EXCLUSIVE: Sens. Rand Paul, Ben Cardin Demand Oversight Of Small Business Grant Program

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Michael Ginsberg Congressional Correspondent
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Democratic Maryland Sen. Ben Cardin and Republican Kentucky Sen. Rand Paul are urging eleven federal agencies to ensure that small business research and development (R&D) grants are not abused by beneficiaries or hostile actors.

Cardin and Paul, the chairman and ranking member of the Senate Small Business Committee, negotiated amendments to the SBIR and STTR Extension Act of 2022, which appropriates billions of dollars to small businesses working on projects that impact national security. The legislation takes aim at so-called “SBIR mills,” which received more than 20% of funds authorized under the program between 2009-2019, according to the State Science & Technology Institute. The program extension also requires federal agencies to “establish and implement a due diligence program to assess security risks presented by small business concerns seeking a federally funded award” to respond to the problem of mills.

“The intent of Congress is for these new provisions to be implemented expeditiously. Strategic competitors are utilizing a variety of methods both legal and illegal to acquire technology and research from the United States. Maintaining U.S. leadership in emerging technology sectors and protecting taxpayers’ investments depends on effective research security,” the two senators wrote to the eleven agencies on Thursday, in letters obtained exclusively by the Daily Caller.

Read the letter to the Department of Defense here:

Sbir Briefing Dod by Michael Ginsberg

Members of Congress from both parties have repeatedly expressed concern that American taxpayer dollars could be funding companies with connections to hostile foreign governments, particularly China. To combat foreign access to the program, the Department of Defense, the Department of Energy, the Department of Health and Human Services, and the National Science Foundation are required to submit reports to Congress about attempted influence.

Cardin and Paul are also requesting briefings from the heads of the eleven disbursing agencies by Oct. 30 so that they can provide information about attempts to influence the program. (RELATED: Top Harvard Professor Found Guilty Of Lying About Payments From China)

China has repeatedly attempted to influence program participants, according to a DOD report obtained by the Wall Street Journal. The DOD report reviews eight examples of the geopolitical foe targeting companies that received SBIR funding, according to WSJ. In one instance, a green energy company transferred its research, development and intellectual property to a Chinese subsidiary before dissolving entirely, the report says.

Congressional Republicans have repeatedly attempted to block the National Institutes of Health, the National Science Foundation, the Department of Defense, and other federal agencies from steering federal grants to Chinese entities. Some GOP officials have argued that federal programs do not contain enough safeguards to prevent the Chinese government from influencing them, even when those programs are ostensibly designed to combat the country.

The Uyghur Forced Labor Prevention Act, passed with broad bipartisan support, prohibits U.S. companies from importing products from Xinjiang, where the Chinese government is carrying out a genocide of the Uyghur ethnic minority. However, the bill does not limit economic activity outside the region.