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The Committee on Small Business Holds Hearing to Analyze How SBIR/STTR Programs Enable Small Business Innovation
WASHINGTON, D.C. – Today, Chairman Roger Williams (R-TX) led a full Committee on Small Business hearing titled “Fostering American Innovation: Insights into SBIR/STTR Programs.” Chairman Williams issued the following statement regarding today’s hearing.
“SBIR and STTR programs are vital to fueling innovation by providing critical R&D funds from the federal government to small businesses – the backbone of American innovation and prosperity,” said Chairman Williams. “The testimony of our witnesses today shed light on the need for this Committee to continue our oversight and reform of the SBIR and STTR programs to ensure these programs are funding groundbreaking advancements, without interference from foreign adversaries like the Chinese Communist Party.”
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Watch the full hearing here.
Below are some key excerpts from today’s hearing:
Chairman Williams: “The SBIR and STTR programs were created to support small business growth while helping federal agencies to fulfill those needs. My question is, as a small business owner myself, and yourself, how important is it that the SBIR program remains merit based, as we talked about?” Dr. Marinelli: “Mr. Chairman, last September, I had the privilege to visit four of the five landing beaches at Normandy, sat on a German reinforcement, and looked at Omaha Beach. I looked at the American cemetery afterward and visited the grave of someone important to my wife’s family -it was truly a sobering experience. Cyrus [Mr. Miryekta] talked about the second offset, that battle was a force on force in Normandy. We were able to kick Iraqi forces out of Kuwait in a week because of the second offset. It is American technology that is going to give us the third offset. My father actually fought in the Korean War as an artillery officer. We need to never have to fight those battles again. We need to get the best technology and the best forces, no matter where they are, anywhere in the county, to establish and maintain that third offset. Otherwise, we are going to end up fighting these battles in a way we do not want, in a way we don’t want. We want to be able to deter foreign forces from ever starting a fight like that. We want to make sure we can win and want to make sure we can win it if that does start. I think it’s very important for our nation’s security to make sure that merit is driving technology into our armed forces and everywhere else in the U.S. government.”
Rep. Stauber: “The most alarming threat to American innovation is the growing evidence that China is actively working to exploit SBIR-funded research. We’ve seen reports of Chinese firms using venture capital investments, research partnerships, and talent recruitment programs to siphon technology developed with U.S. taxpayer dollars, just as Representative Moolenaar stated. If we do not take stronger measures, we risk unintentionally fueling China’s military and economic ambitions at the expense of our own national security. Mr. Miryekta, how is China leveraging venture capital investments in SBIR-funded companies to gain access to sensitive technology, and what steps can Congress take to prevent this?” Mr. Miryekta: “By virtue of innovators, the way the companies are set up, nothing is classified yet, so it’s very easy if a CCP-affiliated investor puts even a tiny amount of capital in, not just as the investor themselves, but even as one of the limited partners, the fact that they have any affiliation or access to the company means they can start collecting on the people in it. There was an example -brought up by the Ranking Member of the Committee on the Chinese Communist Party earlier- which was an American superconductor corporation where exactly that happened, all they needed was access to the company personnel. Then, it goes to a department in the PLA that does target packages, finds out who has access, who’s the most vulnerable, whose vices aren’t in check, and then they send PLA too, which is Chinese communist James Bond. They go in and flip the target and are able to extract what it is that they’re looking for. But by virtue of just having access to individuals, some of the companies we see are targeted through Cold War-era tactics and break-ins. We mean, eleven cars are broken into, seven laptops are stolen, all for a new energy company. Their executives travel as all marked and prepared for when they arrive, so it’s everything from grooming the target, and it’s very pleasant, to old-style illegal activity.”
Rep. Finstad: “How difficult is it for small business owners to understand the government’s hoops and pipe wrenches and all that they have to go through in contracting with the SBIR opportunities? How can we make it easier for these businesses to pursue these opportunities?” Ms. Mackey: “I can’t emphasize enough what it was like the first time we won a SBIR, and someone came in to explain how the federal government works. You know, I am an electrical engineer, my partner is a Harvard Business School grad, and we were just like ‘What is this system? How does it work?’ And every time you think you learn more, there’s something more to learn. So, here’s what I will tell you from our experience that I think would be helpful to others: when we were able to get technology through, it was because of an extended team. I mean the small business has to be good, the technology has to be good, but you have to have government counterparts that are, as Bill pointed out, willing to take the risk. We, as an ecosystem, need to celebrate those government counterparts that are willing to take the risk, and it’s the acquisition folks, and it’s the test folks. We also had industry partners.”
“SBIR and STTR programs are vital to fueling innovation by providing critical R&D funds from the federal government to small businesses – the backbone of American innovation and prosperity,” said Chairman Williams. “The testimony of our witnesses today shed light on the need for this Committee to continue our oversight and reform of the SBIR and STTR programs to ensure these programs are funding groundbreaking advancements, without interference from foreign adversaries like the Chinese Communist Party.”
---
Watch the full hearing here.
Below are some key excerpts from today’s hearing:
Chairman Williams: “The SBIR and STTR programs were created to support small business growth while helping federal agencies to fulfill those needs. My question is, as a small business owner myself, and yourself, how important is it that the SBIR program remains merit based, as we talked about?” Dr. Marinelli: “Mr. Chairman, last September, I had the privilege to visit four of the five landing beaches at Normandy, sat on a German reinforcement, and looked at Omaha Beach. I looked at the American cemetery afterward and visited the grave of someone important to my wife’s family -it was truly a sobering experience. Cyrus [Mr. Miryekta] talked about the second offset, that battle was a force on force in Normandy. We were able to kick Iraqi forces out of Kuwait in a week because of the second offset. It is American technology that is going to give us the third offset. My father actually fought in the Korean War as an artillery officer. We need to never have to fight those battles again. We need to get the best technology and the best forces, no matter where they are, anywhere in the county, to establish and maintain that third offset. Otherwise, we are going to end up fighting these battles in a way we do not want, in a way we don’t want. We want to be able to deter foreign forces from ever starting a fight like that. We want to make sure we can win and want to make sure we can win it if that does start. I think it’s very important for our nation’s security to make sure that merit is driving technology into our armed forces and everywhere else in the U.S. government.”
Rep. Stauber: “The most alarming threat to American innovation is the growing evidence that China is actively working to exploit SBIR-funded research. We’ve seen reports of Chinese firms using venture capital investments, research partnerships, and talent recruitment programs to siphon technology developed with U.S. taxpayer dollars, just as Representative Moolenaar stated. If we do not take stronger measures, we risk unintentionally fueling China’s military and economic ambitions at the expense of our own national security. Mr. Miryekta, how is China leveraging venture capital investments in SBIR-funded companies to gain access to sensitive technology, and what steps can Congress take to prevent this?” Mr. Miryekta: “By virtue of innovators, the way the companies are set up, nothing is classified yet, so it’s very easy if a CCP-affiliated investor puts even a tiny amount of capital in, not just as the investor themselves, but even as one of the limited partners, the fact that they have any affiliation or access to the company means they can start collecting on the people in it. There was an example -brought up by the Ranking Member of the Committee on the Chinese Communist Party earlier- which was an American superconductor corporation where exactly that happened, all they needed was access to the company personnel. Then, it goes to a department in the PLA that does target packages, finds out who has access, who’s the most vulnerable, whose vices aren’t in check, and then they send PLA too, which is Chinese communist James Bond. They go in and flip the target and are able to extract what it is that they’re looking for. But by virtue of just having access to individuals, some of the companies we see are targeted through Cold War-era tactics and break-ins. We mean, eleven cars are broken into, seven laptops are stolen, all for a new energy company. Their executives travel as all marked and prepared for when they arrive, so it’s everything from grooming the target, and it’s very pleasant, to old-style illegal activity.”
Rep. Finstad: “How difficult is it for small business owners to understand the government’s hoops and pipe wrenches and all that they have to go through in contracting with the SBIR opportunities? How can we make it easier for these businesses to pursue these opportunities?” Ms. Mackey: “I can’t emphasize enough what it was like the first time we won a SBIR, and someone came in to explain how the federal government works. You know, I am an electrical engineer, my partner is a Harvard Business School grad, and we were just like ‘What is this system? How does it work?’ And every time you think you learn more, there’s something more to learn. So, here’s what I will tell you from our experience that I think would be helpful to others: when we were able to get technology through, it was because of an extended team. I mean the small business has to be good, the technology has to be good, but you have to have government counterparts that are, as Bill pointed out, willing to take the risk. We, as an ecosystem, need to celebrate those government counterparts that are willing to take the risk, and it’s the acquisition folks, and it’s the test folks. We also had industry partners.”
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