S. 3971
Small Business Innovation and Economic Security Act
Sponsor: Joni Ernst
1 cosponsor
Official summary
Written by the Congressional Research Service.
Small Business Innovation and Economic Security Act
This act reauthorizes through FY2031 and modifies the Small Business Innovation Research (SBIR) program, the Small Business Technology Transfer (STTR) program, and related pilot programs. (The SBIR and STTR programs are administered by various federal agencies and provide competitive awards for domestic small businesses to conduct research and development projects that have the potential for commercialization.)
Specifically, the act expands the requirements for federal agencies administering these programs to evaluate the security risks of the small businesses that apply for awards under the programs. If an agency denies an application for security reasons, the agency must provide the small business with the basis for such determination.
Further, each agency must set a maximum number of proposals per fiscal year that a small business concern may submit in response to Phase I and Phase II solicitations.
The act expands the training requirements for agencies' contracting officers and acquisition workforce with respect to Phase III (commercialization of technologies) awards under the SBIR and STTR programs.
The act also establishes strategic breakthrough allocations for critical technology areas. These are additional Phase II SBIR and STTR awards to small businesses that demonstrate an effective technology and receive matching funds.
Text of the bill
(a) In general. Section 9 of the Small Business Act (15 U.S.C. 638) is amended—
(1) in subsection (g)—
(A) by redesignating paragraphs (15), (16), and (17) as paragraphs (16), (18), and (19), respectively;
(B) by inserting after paragraph (14) the following:
(15) evaluate whether a small business concern presents a security risk for any reason, through measures including—
(A) the due diligence process required under subsection (vv);
(B) disclosures submitted under this subsection; or
(C) coordination with the intelligence community, as defined in section 3 of the National Security Act of 1947 (50 U.S.C. 3003), Federal law enforcement, and other counterintelligence capabilities of the Federal Government;
(C) in paragraph (16), as so redesignated—
(i) by striking subparagraph (B);
(ii) by striking that— and all that follows through the small business concern submitting and inserting that the small business concern submitting;
(iii) by redesignating clauses (i), (ii), and (iii) as subparagraphs (A), (B), and (C), respectively, and adjusting the margins accordingly;
(iv) in subparagraph (B), as so redesignated, by striking or at the end;
(v) in subparagraph (C), as so redesignated, by striking and at the end; and
(vi) by adding at the end the following:
(D) has a security risk connecting the small business concern to an entity, including any affiliates of the entity, or individual on—
(i) the UFLPA Entity List maintained by the Department of Homeland Security;
(ii) the Non-SDN Chinese Military-Industrial Complex Companies List of the Office of Foreign Assets Control maintained by the Department of the Treasury;
(iii) the Section 889 Prohibition List established under section 889 of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (Public Law 115–232; 132 Stat. 1917) and maintained by the Department of Defense;
(iv) the list of Chinese Military companies required under section 1260H of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (10 U.S.C. 113 note) and maintained by the Department of Defense;
(v) the Military End User List maintained by the Bureau of Industry and Security of the Department of Commerce;
(vi) the Entity List maintained by the Bureau of Industry and Security of the Department of Commerce;
(vii) the List of Equipment and Services maintained by the Federal Communications Commission; or
(viii) the Withhold Release Orders and Findings List maintained by U.S. Customs and Border Protection;
(E) has a security risk with a primary source that is classified; or
(F) has a security risk that the Federal agency determines warrants a denial;
(D) by inserting after paragraph (16), as so redesignated, the following:
(17) provide for—
(A) a process under which, upon making an award decision to deny an application on the basis of a determination under paragraph (16), or upon making a determination under paragraph (16) that a small business concern has a security risk described in that paragraph, the Federal agency provides to the small business concern, as appropriate pursuant to the discretion of the Federal agency and in a manner that does not compromise national security, a notification—
(i) advising the small business concern of such determination; and
(ii) identifying the basis for such determination; and
(B) a policy that clarifies that receipt of an award decision denying an application does not prohibit the small business concern from being eligible for an award in a subsequent award cycle;
(E) in paragraph (19), as so redesignated—
(i) in subparagraph (B), by striking paragraph (16)(A) and inserting paragraph (18)(A); and
(ii) in subparagraph (C), by striking paragraph (16)(B) and inserting paragraph (18)(B);
(2) in subsection (o)—
(A) by redesignating paragraphs (19), (20), and (21) as paragraphs (20), (22), and (23), respectively;
(B) by inserting after paragraph (18) the following:
(19) evaluate whether a small business concern presents a security risk for any reason, through measures including—
(A) the due diligence process required under subsection (vv);
(B) disclosures submitted under this subsection; or
(C) coordination with the intelligence community, as defined in section 3 of the National Security Act of 1947 (50 U.S.C. 3003), Federal law enforcement, and other counterintelligence capabilities of the Federal Government;
(C) in paragraph (20), as so redesignated—
(i) by striking subparagraph (B);
(ii) by striking that— and all that follows through the small business concern submitting and inserting that the small business concern submitting;
(iii) by redesignating clauses (i), (ii), and (iii) as subparagraphs (A), (B), and (C), respectively, and adjusting the margins accordingly;
(iv) in subparagraph (B), as so redesignated, by striking or at the end;
(v) in subparagraph (C), as so redesignated, by striking and at the end; and
(vi) by adding at the end the following:
(D) has a foreign risk connecting the small business concern to an entity, including any affiliates of the entity, or individual on—
(i) the UFLPA Entity List maintained by the Department of Homeland Security;
(ii) the Non-SDN Chinese Military-Industrial Complex Companies List of the Office of Foreign Assets Control maintained by the Department of the Treasury;
(iii) the Section 889 Prohibition List established under section 889 of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (Public Law 115–232; 132 Stat. 1917) and maintained by the Department of Defense;
(iv) the list of Chinese Military companies required under section 1260H of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (10 U.S.C. 113 note) and maintained by the Department of Defense;
(v) the Military End User List maintained by the Bureau of Industry and Security of the Department of Commerce;
(vi) the Entity List maintained by the Bureau of Industry and Security of the Department of Commerce;
(vii) the List of Equipment and Services maintained by the Federal Communications Commission; or
(viii) the Withhold Release Orders and Findings List maintained by U.S. Customs and Border Protection;
(E) has a security risk with a primary source that is classified; or
(F) has a security risk that the Federal agency determines warrants a denial;
(D) by inserting after paragraph (20) the following:
(21) provide for—
(A) a process under which, upon making an award decision to deny an application on the basis of a determination under paragraph (20), or upon making a determination under paragraph (20) that a small business concern has a security risk described in that paragraph, the Federal agency provides to the small business concern, as appropriate pursuant to the discretion of the Federal agency and in a manner that does not compromise security, a notification—
(i) advising the small business concern of such determination; and
(ii) identifying the basis for such determination; and
(B) a policy that clarifies that receipt of an award decision denying an application does not prohibit the small business concern from being eligible for an award in a subsequent award cycle;
; and
(E) in paragraph (23), as so redesignated—
(i) in subparagraph (B), by striking paragraph (20)(A) and inserting paragraph (22)(A); and
(ii) in subparagraph (C), by striking paragraph (20)(B) and inserting paragraph (22)(B); and
(3) in subsection (vv)(2)—
(A) by amending subparagraph (A) to read as follows:
(A) assess, using a risk-based approach as appropriate—
(i) the cybersecurity practices of a small business concern;
(ii) patent analysis;
(iii) employee analysis;
(iv) foreign ownership of a small business concern seeking an award, including the financial ties and obligations (which shall include surety, equity, and debt obligations) of the small business concern and employees of the small business concern to a foreign country, foreign person, or foreign entity;
(v) foreign affiliations of a covered individual, owner, or other key personnel of a small business concern with an entity in a foreign country of concern;
(vi) investment relationships of a small business concern with an individual or entity in a foreign country of concern;
(vii) technology licensing agreements or joint ventures (including joint venture-like agreements) with an individual or entity in a foreign country of concern; and
(viii) business relationships between a covered individual, owner, or other key personnel of a small business concern and an individual or entity in a foreign country of concern;
(B) in subparagraph (B), by striking the period at the end and inserting ; and; and
(C) by adding at the end the following:
(C) examine any relationship of a small business concern seeking an award to any entity or individual included on the lists described in subsections (g)(16)(D) and (o)(20)(D).
(b) GAO study. Section 4(b)(4) of the SBIR and STTR Extension Act of 2022 (Public Law 117–183; 136 Stat. 2183) is amended by striking 3 years and inserting 8 years.