PUBLIC LAW 102-564—OCT. 28, 1992 106 STAT. 4251 "(B) a second phase, to further develop proposals which meet particular program needs, in which awards shall be made based on the scientific and technical merit and feasibility of the proposals, as evidenced by the first phase, considering, among other things, the proposal's commercial potential, as evidenced by— "(i) the small business concern's record of successfully commercializing SBIR or other research; "(ii) the existence of second phase funding commitments from private sector or non-SBIR funding sources; "(iii) the existence of third phase, follow-on commitments for the subject of the research; and "(iv) the presence of other indicators of the commercial potential of the idea; and "(C) where appropriate, a third phase— "(i) in which commercial applications of SBIR- funded research or research and development are funded by non-Federal sources of capital or, for products or services intended for use by the Federal Government, by follow-on non-SBIR Federal funding awards; and "(ii) for which awards from non-SBIR Federal funding sources are used for the continuation of research or research and development that has been competitively selected using peer review or scientific review criteria; and", (b) REQUIRED EXPENDITURES FOR SBIR BY FEDERAL AGEN- CIES. —Section 9(f) of the Small Business Act (15 U.S.C. 638(f)) is amended to read as follows: "(f) FEDERAL AGENCY EXPENDITURES FOR THE SBIR PROGRAM.— "(1) REQUIRED EXPENDITURE AMOUNTS. —Each Federal agency which has an extramural budget for research or research and development in excess of $100,000,000 for fiscal year 1992, or any fiscal year thereafter, shall expend with small business concerns— "(A) not less than 1.5 percent of such budget in each of fiscal years 1993 and 1994; "(B) not less thgin 2.0 percent of such budget in each of fiscal years 1995 and 1996; and "(C) not less than 2.5 percent of such budget in each fiscal year thereafter, specifically in connection with SBIR programs which meet the requirements of this section, policy directives, and regulations issued under this section. "(2) LIMITATIONS.— A Federal agency shall not— "(A) use any of its SBIR budget established pursuant to paragraph (1) for the purpose of funding administrative costs of the program, including costs associated with salaries and expenses; or "(B) make available for the purpose of meeting the requirements of paragraph (1) an amount of its extramural budget for basic research which exceeds the percentages specified in paragraph (1). "(3) EXCLUSION OF CERTAIN FUNDING AGREEMENTS.— Funding agreements with small business concerns for research or research and development which result from competitive or single source selections other than an SBIR program shall
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