SB3284

SECTION 1. The legislature finds that the Hawaii technology development corporation serves as a facilitative catalyst for technology and innovation in the State and will align the State with emerging technologies, including computer software, biotechnology, ocean science, energy, nanotechnology, artificial intelligence, sensor and communication systems, health, medical devices, medical tests or other health care technologies, and aerospace and defense.

The legislature further finds that, according to the National Academies of Sciences, Engineering, and Medicine's 2026 review of the Department of Defense Small Business Innovation Research and Small Business Technology Transfer programs:

(1) States underserved by venture capital markets, such as Hawaii, benefit disproportionately from the programs in building their own innovation ecosystems;

(2) For every dollar invested in the programs, participating firms attract more than four dollars in additional federal research and development funding;

(3) The programs serve as gateways for small firms to enter the defense innovation ecosystem and defense industrial base;

(4) Firms receiving five or more Small Business Innovation Research and Small Business Technology Transfer program awards demonstrate higher rates of patent generation, follow-on financing, and successful technology transition; and

(5) Firms receiving state matching support are more likely to secure follow-on federal contracts, generate intellectual property, and contribute to national security capabilities.

The legislature additionally finds that the State's unique strategic position in the Indo-Pacific, combined with federal facilities including military bases and research institutions, creates exceptional opportunities for Hawaii-based companies to support critical defense and dual-use technology development.

The legislature also finds that the federal government's rigorous Small Business Innovation Research and Small Business Technology Transfer review process provides sufficient technical and business merit evaluation, and requiring an additional state-level review would create an unnecessary administrative burden and delay time-sensitive technology development.

The legislature believes that a permanent state Small Business Innovation Research and Small Business Technology Transfer matching program with streamlined approval will enable the State to leverage federal investments, build a sustainable innovation ecosystem, and contribute to both economic diversification and national security priorities.

Accordingly, the purpose of this Act is to:

(1) Establish the Hawaii small business innovation research matching program within the Hawaii technology development corporation to provide matching grants to Hawaii-based companies that have received federal Small Business Innovation Research or Small Business Technology Transfer program awards;

(2) Establish the science, technology, engineering, and mathematics education outreach program within the Hawaii technology development corporation to be administered in collaboration with the department of education, to require participants in the Hawaii small business innovation research matching program to deliver presentations to public school students in the State; and

(3) Require the development corporation to submit annual reports to the legislature.

SECTION 2. Chapter 206M, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:

"§206M-A Hawaii small business innovation research matching program; established. (a) There is established the Hawaii small business innovation research matching program within the development corporation to provide matching grants to Hawaii-based companies that have received federal Small Business Innovation Research or Small Business Technology Transfer awards.

(b) Any company with a principal place of business in the State that has received a federal phase I or phase II award from the Small Business Innovation Research or Small Business Technology Transfer programs from any federal agency shall be eligible for state matching funds without additional state technical or business review. The Hawaii small business innovation research matching program shall be open to companies that are first-time participants to the Small Business Innovation Research or Small Business Technology Transfer programs and companies that have previously received funding from the Small Business Innovation Research or Small Business Technology Transfer programs.

Receipt of a federal Small Business Innovation Research or Small Business Technology Transfer program award shall constitute sufficient evidence of technical and business merit.

(c) The Hawaii small business innovation research matching program shall match funds equal to fifty per cent of the federal Small Business Innovation Research or Small Business Technology Transfer program award amount.

(d) Companies seeking to participate in the Hawaii small business innovation research matching program shall submit an application to the development corporation within ninety days of receiving the Small Business Innovation Research or Small Business Technology Transfer program award notification. The application shall include:

(1) A copy of federal award notice;

(2) Documentation of the company's principal place of business in the State;

(3) A brief description of how state matching funds will be used to advance the project; and

(4) An acknowledgement of the Hawaii small business innovation research matching program's reporting requirements.

(e) The development corporation shall approve or deny applications within thirty days of receipt. Applications meeting the requirements of subsection (b) shall be automatically approved unless insufficient funds remain.

(f) The development corporation shall establish an annual application period for matching fund requests. If applications for matching funds exceed available funding, the corporation shall distribute funds as follows:

(1) All eligible applications received within the application period shall be considered together; and

(2) If the total requested matching funds exceed available funds, the development corporation shall distribute the available funds on a pro-rata basis to all eligible applicants, calculated proportionally based on each applicant's requested matching amount relative to the total requested matching funds.

Any unallocated funds remaining at the end of each fiscal year shall carry forward to the next fiscal year, subject to any applicable appropriations law.

(g) The development corporation shall submit an annual report to the legislature no later than twenty days prior to the convening of each regular session containing:

(1) The total state matching funds provided under the Hawaii small business innovation research matching program and the total federal Small Business Innovation Research or Small Business Technology Transfer program awards leveraged;

(2) The number of applications received, approved, and denied, including reasons for denial;

(3) The average time each approved application took for approval;

(4) The distribution of awards by company;

(5) Any instances where insufficient funds required equitable distribution measures pursuant to subsection (f);

(6) Any follow-on federal research and development contracts and procurement awards received by a company that received matching funding under the Hawaii small business innovation research matching program;

(7) The number of phase I to phase II Small Business Innovation Research or Small Business Technology Transfer programs award transitions;

(8) The number of patents filed and awarded by companies received matching funding under the Hawaii small business innovation research matching program;

(9) Any private sector investment attracted due to the program;

(10) The number of jobs created and retained in the State as a result of the program, including the annual salary ranges reported in the following ranges:

(A) Under $50,000;

(B) $50,000 to $79,999;

(D) $100,000 to $124,999;

(E) $125,000 to $149,999;

(F) $150,000 to 199,999; and

(G) $200,000 or more;

(11) Any technologies transitioned into defense or commercial use;

(12) Any partnerships established with defense prime contractors and federal facilities;

(13) The geographic distribution of supported companies across the State's counties;

(14) The total payroll dollars generated by companies supported by the Hawaii small business innovation research matching program;

(15) Participating company revenue growth, including total annual revenues and percentage change from the prior year;

(16) The number of science, technology, education, and mathematics education presentations delivered to public school students in the State under the science, technology, engineering, and mathematics outreach program established under section 206M-B;

(17) The technology sector and industry classifications of supported companies; and

(18) The return on investment ratio, calculated as total federal funding secured per state dollar invested.

§206M-B Science, technology, engineering, and mathematics outreach program; established. There is established within the development corporation the science, technology, engineering, and mathematics outreach program to promote science, technology, engineering, and mathematics education and career awareness in the State. The development corporation shall collaborate with the department of education to administer the program. Under the program:

(1) Each company receiving matching funds from the Hawaii small business innovation research matching program established under section 206M-A shall deliver a minimum of two presentations to public school students in the State within one year of receiving the matching funds. The presentations shall:

(A) Showcase innovation and technology development occurring in the State;

(B) Describe career pathways in science and technology fields; and

(2) The development corporation shall coordinate with the department of education to schedule the presentations required pursuant to paragraph (1) and identify appropriate grade levels and schools, with priority being given to schools in underserved communities."

SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2026-2027 to support the economic diversification of, and the development of a defense innovation ecosystem in the State, to be allocated as follows:

(1) $ for the Hawaii small business innovation research matching program established by section 2 of this Act;

(2) $ for the manufacturing development program established by section 206M-15.1, Hawaii Revised Statutes, to help Hawaii-based manufacturers become globally competitive and support the scale-up and transition of Small Business Innovation Research or Small Business Technology Transfer program-developed technologies into production; and

(3) $ for commercialization and technology transition support, including:

(A) Accelerator and small business training programs to help develop companies that are solving large-scale problems in the community using innovative, advanced manufacturing, and technology-based solutions;

(B) Support for intellectual property protection, market research, and business development activities identified by the National Academies of Science, Engineering, and Medicine as critical success factors for Small Business Innovation Research or Small Business Technology Transfer program commercialization;

(C) Facilitation of partnerships between the Small Business Innovation Research or Small Business Technology Transfer companies in the State and defense prime contractors, acquisition program offices, and research institutions to support technology transition; and

(D) Assistance in navigating federal procurement processes and transitioning technologies into programs of record.

The sum appropriated shall be expended by the Hawaii technology development corporation for the purposes of this Act.

SECTION 4. In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 5. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 2026.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	3284
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII