Congress passes SBIR/STTR bill that toughens requirements

Bill targets foreign SBIR involvement and “SBIR Mills”

      President Joe Biden on Sept. 30 signed legislation to reauthorize the “SBIR” and “STTR” small business research and technology transfer programs, and to strengthen protections to prevent countries such as China and Russia from benefiting from the programs.

      The new law authorizes three more years for the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs.

      Both programs were due to expire on Sept. 30 if not reauthorized.

      The bill cracks down on foreign investment and affiliation in SBIR/STTR participants. It also increases performance standards for firms that receive multiple SBIR awards.

      “Small businesses will be required to disclose business relationships and financial arrangements before receiving an SBIR or STTR award,” Sen. Ben Cardin, D-MD, chair of the Senate Committee on Small Business and Entrepreneurship, said in a statement. Cardin sponsored the bill.

      “Agencies shall not make an award if they determine existence of improper business ties to or affiliations with foreign countries of concern, or if agency-supported activities, or national security are deemed to be at risk,” Cardin added.

      The law authorizes creation of a new due diligence program to assess security risks of SBIR and STTR awardees, through investigation of their cybersecurity practices, analysis of their patents, and review of their foreign ownership, if any, including any financial ties and obligations.

      Applicants for SBIR or STTR funding will need to disclose:

• Identities of owners and other covered individuals if recruited by countries of concern (Russia, China, North Korea, and Iran);
• Whether there exists a joint venture or company unit, based in, affiliated with or funded by any foreign country of concern;
• Whether there are current or pending contracts or agreements with an enterprise owned by any foreign entity;
• Whether the small business is wholly owned in a foreign country of concern;
• To what extent there are investments by an entity affiliated with a foreign country of concern; and
• Whether there were any technology licensing or intellectual property sales to a foreign country of concern, including the People’s Republic of China in the previous five years.

      A company may be denied SBIR participation based on affiliations with the countries of concern, or based on failure to disclose, along with other reasons. Awardees also must disclose changes in ownership in a timely fashion.

SBIR Mills

      The changes to rules for so-called SBIR Mills pertain to companies that have received multiple SBIR awards without sufficiently commercializing the technologies produced.

      The bill would target companies that have received more than 21 awards or more than 50 awards in the last five years.

      For those companies, the new law sets goals for average sales and investment per future award.

More information:
Senate bill text: https://bit.ly/3E5bdKu

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