Chair Snowe, thank you for holding this hearing today. There are many issues to cover regarding federal contracting and SBIR, and I suspect we will not get to all of them today but we look forward to working with all the witnesses on these issues in the weeks and months ahead. I also hope that the Committee can work together in a bipartisan way to reauthorize small business programs this year.

I want to start out by saying that I deeply appreciate that we are having a hearing on SBIR – a program important to my state as evidenced by the two Massachusetts witnesses today. SBIR has helped thousands of Massachusetts firms, including biotechnology firms. The state is second only to California in receiving the largest number of SBIR grants each year, with 840 grants going to Massachusetts firms in 2004, bringing in almost $300 million to small, high tech firms. That’s about 14 percent of the $2 billion in SBIR grants annually. I care about this program and want to ensure that it continues to work well and in the interests of the small businesses in my state and around the nation.

That said, I am not sure we should attempt to reauthorize the program in what is left of this legislative year. The program does not expire until 2008. There is a $5 million National Academy of Sciences study due out later this year, which I know Dr. Wessner will address, and it would be a shame to go forward without the benefit of the study. I hope that we will take the time necessary to give this program its due.

I know there is much controversy over the role of venture capital in the SBIR program. I approach this issue with an open mind, eager to hear all views and to engage in this issue with all of you so we can determine what makes the most sense for small business and the biotechnology and venture capital communities. I value the important work being done by biotechnology firms and have been on their side as a champion for stem cell research and R&D tax credits. During the presidential campaign I called for substantial increases in research for clean energy, medicine, advanced manufacturing, nanotechnology, stem cell research and other priorities. I also called specifically for increases in funding for life sciences -- such as biological sciences, biotechnology, diagnostics -- and for industrial biotechnology – advances such as “synthetic biology” which can lead to biodegradable plastics, energy, fuels and chemicals based on agriculture waste rather than oil. And I have long supported greater federal support for “curiosity-driven” and long-term, high-risk research.

Biotechnology has done so much for our society – I would like to see a way for biotechnology to flourish, with federal support, without undermining the small business aspect of the SBIR program.

We also need to remember that whatever we do to change the definition of small business with regard to SBIR will have an impact on all of the SBA’s programs. In fact, it would be interesting to hear what SBA’s head of size standards has to say about this issue. It would also be interesting to have GAO’s input. Their recent study concludes that the program is doing well, even with the recent rule clarification by SBA.

Beyond the definition of a small business, there are a number of other issues related to SBIR we need to address. Last year, Senator Snowe and I were successful in having an amendment adopted to the Defense authorization bill to create a new commercial pilot program to encourage and foster the use of SBIR technology by the Defense Department. This program has the potential to result in hundreds of millions of dollars going to SBIR companies. We have 20 years of research and development but we are still struggling with getting the agencies to make the final investment and use SBIR products.

We also need to discuss increasing SBIR award sizes from $100,000 and $750,000; Senator Bayh’s proposal to increase the 2.5-percent set-aside for SBIR projects; and how to increase the geographic diversity of the program.

Let me now turn to federal contracting, a subject that has come up in a number of hearings recently: The SBA is meant to be a watch dog for small businesses with respect to federal procurement policy, and by all accounts, this dog has fallen asleep. Report after report speaks to loopholes in the regulations that allow large businesses to game the system, and the SBA continues to drag its feet in correcting the problem. Despite the President’s stated strategy to unbundle contracts, they remain bundled because of procurement staffing deficiencies, and small businesses are left to suffer the consequences. Meanwhile, we read press releases that tout inflated numbers for the number of small business contracts as a supposed success story of the Administration. We’ll hear from the newly appointed SBA Inspector General today, and I look forward to his update on the status of the SBA’s efforts to safeguard small business procurement participation. But despite the intentions of that office, it is clear that the SBA continues to turn a blind eye to its oversight responsibility.

The SBA also has a responsibility to look out for our underserved communities; America’s service disabled veterans, and its women-owned and socially and economically disadvantaged businesses. But the federal contracting goals that have been established for these communities are never met, they are disregarded by this Administration, and underserved communities are left to wonder why the goals exist in the first place. The Administration must do a better job of enforcing these goals across the federal government to ensure underserved business communities of a fair shot at federal contracting opportunities. And six years after Congress passed the law, its time to stop playing games and to finally implement the women’s procurement program.

I look forward to introducing legislation to address some of the problems we will discuss today – including a bill that was included during the last reauthorization but was dropped in conference – to address the issue of contract bundling. There is so much more that can be done in this area and I look forward to the recommendations of our witnesses.

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