House to pass changes to small business programs exploited by China, Russia

The House of Representatives is expected to pass a bill soon that would require small business plans to conduct background checks on companies seeking support with ties to foreign countries deemed a national security risk.

Why it matters: These changes aim to further Block Chinese and Russian shell companies from accessing national security-related technology, and follow a Department of Defense review that found China was using these programs to steal U.S.-developed technology.

detail: 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 passed the bill unanimously — a rarity in a divided 50-50 chamber. The measure was led by Sen. Senator, chairman of the Small Business Committee. Ben Cardin (D-Md.) and top Republican Joni Ernst (R-Iowa).
  • The changes include requiring agencies governing SBIR and STTR to establish due diligence and oversight programs for businesses with “nefarious ties” to countries such as China, Russia, Iran, Syria and North Korea.

What are they talking about: “China, not the US, is the ultimate beneficiary of the Defense Department and others [U.S.] Research investment,” Ernst said in a statement to Axios.

background: Ernst, who could head the Senate Small Business Committee next year if Republicans retake the Senate, initially tried to include the measure in the Senate’s China Competition Act — but was eventually scrapped after streamlining the package.

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