The Small Business Innovation Research Program Challenges and Opportunities (1999) / Chapter Skim
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Panel IV: Program Challenges—Operational Views
Panel IV: Program Challenges—Operational Views
Pages 80-92
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From page 80... ...
Hill opened the session by recalling an exchange that took place at a congressional hearing in 1982, the year the SBIR program was created, between then-Sen. Warren Rudman (R-N.H.)
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From page 81... ...
Issues in SBIR's Reauthorization While stressing that SBA believes the SBIR program can be improved, he cautioned against the emphasis on legislative remedies that had been mentioned at the symposium to that point, saying that many of the issues raised can be addressed administratively under existing legislation, either agency by agency or across the board. He expressed his eagerness, as SBA Assistant Administrator for Technology, to hear the suggestions of meeting participants, and he promised to take them up with program managers at the participating agencies.
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From page 82... ...
Outreach to the underserved: This is a major issue in the SBIR program as it is in other programs run by SBA, which believes that parts of the small business community especially women and minorities have not traditionally been reached. The agency, Mr.
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From page 83... ...
Nelson, for ten years head of the SBIR program at the Ballistic Missile Defense Organization (BMDO) and its predecessor, the Strategic Defense Initiative Organization, called into question at the outset the notion that the government can create wealth by granting subsidies.
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From page 84... ...
Limiting the availability of funding to established SBIR winners would correct the current tendency of committees and agency technology heads to award a disproportionate amount of their available money to firms whose technologies
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From page 85... ...
"I would say that if, by the time you got to the third award, you did not have a large ratio of matching share or money of some sort," he recalled, "there was something wrong with your underlying assumptions about the marketability of your technology." The government's selection process was helping foster what he charged to be a "large measure of self-deception going on" within the SBIR program. Granting Phase I money to first-time applicantswhich he did in the case of almost any new bidder with an "innovative-sounding idea that at least the technical experts did not say violated the Second Law of Thermodynamics" and instituting schemes such as Fast Track that are designed to demonstrate private-sector interest in a technology are essential, in his opinion, "if you are going to get a wheel invented not reinvented." PARALLAX RESEARCH, INC.
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From page 86... ...
Using liquidated personal assets to operate Parallax, he achieved technical success in the ensuing months but was beginning to run out of money. At that point, his firm was saved by a Phase I SBIR award from BMDO, at the end of which it was able to build a prototype and to demonstrate that the technology "really worked." Commercialization and Phase II When the firm applied for a Phase II award, Dr.
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From page 87... ...
; the product it yielded was promptly commercialized and, having booked almost $60 million in revenues to date, went on to become the largest single success in the history of DoE's SBIR program. ATMI's next SBIR award, from the Environmental Protection Agency, also resulted in prompt commercialization; total sales of the product developed from that award are approaching $100 million, while the product line based on it had brought in $30 million in revenues in the first six weeks of 1998.
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From page 88... ...
ATMI has implemented a three-phase growth strategy, entering three niches: basic materials used in making semiconductors; environmental equipment used in managing those materials; and proprietary thinfilms, which it produces as a service business. ATMI's Technology The product developed from the research aided by the BMDO and NSF awards is designed to provide a safer and more environmentally benign alternative for storing and transporting toxic, corrosive, or otherwise hazardous gases used in the semiconductor industry, which are generally packaged in pressurized cylinders.
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From page 89... ...
In fact, the United States imports between 70 and 80 percent of its needs from Japan, which dominates the gallium arsenide substrate industry worldwide; because of the product's importance to electronics sectors downstream, large Japanese companies are willing to lose money year after year manufacturing gallium arsenide substrates. But while Sumitomo and Hitachi run what Mr.
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From page 90... ...
Young as a little more expensive and, as a material, a little faster than gallium arsenide technology but otherwise similar. Alluding to comments made earlier that if SBIR supports only winners, it is being too conservative in its awards, he added that AXT's 100 percent success rate for commercialization makes it a "bad example." The market for gallium arsenide substrates, used in such telecommunications products as cellular phones and fiber-optic laser diodes, took off in 1995 thanks to an explosion in the popularity of the former product.
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From page 91... ...
Pointing out that during the current economic recovery, smallbusiness has created 12 million new jobs while 2 million jobs have been lost by big business, he warned policymakers not to "put hurdles in front of the small business community." Furthermore, imposing matching requirements on SBIR awards would be unfair in light of the venture-capital industry's aversion to small deals and of the absence of a model whereby small firms can line up matching funds from other sources. Fewer than 3,000 companies annually receive investment money from the U.S.
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From page 92... ...
92 THE SMALL BUSINESS INNOVATION AND RESEARCH PROGRAM firms, and a large part of that was in-kind aid provided within their own companies in some way that would advance the technology's position in the marketplace. There was no contractual requirement regarding what had to be done by the SBIR winner's partner company; marketing, testing, and R&D were all acceptable.
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