Annex C
MEMORANDUM OF UNDERSTANDING between the NATIONAL RESEARCH COUNCIL and the DEPARTMENT OF DEFENSE NATIONAL INSTITUTES OF HEALTH NATIONAL AERONAUTICS AND SPACE ADMINISTRATION DEPARTMENT OF ENERGY NATIONAL SCIENCE FOUNDATION

Summary

This memorandum summarizes the understanding reached at the December 7 meeting, convened by Science Committee staff, between the agencies and the NRC on issues relating to the contract, funding, and execution of the NRC study of the SBIR program.

Background

On November 19 and December 7, 2001, representatives of five agencies carrying out SBIR programs, the SBA, and the House and Senate staff met to work out all remaining issues in negotiations between the agencies and the National Academy of Sciences to carry out the statutory review of the SBIR program that is described in Section 108 of HR 5667 of the 106th Congress and required under Public Law 106-554, hereafter referred to as “the study”. Under this law, the head of each agency with a budget of more than $50,000,000 for its SBIR program for fiscal year 1999, (NSF, NIH, DOE, NASA, and DOD) in consultation with the Small Business Administration, shall, not later than 6 months after the date of enactment of PL 106-554, cooperatively enter into an agreement with the National Academy of Sciences for the National Research Council to conduct a comprehensive study of how the SBIR program has stimulated technological innovation and used small businesses to meet Federal research and development needs. Section 108 also enumerates a series of questions to be answered and issues to be examined as part of the study. The meetings were successful and there is now broad agreement on a cooperative approach to the study.

Areas of Agreement

Substantial areas of agreement among the parties to the discussion included:

  • A shared desire to carry out the required study.

  • A shared desire to work in a consultative and cooperative way through the conduct of the study.

  • An understanding that the scope and duration of the study are defined in the statute.

  • A recognition of the need to preserve the National Academies' independence in the conduct of the study, while ensuring that the study be as broadly inclusive as possible of all SBIR constituencies and demographics. The study shall in all regards be conducted in accordance with standard Academy procedures1, including compliance with Section 15 of the Federal Advisory Committee Act2. Further, to

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SEARCH FOR COMMITTEE NOMINEES: POLICY of the NAS--The fundamental consideration in appointing committees of the NRC is that the resulting group be wholly qualified and appropriately balanced to perform its assigned task with distinction.

Every nomination submitted to the Chair, NRC for approval should be the result of a careful choice among alternatives. Suggestions should be sought from several sources whenever possible, including Liaisons for the relevant sections of the NAS and NAE. The objective is to draw nominees from the broad community of qualified individuals, including those who may be less prominent or "visible" than their peers by reason of their race, sex, or age.



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Annex C MEMORANDUM OF UNDERSTANDING between the NATIONAL RESEARCH COUNCIL and the DEPARTMENT OF DEFENSE NATIONAL INSTITUTES OF HEALTH NATIONAL AERONAUTICS AND SPACE ADMINISTRATION DEPARTMENT OF ENERGY NATIONAL SCIENCE FOUNDATION Summary This memorandum summarizes the understanding reached at the December 7 meeting, convened by Science Committee staff, between the agencies and the NRC on issues relating to the contract, funding, and execution of the NRC study of the SBIR program. Background On November 19 and December 7, 2001, representatives of five agencies carrying out SBIR programs, the SBA, and the House and Senate staff met to work out all remaining issues in negotiations between the agencies and the National Academy of Sciences to carry out the statutory review of the SBIR program that is described in Section 108 of HR 5667 of the 106th Congress and required under Public Law 106-554, hereafter referred to as “the study”. Under this law, the head of each agency with a budget of more than $50,000,000 for its SBIR program for fiscal year 1999, (NSF, NIH, DOE, NASA, and DOD) in consultation with the Small Business Administration, shall, not later than 6 months after the date of enactment of PL 106-554, cooperatively enter into an agreement with the National Academy of Sciences for the National Research Council to conduct a comprehensive study of how the SBIR program has stimulated technological innovation and used small businesses to meet Federal research and development needs. Section 108 also enumerates a series of questions to be answered and issues to be examined as part of the study. The meetings were successful and there is now broad agreement on a cooperative approach to the study. Areas of Agreement Substantial areas of agreement among the parties to the discussion included: • A shared desire to carry out the required study. • A shared desire to work in a consultative and cooperative way through the conduct of the study. • An understanding that the scope and duration of the study are defined in the statute. • A recognition of the need to preserve the National Academies' independence in the conduct of the study, while ensuring that the study be as broadly inclusive as possible of all SBIR constituencies and demographics. The study shall in all regards be conducted in accordance with standard Academy procedures1, including compliance with Section 15 of the Federal Advisory Committee Act2. Further, to 1 SEARCH FOR COMMITTEE NOMINEES: POLICY of the NAS--The fundamental consideration in appointing committees of the NRC is that the resulting group be wholly qualified and appropriately balanced to perform its assigned task with distinction. Every nomination submitted to the Chair, NRC for approval should be the result of a careful choice among alternatives. Suggestions should be sought from several sources whenever possible, including Liaisons for the relevant sections of the NAS and NAE. The objective is to draw nominees from the broad community of qualified individuals, including those who may be less prominent or "visible" than their peers by reason of their race, sex, or age. 42

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Those who have helped formulate the charge to a committee and have given thought to its task are usually involved in selecting the first nominees; members already serving are likely to have preferences concerning additions or replacements. However, while suggestions from those sources are appropriate, consultation should also be sought within the major unit in which the committee is organized, with other major units having related activities or pertinent information resources, and with networks of sources outside the NRC. Policy: It is the policy of the NRC that those responsible for preparing nominations for NRC committee service should strive to ensure that the search for suitable nominees is a broad one. Special effort should be devoted to the identification of qualified women, members of ethnic or racial minorities, younger individuals (35 years old and younger), and members of the NAS, NAE, and IOM. With reference to women and minorities, recent editions of the following biographical directories are available in the Academy Library: Who's Who of American Women Who's Who Among Black Americans Black Engineers in the United States With reference to members of the Academies and the Institute, Section Liaisons should be contacted sufficiently in advance of the need that they can have time to consult with their sections. See "Section Liaison Process" in the Guide to Project Management. 2 PL 105-153, December 17, 1997, 111 Stat 2689—Section 15 of the Federal Advisory Committee Act of 1997 was amended to read as follows: "REQUIREMENTS RELATING TO THE NATIONAL ACADEMY OF SCIENCES AND THE NATIONAL ACADEMY OF PUBLIC ADMINISTRATION "SEC. 15. (a) IN GENERAL.--An agency may not use any advice or recommendation provided by the National Academy of Sciences or National Academy of Public Administration that was developed by use of a committee created by that academy under an agreement with an agency, unless-- "(1) the committee was not subject to any actual management or control by an agency or an officer of the Federal Government; "(2) in the case of a committee created after the date of the enactment of the Federal Advisory Committee Act Amendments of 1997, the membership of the committee was appointed in accordance with the requirements described in subsection (b)(1); and "(3) in developing the advice or recommendation, the academy complied with-- "(A) subsection (b)(2) through (6), in the case of any advice or recommendation provided by the National Academy of Sciences; or "(B) subsection (b)(2) and (5), in the case of any advice or recommendation provided by the National Academy of Public Administration. "(b) REQUIREMENTS.--The requirements referred to in subsection (a) are as follows: "(1) The Academy shall determine and provide public notice of the names and brief biographies of individuals that the Academy appoints or intends to appoint to serve on the committee. The Academy shall determine and provide a reasonable opportunity for the public to comment on such appointments before they are made or, if the Academy determines such prior comment is not practicable, in the period immediately following the appointments. The Academy shall make its best efforts to ensure that (A) no individual appointed to serve on the committee has a conflict of interest that is relevant to the functions to be performed, unless such conflict is promptly and publicly disclosed and the Academy determines that the conflict is unavoidable, (B) the committee membership is fairly balanced as determined by the Academy to be appropriate for the functions to be performed, and (C) the final report of the Academy will be the result of the Academy's independent judgment. The Academy shall require that individuals that the Academy appoints or intends to appoint to serve on the committee inform the Academy of the individual's conflicts of interest that are relevant to the functions to be performed. "(2) The Academy shall determine and provide public notice of committee meetings that will be open to the public. "(3) The Academy shall ensure that meetings of the committee to gather data from individuals who are not officials, agents, or employees of the Academy are open to the public, unless the Academy determines that a meeting would disclose matters described in section 552(b) of title 5, United States Code. The Academy shall make available to the public, at reasonable charge if appropriate, written materials presented to the committee by individuals who are not officials, agents, or employees of the Academy, unless the Academy determines that making material available would disclose matters described in that section. "(4) The Academy shall make available to the public as soon as practicable, at reasonable charge if appropriate, a brief summary of any committee meeting that is not a data gathering meeting, unless the Academy determines that the summary would disclose matters described in section 552(b) of title 5, United States Code. The summary shall identify the committee members present, the topics discussed, materials made available to the committee, and such other matters that the Academy determines should be included. "(5) The Academy shall make available to the public its final report, at reasonable charge if appropriate, unless the Academy 43

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ensure that the concerns of small business are appropriately represented, the statute requires the National Research Council to "consult with and consider the views of the Office of Technology and the Office of Advocacy of the Small Business Administration and other interested parties, including entities, organizations and individuals actively engaged in enhancing or developing the technological capabilities of small business concerns." Also, in recognition of a need to seek out representatives of under-served populations for advice and as potential panelists and peer reviewers, the Academy shall look to socially and economically disadvantaged small business concerns, as defined in section 637(a)(4) of title 15 of the United States Code3, small businesses that are at least 51 percent owned and controlled by women, and researchers at determines that the report would disclose matters described in section 552(b) of title 5, United States Code. If the Academy determines that the report would disclose matters described in that section, the Academy shall make public an abbreviated version of the report that does not disclose those matters. "(6) After publication of the final report, the Academy shall make publicly available the names of the principal reviewers who reviewed the report in draft form and who are not officials, agents, or employees of the Academy. "(c) REGULATIONS.--The Administrator of General Services may issue regulations implementing this section.". (c) EFFECTIVE DATE AND APPLICATION.-- (1) IN GENERAL.--Except as provided in paragraph (2), this section and the amendments made by this section shall take effect on the date of the enactment of this Act. (2) RETROACTIVE EFFECT.--Subsection (a) and the amendments made by subsection (a) shall be effective as of October 6, 1972, except that they shall not apply with respect to or otherwise affect any particular advice or recommendations that are subject to any judicial action filed before the date of the enactment of this Act. 3 15 U.S.C 637 – (4)(A) For purposes of this section, the term ''socially and economically disadvantaged small business concern'' means any small business concern which meets the requirements of subparagraph (B) and - (i) which is at least 51 per centum unconditionally owned by - (I) one or more socially and economically disadvantaged individuals, (II) an economically disadvantaged Indian tribe (or a wholly owned business entity of such tribe), or (III) an economically disadvantaged Native Hawaiian organization, or (ii) in the case of any publicly owned business, at least 51 per centum of the stock of which is unconditionally owned by - (I) one or more socially and economically disadvantaged individuals, (II) an economically disadvantaged Indian tribe (or a wholly owned business entity of such tribe), or (III) an economically disadvantaged Native Hawaiian organization. (B) A small business concern meets the requirements of this subparagraph if the management and daily business operations of such small business concern are controlled by one or more - (i) socially and economically disadvantaged individuals described in subparagraph (A)(i)(I) or subparagraph (A)(ii)(I), (ii) members of an economically disadvantaged Indian tribe described in subparagraph (A)(i)(II) or subparagraph (A)(ii)(II), or (iii) Native Hawaiian organizations described in subparagraph (A)(i)(III) or subparagraph (A)(ii)(III). (C) Each Program Participant shall certify, on an annual basis, that it meets the requirements of this paragraph regarding ownership and control. 44

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Historically Black Colleges and Universities and other minority institutions. • The division of the study into two major phases as elaborated in Appendix A, with an external peer review directed according to standard Academy procedures of the methodology proposed at the end of Phase I to be carried out before Phase II is undertaken. • Specifics related to the contracts and funding of the study are as elaborated below. Contracts and Funding for the Congressional Study: The NRC and the agencies agreed on all of the following points: • The agencies will provide up-front funds to cover the first half of the funding for the entire two-phased study. That is, half the total cost will be used to cover Phase I activities and substantial bridging to Phase II. • Pending budget authority, funding for completion of Phase II activities will be released in its entirety, within 60 days following completion of Phase I and the external peer review (described above) of the Phase I results and the Phase II plan/activities. Agencies fully intend to commit funds for the balance of the study, however, that release of funding depends on agency budget authority. There will be no gap as the study moves from Phase I to Phase II. • New proposals will not be prepared. The NRC will submit a revised budget to each agency for the study. • The contracts for the study with the individual agencies are to be finalized 30 days after signature of this document, pending receipt of agencies' budgets and the specific receipt of funds from which this study will be supported. • Each agency is to take responsibility for the transfer of funds to the NRC under its contract. (5) Socially disadvantaged individuals are those who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities. (6)(A) Economically disadvantaged individuals are those socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same business area who are not socially disadvantaged. 45

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Appendix A: A Two-Phase NRC Study of the SBIR Program PHASE I DEVELOP & REVIEW TOOLS AND METRICS [Time estimates] Launch NRC Study Conclude contracts [Months 1-4] Secure Academy GBEC Approval Select Steering Committee Identify members and agree on initial contracts for Research Team Secure approval of Steering Committee Convene Initial Symposium Host Initial Symposium to launch project and help identify issues, commonalities, & Working Groups and unique features of agency programs. [Months 5-8] Convene a series of meetings between the research group, agency representatives, and program officers, and other interested parties to review the study’s overall methodology, to address unique agency objectives, practices and metrics, and to address the specific issues identified in the legislation. Develop Strategy and Develop survey evaluation framework including sampling strategy, appropriate Research Tools survey instruments including target populations (e.g. small business awardees, [Months 9-12] agency employees, etc.), case study templates, and an analysis plan. Review Consult with small business representatives. [Months 13-16] Review instruments with agency representatives and research team. Finalize methodologies with research team and Steering Committee. Submit overall methodology and survey evaluation framework for the external peer review. Complete peer review of overall methodology and evaluation framework. Phase II RESEARCH, REFINE, REVIEW, AND REPORT Field Research & Empirical Organize tasking of research team Analysis Commission Research [Months 17-27] Facilitate and follow-up on field interviews and surveys Commission independent empirical analyses to review results Produce, Review, Publish & Evaluate and cross-check survey results and commissioned work Publicize Field Research Discuss results with agencies for comment [Months 28-36] Convene symposium (s) based on study outcomes. 46