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TITLE VIII--ACQUISITION POLICY, ACQUISITION MANAGEMENT, AND RELATED MATTERS

Subtitle G—Small Business Matters

P. L. 116-92

House Conference Report 116-333

(a) In General.--Not later than 1 year after the date of the enactment of this Act and subject to subsection (b), the Secretary of Defense shall establish and administer a program to be known as the ``Domestic Investment Pilot Program'' under which the Secretary and the service acquisition executive for each military department may make a SBIR award under section 9(dd) of the Small Business Act (15 U.S.C. 638) to a small business concern without providing the written determination described under paragraph (2) of such section 9(dd) if such concern is--

(1) exclusively owned by multiple United States-owned venture
capital operating companies, hedge funds, or private equity firms, or

(2) majority-owned by multiple United States-owned venture
capital operating companies, hedge funds, or private equity firms, if the minority foreign ownership of such concern is limited to members of the national technology and industrial base as defined under section 2500 of title 10, United States Code.

(b) Limitation.--During any fiscal year, the aggregate amount of awards made under the Domestic Investment Pilot Program shall not exceed an amount equal to 10 percent of the total amount that the Secretary of Defense may award under section 9 of the Small Business Act (15 U.S.C. 638) during such fiscal year.

(c) Evaluation Criteria.--In carrying out the Domestic Investment Pilot Program, the Secretary of Defense may not use investment of venture capital or investment from hedge funds or private equity firms as a criterion for the award of contracts under the SBIR program or STTR program.

(d) Annual Reporting.--The Secretary of Defense shall include as part of each annual report required under section 9(b)(7) of the Small Business Act (15 U.S.C. 638(b)(7)) information on the implementation of the Domestic Investment Pilot Program with respect to the year covered by the report, including--

(1) the number of applications for participation received from small business concerns;

(2) the number of awards made to small business concerns, including an identification of such concerns;

(3) the extent to which a small business concern participant is foreign-owned, including an identification of the foreign owners; and

(4) an assessment of the effect of the Domestic Investment Pilot Program on--

(A) inducing additional venture capital, hedge fund, or private equity funding of research as defined in section 9(e)(5) of the Small Business Act (15 U.S.C. 638(e)(5));

(B) substantially contributing to the mission of the Department of Defense; and

(C) otherwise fulfilling the capital needs of small business concerns for additional financing for SBIR projects.

(e) Notification.--The Secretary of Defense shall notify the Small Business Administration of an award made under the Domestic Investment Pilot Program not later than 30 days after such award is made.

(f) Termination.--The Domestic Investment Pilot Program established under this section shall terminate on September 30, 2022.

(g) Definitions.--In this section:

(1) Military department; service acquisition executive.--The terms ``military department'' and ``service acquisition executive'' have the meanings given those terms, respectively, in section 101 of title 10, United States Code.

(2) SBIR; sttr.--The terms ``SBIR'' and ``STTR'' have the meanings given those terms, respectively, in section 9(e) of the Small Business Act (15 U.S.C. 638(e)).

(3) Small business act definitions.--The terms ``small business concern'', ``venture capital operating company'', ``hedge fund'', and ``private equity firm'' have the meanings given those terms, respectively, in section 3 of the Small Business Act (15 U.S.C. 632).

The House amendment contained a provision (sec. 878(b)) that would express a sense of Congress encouraging the Administrator of the Small Business Administration to promulgate regulations implementing existing authority under title 15, United States Code, that permits small business concerns that are majority-owned by multiple venture capital operating companies, hedge funds, or private equity firms to participate in the Small Business Innovation Research (SBIR) program. The provision would further direct the Secretary of Defense to establish a pilot program to exercise this authority and make SBIR awards to such business concerns up to 10 percent of the Department's annual SBIR allocation and would exempt the Department from the requirement for written determinations in advance of such awards. The provision would also direct the Secretary of Defense to include information about the activities under the pilot program in the annual report on the SBIR program.

The Senate bill contained no similar provision.

The Senate recedes with amendments that would eliminate the sense of congress; limit the Department of Defense exemption from the written determination to only those small business concerns meeting certain requirements related to foreign ownership; further expand the information provided in the SBIR annual report; and add a requirement for the Secretary of Defense to notify the Administrator of the Small Business Administration 30 days following an award.

House Report 116-120

 Section 878--Improvements to Certain Defense Innovation Programs

This section would create a pilot program within the Department of Defense to encourage engagement with commercial technology companies through the Small Business Innovation Research Program and the Small Business Technology Transfer Program, and would modify other elements of the innovation architecture within the Department.