After releasing a report highlighting the vulnerability of critical technology to espionage by the Chinese Communist Party, Senate Small Business and Entrepreneurship Committee Chair Joni Ernst (R-Iowa) emphasized the need for Congress to pass her INNOVATE Act. This legislation aims to protect and advance American innovation.
Ernst explained that her bill seeks to reauthorize the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. The goal is to cut red tape, ensure funding reaches small businesses and startups, and strengthen protections against China's attempts to steal taxpayer-funded intellectual property.
In her remarks, Ernst stated: "Today’s hearing comes at a pivotal moment." She noted America's historical leadership in technological innovation but warned against complacency as adversaries like China work to undermine this position. Ernst highlighted that over the past 20 years, Washington has overlooked China's industrial espionage strategy aimed at eliminating U.S. technological leadership.
Ernst stressed the importance of securing America's innovation pipeline: "The truth is, America has left its door wide open." She cited estimates from the United States Trade Representative and FBI that intellectual property theft by China costs the U.S. economy between $225-600 billion annually.
The SBIR and STTR programs have not been immune to exploitation. In 2021, concerns were raised about foreign actors exploiting these programs, leading to recommendations for due diligence reviews on applicants' foreign ties.
Through previous legislation, Ernst worked on establishing a framework for identifying foreign risks within these programs. However, she insists more action is needed: "In fact, my recent report on this subject showed that 64 percent of applications flagged for foreign risk were still eligible to receive taxpayer dollars."
The INNOVATE Act would standardize foreign ties due diligence across agencies involved in SBIR and empower them to reclaim award funds when national security is threatened. Ernst concluded by expressing anticipation for insights from expert witnesses on addressing these threats.
