supporting small business 
technologists across a range of geography, demographics, and 
experience levels. I thank you again for your work and for your 
continued support of the SBIR and STTR programs. I will be 
pleased to answer any questions you may have.
    [The prepared statement of Mr. Caravias follows:]
    
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    Chairwoman Stevens. Excellent. With that, we'll hear from 
Dr. Reuel.

       TESTIMONY OF DR. NIGEL REUEL, ASSOCIATE PROFESSOR,

          JACK R. AND CAROL A. JOHNSON FACULTY FELLOW,

                DIRECTOR OF GRADUATE EDUCATION,

                     IOWA STATE UNIVERSITY

    Dr. Reuel. Great. I appreciate this opportunity to speak to 
you today. I wear an interesting little hat here in this role 
of both as an academic member at Iowa State University where my 
graduate students and I develop the initial seeds of these 
technologies and then seek for supportive SBIR funds to take 
them out of the lab.
    Today, I've helped over the last 3 years three separate 
entities start, and each of their start's initial funding was 
SBIR funds. And in some cases they've moved very quickly, one 
just last month [inaudible] is done with these funds.
    So I want to take my oral testimony just to highlight some 
of the things that I've detailed further in my written 
testimony, and it's mainly riffing off of this analogy of a 
seed. So coming from Iowa, it's an apt image of things that 
grow, and building things in my academic laboratory. It is a 
young tender seed that needs a lot of support in order to make 
it, survive the drought and winds that occur when it leaves the 
controlled environment of a lab.
    And there are three specific aspects of the SBIR program 
that I want to highlight, and namely--and these have already 
been highlighted today but I'll further reinforce. So first, 
you need purposeful training. Dr. Schrag mentioned aspects of 
that at NSF. Second is funding to test feasibility, which is 
unique. Private funds are very scared of touching that, and so 
SBIR provides a critical role in supporting that. And then 
third is this validation to external State--stakeholders.
    So first with purposeful training it's already been 
mentioned that some programs think about this very intently, so 
we've had the privilege of working through the National Science 
Foundation and multiple boot camps where the team are trained 
in customer discovery and in some cases, for example, Frugi 
Biotechnology, Inc., they started with an idea in mind of their 
technology of what market need it would fill, and when they 
went out and did customer discovery, they found actually that 
need wasn't as apparent but there was another burning need. And 
so they pivoted due to this training that the National Science 
Foundation had them go through through the SBIR program. And 
that pivot turned them to drug discovery customers, and that 
eventually was the company out in San Francisco that acquired 
Frugi. And so that was all done through customer discovery.
    In addition to that, they get training on their 
commercialization plan that's very data-driven. They have 
consultants that meet weekly to provide insight, training on IP 
(intellectual property), all those aspects that give resilience 
to this young tender seed to grow.
    And so then going to the next one, the funding to test 
feasibility, that, again, is something that I've seen with my 
companies. I, out of graduate school, had my very first startup 
attempt, went to a premier business incubator out in Boston and 
quickly found that my needs as a science-minded entrepreneur 
were very different. I needed more than a desk and a phone. I 
needed more than just a mockup, a cardboard model. I needed to 
test feasibility, and that takes sufficient funding and 
required capital in order to do that. And so with SBIR funds 
for my three companies that have--are growing and employing 11 
individuals today, all of that funding goes to that testing and 
feasibility. And that allows them to get that critical data to 
then stand before a private investor and provide a convincing 
pitch of what they can do. So that's very important.
    And last is this validation to external stakeholders. So 
it's a stamp of approval that you've gone through a scientific 
review, you're found meritorious, and it allows you to again 
strengthen that recommendation to seek fundraising.
    So last, I do just want to echo my gratitude to Members of 
the Subcommittee and for not only the long-standing support of 
SBIR but also communicating it your constituents, that it's 
very important to have this innovation ecosystem. Also wearing 
my academic hat, I want to thank for fundamental tests--
fundamental funding, which incubates those seeds. And I think 
we need to strive as we grow this pot and continue to expand to 
keep that parity of providing fundamental research to keep the 
pipeline of seeds alive to then incubate into businesses, to 
expand diversity in order to have better regional 
representation, as well as amongst people. So, with that, I 
look forward to questions.
    [The prepared statement of Dr. Reuel follows:]
    
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    Chairwoman Stevens. OK. That's great. We're now going to 
move to 5 minutes of questions, and I'm--the Chair is going to 
recognize herself for 5 minutes.
    Dr. Schrag, you were--in your testimony you're talking 
about accessibility, and I'm just wondering, could you shed 
some light on how people find out about SBIR/STTR 
opportunities?
    Dr. Schrag. Thank you for that question, Chairwoman. Yes, 
the NSF portfolio we found that there's a number of different 
routes. We obviously--the NSF has a very high name brand among 
scientists and engineers, and a lot of times those folks are 
involved in inventing the technology and so they may know about 
our programs. But more recently we have tried to really create 
new routes to visibility for our program, and that includes a 
pretty coordinated digital marketing campaign, especially to 
underrepresented entrepreneurs and innovators and a lot of 
outreach events. Our program directors are full-time dedicated 
to this program and they attend and present at well over 100 
outreach events per year, especially to again target 
communities where maybe our visibility is not as high. So we've 
tried to really create multiple different ways that people can 
find out about us.
    The other thing I would say is that our portfolio companies 
are great ambassadors, and so if we give them the good 
experience, if they find that they're supported and the NSF is 
adding value to their company, they are the best referrals that 
we can get----
    Chairwoman Stevens. Oh, sure.
    Dr. Schrag [continuing]. Because they can talk to 
entrepreneurs in their network and get the word out that way.
    Chairwoman Stevens. Yes, those ecosystems are really 
important. And the--we have TechTown in Detroit, for instance, 
and that's sort of an accelerator because what happens--you 
know, we got a lot of university people here, and those are 
great hotbeds, but then people leave the university and they're 
years into their career and they're tinkering around in the 
garage or the basement and then they forget all about these 
opportunities like SBIR/STTR. And this is why frankly as 
Members of Congress, you know, we share these opportunities, we 
look to unearth this.
    And, Dr. Feldman, I want to get at--your testimony was just 
fantastic. And you're talking about this linkage about what's 
going on at the HBCUs and SBIRs. And obviously there's some 
challenges to nontraditional and underrepresented firms, which 
we've talked about. But could you just--could you just shed a 
little bit more light on exactly what you shared in your 
testimony about why HBCUs tend to not be as plugged into 
technology transfer or SBIR/STTR opportunities?
    Dr. Feldman. I want to say that it is just an artifact of 
the data and so, we don't know are they applying and then not 
getting the funding, right? We are just observing who received 
the funding. And so our recommendation, our committee 
recommendation, we see all the HBCUs have engineering schools. 
Many of them have medical schools. And their faculty, graduate 
students also--because many times we see that companies are 
started, academic companies are started by postdocs or Ph.D. 
students. And so an important way that people learn about the 
program and also what makes a high-quality proposal is in 
participating in a review panel.
    Chairwoman Stevens. Yes.
    Dr. Feldman. And so that is something we need to do. We 
need to do scientific review anyway. And by sort of broadening 
the list of participants, more people would know about the 
program and would know what a good proposal looks like.
    And I also love the idea of involving more small businesses 
in the evaluation of these proposals. Now, specifically at NIH 
it's an issue because NIH's SBIR and STTR awards go through the 
same evaluation as an R01 award. And so that is being evaluated 
on its scientific merit.
    Chairwoman Stevens. Yes, and we have a--there's a lot with 
the evaluation component. And, you know, I'm just wondering, 
Dr. Schrag, have you spent time going to these HBCUs with the 
NSF yet, I mean, you personally or anyone in your shop? Because 
I'm wondering if we should do something like that if you--I 
mean, I know it's been 2 years of a pandemic, but do you--have 
you spent time over there?
    Dr. Schrag. So we've actually approached those communities 
in multiple ways. The main focus of our outreach has actually 
been through organizations that support critical masses of 
underrepresented innovators and entrepreneurs like the National 
Society for Black Engineers and SACNAS (Society for Advancement 
of Chicanos/Hispanics and Native Americans in Science) and----
    Chairwoman Stevens. Yes.
    Dr. Schrag [continuing]. A number of organizations. And so 
we find that's--those have a little bit of a greater scale 
nationally where we can get kind of in front of more folks at 
one time.
    Chairwoman Stevens. Yes.
    Dr. Schrag. But I think it's absolutely a great thing to 
explore. I think it's a great idea.
    Chairwoman Stevens. Yes, I was over at Groves High School 
sending off a group of 125 students. It was a Black empowerment 
education tour to about a half a dozen HBCUs, and, you know, 
I'm just thinking about how, you know, we go and visit the 
national labs as Members of Congress, and our Chairwoman, 
Congresswoman Eddie Bernice Johnson, has been involved with 
this MSI STEM Achievement Act, which passed the House as part 
of COMPETES, and I think that would further assist, too.
    We're going to move to the next questioner, but I do want 
to put a pin in Dr. Feldman's great points on data collection 
and how we manage that. That's come up with our AmeriCorps 
program as well. And if we could do a second round, maybe we 
can get into that.
    But with that, why don't I yield back and get to Mr. 
Feenstra for 5 minutes of questions.
    Mr. Feenstra. Well, thank you so much, Madam Chair. And I 
want to thank everyone for their testimony.
    As I mentioned in my opening statement, one of the great 
aspects of SBIR and STTR programs are the ability to spark 
innovation in middle America not just on the coast. Dr. Reuel, 
your story provides a great model for entrepreneurs. Can you 
further expand upon the advantage of building a startup in a 
State like Iowa, and then also how has Iowa State supported and 
helped to foster this entrepreneurial spirit on campus in Ames 
and across the State?
    Dr. Reuel. Thanks, Representative Feenstra, happy to. So, 
yes, my first startup experience was in a much more expensive 
climate on one of the coasts where funding did not go as far. 
One of the benefits I've found in Iowa, especially with the 
entrepreneurship ecosystem that's being built here at Iowa 
State University, there are many incubators that are not only 
available and provide functional space but they come at a cost 
point that is very affordable in terms of usage of SBIR funds. 
So we can use those funds to lease space, to get the personnel 
that we need. And being close to a university is also--gives us 
great access to talented people. And a shout-out to the 
Midwest. It's nice in the fact that people love it here and 
they want to stay here, so in terms of employee retainment, 
that's been a nice thing as well. They don't drift off and go 
to different companies.
    Mr. Feenstra. Well, that's great to hear. I mean, I'm just 
so impressed with what you do. I've got a further question for 
you, Dr. Reuel. As Congress is considering reauthorization of 
the SBIR and the STTR programs, the I-Corps program model is 
one that we have been looking at closely as a method to 
encourage SBIR success. What has been your experience with the 
I-Corps program, and do you think it's worthwhile for all SBIR 
and STTR applicants to be involved in this program? And would 
you consider any improvements that would be beneficial?
    Dr. Reuel. Thank you again for that question. Yes, 
definitely. It provides critical feedback when you need it at 
the very beginning of your journey. So often the founding team 
is very much in love with their technology and they think they 
know what its prime application can be. However, this forced 
training, this experiential training makes you put it aside for 
a bit and go out and talk to others and not talk about your 
technology but talk about their needs. And then that allows you 
to really match where those funds are going to go so now you're 
not burning them toward a destination that doesn't make sense 
but you're using them to really bring your product to a market 
that has a need that can be met.
    Mr. Feenstra. Yes, thank you. I greatly appreciate those 
thoughts and ideas.
    Dr. Binkley, I'm very proud to have Ames National Lab 
located in my district, and I want to ask you about the 
important facet of DOE's SBIR program partnerships with 
national labs. Can you discuss how the SBIR partnership with a 
national lab generally works? And then how does DOE utilize 
these partnerships to further capitalize on R&D in its mission 
areas?
    Dr. Binkley. Thank you, Representative Feenstra, for those 
questions, very, very good questions. We use a significant 
fraction of our SBIR funds in a mode that helps us advance 
instrumentation and experimental capabilities that can directly 
be folded back into our science programs. And Ames Lab is an 
example of one of the places where we do this. And we find that 
that approach to advancing instrumentation and other features 
related to the scientific mission of the Department is really 
important. I'll stop there.
    Mr. Feenstra. Well, I appreciate, you know, those comments, 
and what you do. I mean, I think of all the witnesses that we 
have, I mean, we're making great strides in these different 
areas, and I appreciate all your comments and thoughts. And 
with that, Chairman Stevens, I yield back.
    Chairwoman Stevens. OK, that's great. And we'll turn to Dr. 
Bill Foster for 5 minutes of questioning now. Thanks.
    Mr. Foster. Well, thank you, Chairwoman Stevens and Ranking 
Member Feenstra and all the witnesses for joining us here 
today. I'd like to actually give you a little more chance to 
brag about some of the successes of the SBIR programs. 
Specifically there's a company called ClearFlame Engine 
Technologies that's based out of Geneva, Illinois, just outside 
my district which has widely succeeded in developing diesel 
engines which work with full thermodynamic efficiency on 
everything from corn ethanol to methanol from hydrogen hubs. 
And it's actually led by former researchers from Argonne 
National Lab and Stanford, and ClearFlame received funding from 
the SBIR and other sources, including everything from the corn 
growers in nearby States to significant assistance from the 
national lab and the SBIR programs. In fact, they just were 
able to raise $17 million from a combination of John Deere and 
I think Breakthrough Energy Ventures, so they've clearly 
vaulted across the valley of death.
    And so, Dr. Binkley, how does the Office of Science mass 
produce successes like ClearFlame and advance translational 
breakthroughs in other areas?
    Dr. Binkley. Thank you, Representative Foster. That's a 
very, very good question. Thank you for the opportunity for me 
to answer that. So the way we arrive at SBIR topics in the 
Department is we have a network of Federal program managers 
spanning the Office of Science and the applied energy programs 
and even parts of NNSA (National Nuclear Security 
Administration). And they are always on the lookout for topics 
that can advance the clean energy and national security 
missions of the Department. And it's through that network of 
Federal program managers that we identify topics that are 
folded into our funding opportunity announcements (FOAs) for 
phase I and phase II SBIR and STTR activities. And it's through 
that process that we are able to get proposals in across a 
very, very diverse set of activities. And it's essentially, you 
know, go--for the broad community input through the FOA process 
and, you know, there are a number of outstanding successes over 
time.
    Mr. Foster. And so what I was struck with while reading 
through the history of ClearFlame is how it started as a bright 
idea at a university. The technology was essentially proven at 
a small scale at Argonne National Lab, and then it is now--it's 
now to the point where I think they had a semitruck driving 
around the National Mall powered by corn ethanol. And I didn't 
mention actually one of the neatest things about it is that the 
pollutants coming out the back end of the diesel engine that 
they've developed are much, much smaller, so you don't have to 
worry about soot and the other things that actually cost a lot 
of money to try to mitigate in standard diesel engines.
    And so--but the pipeline from the bright ideas collected 
from both laboratory researchers and universities and then 
having some technical assistance trying to sort of get to the 
proof-of-principle stage and then launching into the point 
where venture capital will grab it or established companies 
like John Deere. How is that pipeline set up, and what are the 
opportunities to just have the Department of Energy do more of 
this? Is it--yes.
    Dr. Binkley. Well, so the success at Argonne, I think, at 
least in my opinion, derived from the fact that there's close 
cooperation between the basic and applied programs at Argonne. 
So fundamental advances coming out of the chemistry and 
materials areas and then close coupling of those activities 
with the funded activities--activities at the lab funded by the 
applied energy offices. And I think that's a key strength in 
developing ideas that can be commercialized the way you 
described.
    Mr. Foster. OK. In my sort of last 30 seconds here, I'd 
like to point out what is a real concern with me. When I look 
at in the Office of Science you have many ongoing construction 
projects at any time, and essentially all of the construction 
projects have just been clobbered by a combination of COVID and 
supply chain difficulties and, you know, the--actually the very 
rapid rate of wage inflation for technical personnel. And so 
they've ended up, you know, not making their initial budget, 
you know, estimates. As a result, in order to hold to the 
original budgets, they've cut scope, important scientific scope 
from these projects. And I'd like you to consider if you would 
and get back to us with a rough estimate of what would be 
involved in restoring the original scientific scope that was 
planned and appropriate levels of project contingency really to 
correct for what is, we all hope, a one-time big body punch to 
these--all these ongoing projects? Because that's the sort of 
thing I think that putting in in the startup funding for the 
COMPETES and other appropriations things I think would do a lot 
of good to making sure we get the scientific output that was 
planned on these very important construction projects. So if 
you could get back to us with some information on that, I'd 
appreciate it.
    Dr. Binkley. Yes, Representative Foster, we'd be very happy 
to get back to you with that information. We've tracked that 
very closely over the lifetime of the pandemic and have a 
really solid financial understanding of what the impacts are 
and the scope impacts to the projects.
    Mr. Foster. Yes, OK. Well, thank you. I appreciate it and I 
yield back.
    Chairwoman Stevens. Great. And now we're going to move to 
Dr. Baird for 5 minutes of questioning. Thank you so much for 
your patience.
    Mr. Baird. Thank you, Madam Chair. And I really appreciate 
you holding this session about SBIR and STTR. And I always 
enjoy the kind of information we get from these sessions. It 
really is beneficial to us making decisions on these 
committees.
    But I was also very pleased to have you join as we 
introduced H.R. 4033, you know, the SBIR and the STTR 
Information Transfer Improvements Act during this Congress. So 
I want to thank you for that.
    And you know America's leadership in science and technology 
is critical to our economic and national security, basic 
research supported with taxpayer dollars to the National 
Science Foundation, NASA, NIH, and DOD and even other Federal 
agencies has led to key scientific discoveries that are very 
crucial in today's world such as the internet, wireless 
communication, lifesaving medicine, lasers, and many more. So 
this basic research produces the scientific fuel for 
innovation. Risk-taking small businesses are the engines for 
converting this kind of knowledge into new products and 
services. So small businesses are the catalyst for economic 
growth and producing good-paying jobs in our communities.
    And with that, I want to move to Dr. Schrag. And in your 
testimony you mentioned that H.R. 4033. So while the 
Administration has not really taken a position on the bill, can 
you expand on your comments and explain how the bill would be 
most directly effective for the NSF?
    Dr. Schrag. Thank you, Representative. Yes, thank you, 
Representative, for that question. Yes, I don't know if there 
is a specific aspect of the legislation. I don't want to run 
you out of time but there's a number of different sections. Is 
there a particular area you'd like me to comment?
    Mr. Baird. Yes.
    Dr. Schrag. We appreciate it. I think I would refer you to 
my written testimony. Obviously, some of the things that stand 
out to us are any ability for Congress to help create a little 
more stability around the program as a whole and also around 
some of the pilot programs, which NSF uses many of to great 
effect, I believe, so that's all--that's all I think extremely 
positive. Beyond that, I'd be happy to answer any specific 
questions around any sections of the bill that are of interest.
    Mr. Baird. Do any of the other witnesses care to address 
that issue, how effective this transfer for SBIR and STTR?
    If not, Madam Chair, I yield back.
    Chairwoman Stevens. OK. That's great. Thank you. And with 
that, we'll move to Congresswoman Ross for 5 minutes of 
questioning.
    Ms. Ross. Thank you very much, Chairwoman Stevens and 
Ranking Member Feenstra, for holding this very important 
hearing. I also want to thank them for their efforts to improve 
SBIR and the STTR through their legislation introduced last 
year. These programs play an important role, as we've heard, in 
helping small companies take the initial steps to advance 
research and development and begin commercialization of 
exciting new discoveries. As this Committee reflects on the 
programs' 40 years, we should use the testimonies given today 
to inform how we can make improvements to ensure that we're 
optimizing success of Federal dollars in the small business 
innovation space.
    And, Dr. Feldman, it is a pleasure to have you here from 
the University of North Carolina. For many years, the National 
Academies surveyed SBIR award winners in an effort to track 
program outcomes. But it was always a challenging task. And now 
your committee is taking a different approach to measuring 
program outcomes. Can you talk about both the challenges of 
surveys and how you're now trying to measure SBIR program 
outcomes? What are the relative advantages and disadvantages of 
the different approaches?
    Dr. Feldman. Representative Ross, thank you so much for 
this question. So I can just talk about this all day. And 
really with the survey we worry about response bias. That is 
who is filling out the survey and giving us information. And 
prior studies were only sending their questionnaire to people 
who received the funding.
    What we've been able to do is to match from different data 
sources, so using patent data, looking at new product 
announcements, looking at follow-on funding, trying to track 
employment, and really triangulating across different data 
sources so the that we get a full picture of what's going on in 
the company.
    And so what we find is that the programs have significant 
impact. For NIH we were able to look at new drug approval, new 
device approvals, and so on, that is using publicly validated 
sources to provide evidence about the program.
    Let me mention one of the most exciting things that we're 
doing, and currently we are working on an evaluation for the 
National Science Foundation that is in progress. But we realize 
that firms get the award, but it is individual researchers who 
are doing the work, who have the ideas, and so we have also 
started looking at the individual researchers so that the firm 
is a way of providing resources for individual PIs (principal 
investigators) who actually are the inventors and have the 
creative ideas to move forward.
    And so what are the sort of limitations? Well, I would like 
to know everything about a firm through its entire lifecycle. 
What we see is firms change their names, and so sometimes it's 
hard to track firms in a consistent basis. The question of are 
they merged or acquired, if they have an IPO, which is the gold 
standard, there's a lot of news about that, mergers and 
acquisitions less so and especially when they are publicly held 
companies. And so our data are only as good as all the 
underlying data.
    Let me mention for NIH we did have the applicants who were 
not awarded, and so that allowed us to again have a fuller 
picture. But, you know, it would be great if we could trace 
intellectual property because even when firms do go bankrupt, 
those principal investigators who got the SBIR funding move on 
to other companies, taking their ideas and their experience 
with them. I wish we could do better on that front. But I do 
believe that we have done what is a state-of-the-art assessment 
of the programs.
    Ms. Ross. Wonderful. I know I only have a few seconds left, 
but I wanted Dr. Binkley to maybe briefly comment on the 
importance of matching programs. We have one in North Carolina 
in aiding with diversity of applicants.
    Dr. Binkley. Thank you, Representative Ross. That's a great 
question. You know, we've been working very, very hard across 
our entire research portfolio on diversity issues, not just on 
the SBIR/STTR area. And so, you know, it's important to have 
good outreach to minority-serving institutions, HBCUs and so 
on.
    And then the other tool that we've been using very 
aggressively over the last year is if you look at the Code of 
Federal Regulations (CFR) that govern how we do processing of 
grant applications, we are allowed by the CFR to have program 
policy factors that allow us to focus more attention on, for 
example, minority-serving institutions, HBCUs, EPSCoR 
(Established Program to Stimulate Competitive Research) States, 
et cetera. And so we've been using those tools in our funding 
opportunity announcement process overall and, you know, we'll 
see how this works over the next couple of years.
    Ms. Ross. Thank you very much. And thank you to the Chair 
for your indulgence. I yield back.
    Chairwoman Stevens. The women from North Carolina unite, 
and with that, we will pass it over to Congressman Meijer for 5 
minutes of questioning.
    Mr. Meijer. Well, thank you, Chairwoman Stevens. Can you 
hear me? OK, thank you. And thank you to all our--and to 
Ranking Member Feenstra and to all of our panelists who are 
here today. I think you are hearing broad and bipartisan 
enthusiasm and excitement for what the SBIR and STTR programs 
have been able to do.
    I want to just--we discussed a little bit on the 
underrepresented communities, and I wanted to shift that a 
little bit to ask to Dr. Schrag and Dr. Binkley specifically 
around the veterans community, how have the SBIR and STTR 
programs engaged the veterans community, and what obstacles 
have you encountered if any in working to fulfill the mission 
to foster and encourage participation from this population?
    Dr. Schrag. I guess I can start, Dr. Binkley, if that's OK. 
Thanks for the question, Representative Meijer. I appreciate 
that. This is a very important issue and a focus of ours. One 
thing I would say is that NSF does have a specific request for 
supplemental funding, so an opportunity for our phase II 
awardees to actually request additional funding specifically to 
bring in and pay a veteran participant in their phase II 
research. And that gives the opportunity for that veteran to 
get kind of a boots-on-the-ground experience in deep technology 
startup research projects. But that's called the Veterans 
Research Supplement, VRS, and that's something that we've 
continued to offer. I think it's also been expanded throughout 
other parts of NSF subsequently. So that's been a great 
opportunity.
    The broader question about outreach to veterans, that does, 
I think, parallel some of the other really important issues we 
talked about with respect to underrepresented communities and 
geographies with less activity. And so I think our approach 
really has been to really double down on doing outreach, to 
have our digital marketing campaign tailored to try to target 
these communities, including veterans.
    And then the other thing is that, again, we've tried to 
really just create a program that is more approachable. And 
this is something that we hope helps everybody but specifically 
people who don't have as much experience with grant proposals 
and government funding. And part of that is the project pitch 
process that I mentioned, which allows folks to get immediate 
feedback and immediate dialog with our program directors, 
having a compliance that's flexible and forgiving so folks 
don't feel like the door is slammed in their face for 
bureaucratic issues, and having our program directors who are--
all of us program directors at NSF are both technical experts 
in our fields and also have startup experience as startup 
founders or investors. And so for those folks, I think we have 
a little bit more ability to have empathy and understand where 
these folks are coming from and to kind of meet them where they 
live. So that's the kind of broader approach that we've taken 
to outreach to that community.
    Dr. Binkley. OK. So, Representative Meijer, thank you for 
that question. I have to confess that in the Department of 
Energy we're not as far along as the National Science 
Foundation is in reaching veterans through our SBIR/STTR 
programs. We do have significant activities at a number of our 
national labs, and I think there are lessons that we can learn 
from NSF on how to do this in the SBIR/STTR area.
    Mr. Meijer. Dr. Binkley, I appreciate your candor there. 
And Dr. Schrag, I thank you for that response. I think, you 
know, before I came to Congress I was the Chairman of the Board 
of Student Veterans of America, and so for the post-9/11 G.I. 
Bill and what that has done for veterans' higher education, you 
know, that cohort is by and large--you know, what we saw in the 
immediate post-9/11 era, that cohort is now, you know, shifting 
from concentration on undergrad to a concentration in graduate 
programs, and so I think we're at a very opportune time to be 
targeting efforts, and so I appreciate that outreach as being 
very concentrated and that there is work to make the program 
more approachable. But I--you know, I think the time is right 
for this to be an expanded area of focus.
    And just Dr. Schrag, real quickly, you know, I know in the 
GAO (Government Accountability Office) report it mentioned the 
flexibility to issue SBIR awards to companies that were venture 
capital or hedge fund or private equity funded and that there 
had been some not as rapid adoption or that there--some of the 
agencies had not used their full authority. Could you speak to 
that at all and anything we can do to encourage, you know, SBIR 
awards to be going to appropriate companies and not having any 
discrepancies in terms of their funding source?
    Dr. Schrag. Yes, thank you for that question, 
Representative Meijer. Yes, so you're correct that the 
authority to issue SBIR awards to majority venture-backed 
companies is something NSF has not requested. As I mentioned, 
our focus is really on very early, very small companies. 
Typically speaking, companies will not become venture-backed 
until two or three rounds of private funding, and so those 
companies would tend to be later than the types of companies we 
look for.
    And in general, again, our approach is to try to provide 
funding where there is the biggest gap in the private--the 
valley of death, right, in the private sector. And typically a 
company that's already half-owned by venture capitalists would 
already have had access to the private sector, and so we're 
less likely to fund those.
    I will say though that venture capital is a very common 
graduation of our companies when they move out of the program 
to the next source of funding. Venture capital is almost always 
part of that path. It just happens to be that we go first and 
then venture capital tends to come a little later.
    Mr. Meijer. Thank you, Dr. Schrag. I appreciate that color. 
And, Madam Chair, my time is expired, so I yield back.
    Chairwoman Stevens. Great. And with that we're going to 
hear from Congresswoman Wild for 5 minutes of questioning.
    Ms. Wild. Thank you, Madam Chair. I'm proud that this 
Committee has paid so much attention to the innovation 
challenges and opportunities for our country and economy in 
this Congress, approving a number of bills on a bipartisan 
basis, including my legislation, the bipartisan Regional 
Innovation Act, which passed the House as part of the America 
COMPETES Act, which would invest in regional innovation 
strategy development and implementation for communities across 
the country. I think there's just as much potential in my 
district, the greater Lehigh Valley, as there is in the Silicon 
Valley, and the entrepreneurs and innovators there need a fair 
shot at that.
    And I'm pleased to say that the Small Business Innovation 
Research program, or SBIR, is already supporting some of this 
work by local innovators in my district, Pennsylvania's 7th. 
[inaudible] a very proud tradition of manufacturing. It helps 
build the infrastructure and economic engine [inaudible] 
through the 20th century. And today's entrepreneurs are 
continuing that legacy by developing the next generation of 
technologies and by making them here in America.
    For example, last year, one constituent's small business 
Amorphic Tech in Allentown, Pennsylvania, received a phase II 
SBIR award from the Department of Energy to build on research 
and pursue solutions for a device that will reduce energy use 
up to 40 percent from personal desalinators to municipal water 
treatment plants.
    And another business in my district, Vaxform in Nazareth, 
Pennsylvania, received a phase I SBIR award from the Department 
of HHS (Health and Human Services) to pursue a vaccine against 
group A strep. These types of investments and visionary 
innovators will help lead my community and our entire country 
into a 21st century economy, ready to tackle issues like global 
climate change, economic opportunity, and American 
manufacturing leadership.
    But a common refrain from aspiring SBIR awardees and 
entrepreneurs is that the process can be so complicated that it 
requires its own expertise to master. So, Dr. Schrag and Dr. 
Binkley, how have the Department of Energy and NSF taken the 
challenge of improving first-time applicants' success? And 
either one of you can start.
    Dr. Schrag. Thanks for the question, Representative Wild. 
I'll start and try to be brief. In addition to the measures 
that I mentioned regarding the project pitch and the 
administrative compliance aspects in my opening statement, 
again, we have tried to change our process and our proposal 
format to really align more with the natural language of 
entrepreneurs, right? Our goal is to make SBIR not a separate 
offshoot of the startup and entrepreneurial process but to have 
it be aligned with it so that the things you're going to be 
doing to prepare a proposal to NSF SBIR are the same things you 
need to be doing anyway to build your business and your 
business model and your understanding of your customers, so 
really trying to have the commercialization focus in our format 
and in our review criteria, and then, again, the 
commercialization experience of our program directors.
    The other thing I would say is that we do bring in, as was 
mentioned before, a number of commercial reviewers at both 
phase I and phase II, and those are typically entrepreneurs and 
investors where, again, there's an empathy between the folks 
who are reviewing the proposal, providing feedback, and the 
folks who are applying. And I think that creates more comfort 
in the process and makes folks more willing to go through what 
is a lengthy review timeline.
    Ms. Wild. Thank you. Let's switch over then to Dr. Binkley 
if we could on that question.
    Dr. Binkley. OK. Thank you, Representative Wild. That's 
really a great question also. And in addition to reviewing our 
overall proposal process and trying to simplify it, you know, 
we have introduced I think some streamlining there.
    But then more importantly we've created an application 
assistance program that targets first-time SBIR/STTR 
applicants. And we did--we actually did that in 2014, and we've 
been using it since then. And the focus of this application 
assistance program is not solely on steering small businesses 
through the application process in a timely fashion but similar 
to what my NSF colleague mentioned, it also provides critical 
reviews to proposers to ensure that a high-quality application 
can be developed and submitted.
    Ms. Wild. Thank you so much. I just think it's very 
important that we always keep in mind that small businesses 
have tight operation margins, and investing the time to write a 
competitive application is a large investment, and we want to 
do everything that we can to make sure that we are assisting 
these small businesses.
    With that, Madam Chairman--Chairwoman, I yield back. Thank 
you.
    Chairwoman Stevens. Yes, that's great. Thank you. Look, 
we're going to do a very brief round of second questions with 
yours truly in part because of where we were on data 
questioning, so that's the question I just want to get in for 
the record here. We've seen that critical tools in grantmaking 
oversight is the ability to measure the impact of the funding 
toward an intended goal, and the past data challenges have 
limited the ability for agencies to track commercialization 
benchmarks. But agencies were also able to identify the 
barriers and address those issues.
    You know, I've been an NSF applicant in a previous life. I 
know people who've gotten SBIRs. We heard from Dr. Feldman very 
extensively and to great appreciation on some of this data and 
surveying benchmarking.
    But I want to get our private sector voices in here. And I 
was just wondering, Mr. Caravias, if we could just start with 
you about how you have participated in surveys as an NSF 
applicant. And, by the way, congratulations on getting to phase 
III here. That's a really--I've looked at those phases, and 
that's really just tremendous to see your technology through 
that process. But any inputs you could make on surveying for us 
here?
    Mr. Caravias. Well, thank you, Madam Chair. I appreciate 
that. We have participated--we have not participated in surveys 
at all. We have participated--I guess we have one or I have 
one, an acquired company and NSF proposal, and we were very 
appreciative of that of phase I, which did not go to a phase 
II.
    I'm not sure how else--is there something specifically that 
I could answer about surveys, you know, not having done any 
myself or possibly something about----
    Chairwoman Stevens. Well, look--yes, I just think in terms 
of what--when you're being surveyed, I know you've obviously 
been funded SBIR through the DOD, but are--do you feel like 
you're getting the right questions asked, you know, that are 
contributing to these overall data benchmarks that Dr. Feldman 
mentioned?
    Mr. Caravias. Not having participated in the surveys, I 
think it's very difficult for me to comment on that, Madam 
Chair. I do----
    Chairwoman Stevens. OK. Well, has Mr.--has Dr. Reuel done a 
survey? Like who else here has been part of the surveys from 
the--I mean, obviously Dr. Schrag is sending them out, but, you 
know, who's been doing them?
    Dr. Reuel. So I can chime in, yes. So I think surveys are 
often neglected. So the NSF has a much more clever tactic. So 
before you can get the last amount of money from your grant, 
you have to provide considerable feedback in a project report. 
And they do that on purpose so that way they can get some of 
these metrics in place to figure out where you are on your 
journey and where the funds were spent.
    Dr. Schrag. Chairwoman, if you--do you mind if I chime in 
here?
    Chairwoman Stevens. Yes, that's great.
    Dr. Schrag. OK.
    Chairwoman Stevens. Yes, we need to hear from the agencies, 
too.
    Dr. Schrag. OK, no, I think this is a great, important 
question, and we have actually spent a lot of time trying to 
figure out how best to assess outcomes. There's a lot of 
challenges in this, as Maryann had referred to. You know, one 
of the main things is that when our companies become 
successful, it can be a decade or more, right? We had a company 
called Ginkgo Bioworks that was a company that went public last 
year for $16 billion. NSF funded them in 2007. And so the 
ability to kind of survey a company that you funded that long 
ago is difficult. You have to--you've lost contact with them in 
many cases and you have to find them.
    And so the approach that we have taken more recently--you 
know, we have in the past used surveys, but more recently the 
approach that we've taken to tracking our companies--and again, 
this is focused on private sector commercialization as the 
outcome, so it may differ. But we use third-party tools as a 
primary way to do that. There are services out there like 
PitchBook and CB Insights that track the financial status and 
health of private companies. And so we can actually put a--make 
a list of all the companies we funded and put them in these 
systems and they automatically give us updates on the 
transactions those companies are going through, if they're 
acquired, if they're raising money. We get that information for 
free in real time without having to go and survey the company.
    In addition, I do think surveys have potentially a place. 
We don't typically do them right now, but I think the small 
percentage of the companies that--you know, the big success 
stories which can be identified using these third-party tools, 
you can then go and do a deeper dive into--you know, into what 
makes them tick or how they've done with surveys. But obviously 
since we've funded 3,000 different small businesses over the 
last decade, doing surveys to all of them is a little bit 
difficult for us to manage.
    Chairwoman Stevens. Right. OK. Because--well, Dr. Feldman 
in her testimony said waste, fraud, and abuse, and I'm just 
trying to get at what she's talking about here. Is there a 
concern for this? Because it seems to me--I mean, even with Mr. 
Caravias, I mean, he's going through the DOD, and I have worked 
with DOD funding before. We've seen it. It's very strict. So is 
there a concern for this, or is there something we're missing 
on the surveys here or----
    Dr. Feldman. May I say that I was really talking about 
proposals to limit the number of awards that a company can 
apply for or can receive. And so we've heard that this is a 
concern, and I think it would be a bad idea in that because 
it's difficult to write proposals, there are economies of scale 
of having firms with a lot of PIs who are writing projects. And 
so I think that we should not limit the amount, and that's why 
I mentioned it----
    Chairwoman Stevens. OK.
    Dr. Feldman [continuing]. Because I think if we want to 
encourage innovation, we just want to let there be as much 
experimentation and as many applications as possible.
    Chairwoman Stevens. Yes, because if you're limited, what 
happens? You know, what, do you start a new company or--you 
know.
    Dr. Feldman. Right.
    Chairwoman Stevens. Yes, you know, or you're stopped in 
your tracks. I mean, I--just a couple weeks ago, I--we spent 
some time reviewing all these phases and the ways in which you 
get an SBIR, and it's--it is not easy, and yet it's--it really 
is serving a very unique purpose.
    OK. So I'm over the 5 minutes for the second round of 
questions. We don't have any other Member who wants to do a 
second round of questions, so we're going to move to close.
    And obviously, a huge thank you to our witnesses. Thanks 
for your patience at the beginning of this hearing as we moved 
from hybrid to all in Zoom. We did have the Zoom hybrid working 
yesterday, and I'll tell you the Science Committee here under 
my Chairmanship last term was one of the first Subcommittees to 
continue with Committee activity in March and April of 2020 
because we know--although pandemics are long oftentimes, the 
work of innovation does not stop, the work of entrepreneurs and 
makers and dreamers and doers.
    And, you know, we're really excited to have had today's 
kind of fact-based hearing on SBIR/STTR programs. Your 
expertise and your knowledge, this was very, very insightful. 
And I know that the colleagues who participated and who will 
participate following the conclusion of the hearing and the 2-
week question for the record period have really appreciated 
your time and obviously the trajectory as we move forward with 
the reauthorization legislation that Dr. Baird and I 
introduced.
    So with that, again, the record is going to remain open for 
2 weeks, and the witnesses will be excused, and the hearing is 
now adjourned.
    [Whereupon, at 11:49 a.m., the Subcommittee was adjourned.]