WASHINGTON - With the Small Business Technology Transfer (STTR) program set to expire at the end of the month, the Senate today passed legislation introduced by Sen. John F. Kerry, D-Mass., chairman of the Committee on Small Business and Entrepreneurship, that would continue the program nine years and boost funding to small businesses to $150 million by 2007.

"By extending STTR, we've reaffirmed our commitment to small businesses and advancing the nation's high-tech sector," Kerry said. "STTR facilitates collaboration between universities, government and small businesses on dynamic research projects. The combination of ingenuity and resources fostered by STTR results in astounding innovations benefitting both the private and public sectors."

Developed as a pilot program to move ideas from the research stage to the product stage, the program links small businesses with universities and colleges, nonprofit research institutions, and federal laboratories to develop research that might otherwise be forgotten in the lab.

"STTR enables fledgling businesses sitting on the cusp of the Digital Divide to bring promising research to fruition, propelling them into the ring of high-tech competition," Kerry said.

First passed by Congress in 1992, the highly successful STTR program is funded by government agencies that have an annual extramural R&D budget in excess of $1 billion. Each agency currently sets aside 0.15 percent for STTR competitive awards and contracts, about $65 million a year. Five agencies participate: Defense, Energy, NASA, the National Science Foundation, and Health and Human Services' National Institutes of Health. Reauthorization of the program extends it through Sept. 30, 2010, and gradually increases funding to 0.5 percent, approximately $150 million, by 2007.

The General Accounting Office reported that the STTR program was successful in transferring technology into the private marketplace and found that 45 percent of the projects funded by the program had commercial sales within five years. Nearly half of the companies had received patents for their technology. These prosperous companies have already had sales of $132 million and expect an additional $900 million in the next five years.

The bill, S.856, titled The Small Business Technology Transfer Reauthorization Act of 2001, also requires participating agencies to implement an outreach program to research institutions and strengthens the data collection requirements regarding awards and the data rights for companies and research institutions that conduct STTR projects.

STTR is a three-phase program. Phase I consists of a one-year, $100,000 grant designed to determine the scientific and commercial merits of a company's idea. The second phase involves a two-year, $500,000 grant, the intent being to further development of the idea. The new legislation increases the size of this grant to $750,000, beginning in 2004. Phase III brings the idea to the commercial market by restricting STTR funds, thereby reminding the company that fiscal success, rather than continued reliance on STTR funds, is the ultimate goal.