decreasing order of program size: the Department of Defense (DoD), the National Institutes of Health (NIH), the National Aeronautics and Space Administration (NASA), the Department of Energy (DoE), and the National Science Foundation (NSF).

The NRC Committee assessing the SBIR program was not asked to consider if SBIR should exist or not—Congress has affirmatively decided this question on three occasions.3 Rather, the Committee was charged with providing assessment-based findings to improve public understanding of the program as well as recommendations to improve the program’s effectiveness.

1.2
SBIR PROGRAM STRUCTURE

Eleven federal agencies are currently required to set aside 2.5 percent of their extramural research and development budget exclusively for SBIR awards. Each year these agencies identify various R&D topics, representing scientific and technical problems requiring innovative solutions, for pursuit by small businesses under the SBIR program. These topics are bundled together into individual agency “solicitations”—publicly announced requests for SBIR proposals from interested small businesses. A small business can identify an appropriate topic it wants to pursue from these solicitations and, in response, propose a project for an SBIR award. The required format for submitting a proposal is different for each agency. Proposal selection also varies, though peer review of proposals on a competitive basis by experts in the field is typical. Each agency then selects the proposals that are found best to meet program selection criteria, and awards contracts or grants to the proposing small businesses.

As conceived in the 1982 Act, SBIR’s award-making process is structured in three phases at all agencies:

  • Phase I awards essentially fund feasibility studies in which award winners undertake a limited amount of research aimed at establishing an idea’s scientific and commercial promise. Today, the legislation anticipates Phase I awards as high as $100,000.4

  • Phase II awards are larger—typically about $750,000—and fund more extensive R&D to further develop the scientific and commercial promise of research ideas.

  • Phase III. During this phase, companies do not receive additional funding from the SBIR program. Instead, award recipients should be obtaining additional funds from a procurement program at the agency that made the

3

These are the 1982 Small Business Development Act, and the subsequent multi-year reauthorizations of the SBIR program in 1992 and 2000.

4

With the agreement of the Small Business Administration, which plays an oversight role for the program, this amount can be substantially higher in certain circumstances, e.g., drug development at NIH, and is often lower with smaller SBIR programs, e.g., EPA or the Department of Agriculture.



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