An Assessment of the SBIR Program (2008) / Chapter Skim
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Based on that legislation, and after extensive consultations with both Congress and agency officials, the NRC focused its study on two overarching questions.1 First, how well do the agency SBIR programs meet four societal objectives of interest to Congress: (1) to stimulate technological innovation; (2)
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These were complemented by extensive interviews and discussions with program managers, program participants, agency ‘users' of the program, as well as program stakeholders. The study as a whole sought to understand operational challenges and measure program effectiveness, including the quality of the research projects being conducted under the SBIR program, the challenges and achievements in commercialization of the research, and the program's contribution to accomplishing agency missions.
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These data underscore the significant level of involvement by universities in the program and highlight the program's contribution to the transition of university research to the marketplace.6 Increasing private sector commercialization of innovations7 o o A Commercial Enabler for Small Firms: Small technology companies use SBIR awards to advance projects, develop firm-specific capabilities, and ultimately create and market new commercial products and services. Company creation: Just over 20 percent of companies responding to the NRC Phase II Recipient Survey indicated that they were founded entirely or partly because of a prospective SBIR award.8 The decision to initiate research: Companies responding to the same survey reported that over two-thirds of SBIR projects would not have taken place without SBIR funding.9 Providing alternative development paths: Companies often use SBIR to fund alternate development strategies, exploring technological options in parallel with other activities Reaching the market: Although the data vary by agency, respondents to the Committee's Phase II recipient survey indicate that just under half of the projects do reach the marketplace.10 Given quality of their research.
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o A Small Percentage of Projects Account for Most Successes. As with investments made in early stage companies by angel investors or venture capitalists, SBIR awards result in sales numbers that are highly skewed.11 A small percentage of projects will likely achieve large growth and significant sales revenues -- i.e., become commercial "home runs." Meanwhile many small successes together will continue to meet agency research needs and comprise a potentially important contribution to the nation's innovative capability.
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While support for women-owned businesses is increasing, support for minority-owned firms has not increased. For example, at DoD, which accounts for over half the SBIR program funding, the share of Phase II awards going to women-owned businesses increased from 8 14 The growing interest of Defense prime contractors is recorded in National Research Council, SBIR and the Phase III Challenge of Commercialization, Charles W
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for better data collection and analysis and opportunities for improvements in program operations in areas such as award size, cycle time, and outreach to minorities.22 • Retain program flexibility:23 o SBA and SBIR: The SBA has oversight responsibility for the eleven SBIR programs underway across the federal government. The agency is to be commended for its flexibility in exercising its oversight responsibilities, which allows the agencies to adapt the program to fit their needs and methods of operation.
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o Cycle Time: 30 The processing periods for awards vary substantially by agency, and appear to have significant effects on recipient companies.31 Agencies should closely monitor and report on cycle times for each element of the SBIR program: topic development and publication, solicitation, application review, contracting, Phase II application and selection, and Phase III contracting. Agencies should also specifically report on initiatives to shorten decision cycles.
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• Continue to focus on increased private-sector commercialization o Encourage continued experimentation.35 The agencies should be strongly encouraged to develop programs that seek to improve the commercialization outcomes of the SBIR program. Some agencies have sought, with the approval of SBA, to experiment with SBIR funding beyond Phase II in order to improve the commercialization potential of SBIR funded technologies.
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Additional funds might be allocated internally within the existing agency budgets, drawn from the existing set-aside for the program, or by modestly increasing the set-aside for the program, currently at 2.5 percent of external research budgets. o Optimize the return on investment: The key point is that a modest addition to funds for program management and evaluation are necessary to optimize the nation's return on the substantial annual investment in the SBIR program.
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In 2005, the 11 federal agencies administering the SBIR program disbursed over $1.85 billion dollars in innovation awards. Five agencies administer over 96 percent of the program's funds.
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