5545-S

AN ACT Relating to economic development; adding new sections to chapter 43.330 RCW; and creating a new section.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. (1) The legislature finds that it is in the interest of the state to increase participation by Washington state small businesses in the federal small business innovative research program and to assist small businesses in the state in becoming small business innovative research program grant recipients. Small technology-based firms are the source of approximately one-half of our nation's major innovations.

(2) The legislature further finds that many innovators lack the grant-writing skills necessary to prepare a successful proposal and could benefit from the assistance of others in the state with grant-writing experience.

(3) The legislature further finds that the gap between the completion of the initial phase I contract and the award of the phase II contract after the agency has evaluated the phase I work creates cash flow and staffing problems for small businesses, especially new businesses. Continuous funding would create a more stable environment for small businesses involved in the program, and may attract small businesses that are currently discouraged from participating by the disruption the funding gap causes.

NEW SECTION. Sec. 2. A new section is added to chapter 43.330 RCW to read as follows:

(1) As used in this section, the following terms shall have the following meanings:

(a) "Small business innovation research program" means the program, enacted pursuant to the small business innovation development act of 1982, P.L. 97-219, that provided funds to small businesses to conduct innovative research having commercial application.

(b) "Small business" means a corporation, partnership, sole proprietorship, or individual, operating a business for profit, with two hundred fifty employees or less, including employees employed in a subsidiary or affiliated corporation that otherwise meets the requirements of the federal small business innovation research program.

(2) The department shall establish a small business innovation research assistance program to assist Washington small businesses to win phase I small business innovation research program awards.

(a) Each phase I application shall be reviewed by a previous small business innovation research program participant or by a two-member team composed of either two previous small business innovation research program participants or an experienced grant writer and a previous small business innovation research program participant.

(b) Each reviewer or team participant shall be retained by the department at a rate of no more than one thousand dollars per proposal.

(c) In implementing this program, the department shall give priority to first-time small business innovation research program applicants, new businesses, and firms with fewer than ten employees.

(d) The department may charge a modest initial fee for this service and an additional market rate fee that is contingent upon the small business's receipt of a phase I award.

(3)(a) The department shall establish a competitive grant program to assist small businesses participating in the federal small business innovation research program in continuing innovative research that has potential commercial application. Grants shall be awarded to those small businesses: (i) Whose technology shows the greatest potential to lead to commercialization or fabrication within the state or to improved products or processes; and (ii) which demonstrate need.

(b) For the purposes of this subsection (3), a small business must meet the following requirements to be eligible for grant money:

(i) The small business's principal place of business shall be located in this state;

(ii) The small business certifies that the research to be conducted shall be located in this state;

(iii) The small business has completed its small business innovation research program phase I research;

(iv) The small business's final phase I report with respect thereto has been accepted by the federal agency involved;

(v) The small business's phase II research proposal has been properly submitted to the federal agency involved;

(vi) The small business has submitted copies of its final phase I report and phase II proposal to the agency;

(vii) The small business has demonstrated, to the satisfaction of the director, that it has available financial resources to continue its research in an amount equal to the grant amount; and

(viii) The small business has entered into a contract with the department which obligates the small business to, upon commercialization of the product, process, or service that is the basis for the state's grant, continue to locate its principal place of business in the state, and return to the department a share, not to exceed the size of the grant award, of any license, patent, copyright, or royalty income that results from the research. The contract shall also provide that the department may require the return of the grant dollars with interest if the small business fails to meet the terms of the contract.

(4) Grants awarded under subsection (3) of this section shall be no greater than twenty-five thousand dollars.

(5) Consistent with federal small business innovation research program procedures, proprietary information submitted to the department under subsection (3) of this section shall not be subject to disclosure under the public disclosure act.

NEW SECTION. Sec. 3. A new section is added to chapter 43.330 RCW to read as follows:

The department shall adopt rules necessary to implement section 2 of this act.