Nine House Republicans voted against a bill on Thursday aimed at requiring federal agencies to vet companies seeking funds through small business programs that are exploited by foreign countries of concern, including China.
The legislation, titled the SBIR and STTR Extension Act, passed in a 415-9 vote. All “no” votes came from Republicans — Reps. Andy Biggs (Ariz.), Dan Bishop (N.C.), Mo Brooks (Ala.), Matt Gaetz (Fla.), Marjorie Taylor Greene (Ga.), Thomas Massie (Ky.), Tom McClintock (Calif.), Ralph Norman (S.C.) and Chip Roy (Texas) opposed the measure.
The bill, which passed the Senate by unanimous consent last week and has bipartisan sponsorship, now heads to President Biden’s desk for his signature.
Asked why he voted against the legislation, Gaetz pointed to funding that the Small Business Association has received in the past two years.
“Over the past two years, the SBA has been appropriated over $1 Trillion. As the Biden administration cripples every facet of our economy, authorizing millions more for SBA is not an essential funding priority,” he told The Hill in a statement.
McClintock told The Hill in a statement on Friday that he voted against the bill because he is “highly skeptical” of pilot programs that receive automatic extensions, and believes that the “financial entanglement” of businesses and government is unhealthy.
The measure reauthorizes six pilot programs.
“I am highly skeptical of pilot programs that are automatically extended without proving their worth, and taxpayer grants to businesses where private investors are unwilling to risk their own capital. Finally, the increasing financial entanglement between businesses and government is unhealthy in a free society and is a breeding ground for corruption, political favoritism and misallocation of resources,” McClintock said.
“For all these reasons, I am a no vote.”
The nine Republicans who opposed the measure did not speak during debate on the bill on the House floor Wednesday. The Hill reached out to the lawmakers for comment on their votes.
The measure directs federal agencies with Small Business Innovation Research (SBIR) or Small Business Technology Transfer (STTR) programs to create a “due diligence program” that would evaluate potential security risks presented by small businesses seeking federal funds.
The due diligence programs would then be mandated to review the financial ties and obligations between the small business requesting federal funds and foreign countries, people or entities. Additionally, the measure calls for the evaluation of the small businesses’ cybersecurity practices, patent analysis, employee analysis and foreign ownerships.
“Agencies shall not make an award if they determine existence of improper business ties to or affiliations with foreign countries of concern, or if agency-supported activities, or national security are deemed to be at risk,” a section-by-section breakdown of the 46-page bill reads.
According to the bill, “foreign country of concern” includes the People’s Republic of China, the Democratic People’s Republic of Korea, the Russian Federation, the Islamic Republic of Iran and other countries determined to be of concern by the secretary of state.
The SBIR and STTR are competitive programs that advocate for small businesses in the U.S. to take part in federal research and research and development, with the possibility of commercializing.
Federal agencies with extramural research and development budgets that surpass a certain level are required to distribute a portion of their funds through the SBIR program and save another chunk for the STTR program.
Even federal agencies currently take part in the SBIR program, according to its website, five of which are also involved with the STTR program.
The legislation sets additional parameters for awarding funds through the SBIR and STTR programs — including barring small businesses that made material application misstatements — and it reauthorizes the two programs in addition to six pilot programs.
They were initially set to expire on Friday, but under the bill will be extended through Sept. 30, 2025.
Passage of the bill comes after a review by the Department of Defense found that China was exploiting the SBIR program. The Wall Street Journal, which reviewed the April 2021 study, reported in May that China was targeting companies that were given funds through the SBIR program with state-sponsored practices.
Sen. Joni Ernst (R-Iowa), a co-sponsor of the bill, referenced The Wall Street Journal article in a statement outlining the legislation.
Updated Friday at 4:37 p.m.