News Article

House set to pass changes to small business programs exploited by China
September 28, 2022


By: Alayna Treene

The House is soon expected to pass a bill that would require small business programs to do background checks on companies seeking support that have ties to foreign nations deemed a national security risk.

Why it matters: The changes aim to further prevent Chinese and Russian shell companies from accessing national security-related technology, and follow a Department of Defense review that found China was stealing technology developed in the U.S. by exploiting these programs.

Details: The reforms to the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs must be reauthorized by midnight on September 30.

Last week, the Senate unanimously passed the bill — a rare occurrence in the 50-50 split chamber. The measure is led by Small Business committee chair Sen. Ben Cardin (D-Md.) and a top Republican Joni Ernst (R-Iowa).

The changes include requiring agencies administering SBIR and STTR to establish due diligence and oversight programs for businesses with “nefarious ties” to countries like China, Russia, Iran, Syria and North Korea.

What they’re saying: “China, not the United States, is the ultimate beneficiary of DoD and other [U.S.] research investments,” Ernst said in a statement to Axios.

Background: Ernst, who will likely chair the Senate Small Business committee next year if Republicans take back the Senate, initially tried to include the measure in the Senate’s China competition bill — but it ultimately got stripped out when the package was slimmed down.