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An Assessment of the SBIR Program at the National Science Foundation
excellence while countering an institutional bias in favor of funding academic research. In contrast, the new multiagency SBIR program was focused on rectifying the large disparity in research capability of large versus small firms, stemming in part from federal procurement practices.
Federal procurement of research and development carries with it the “independent research and development and bid and proposal expense” (IR&D/B&P) that provides firms with funds that they can use for independent research. “The 100 or so major defense contractors accounted for an estimated 97 percent of all IR&D.”2 The IR&D/B&P funds had primarily assisted large defense contractors in doing research that might lead to additional government contracts and, in the process, lessened the relative competitiveness of smaller firms lacking these funds for research. The SBIR program was seen as providing a way for the major procurement agencies to increase the capability of small businesses to also conduct research that might lead to federal procurement. Increasing the research capabilities of small businesses was seen as a way to decrease barriers to their entry into the defense contracting world and thereby to increase competition among agency vendors. In contrast, it was seen as a way for the NSF to fund innovative research in small firms for the purpose of generating technology that increases national economic prosperity, one of the NSF’s mission goals.
6.2 NSF—A NONPROCURING AGENCY
The NSF is an independent federal agency created “to promote the progress of science; to advance the national health, prosperity, and welfare; [and] to secure the national defense….”3 It is an important funding source for basic research conducted by the nation’s colleges and universities. In a number of disciplines, such as mathematics, computer science, and the social sciences, it is the major source of federal funding. The agency carries out its mission largely by issuing grants to fund specific research proposals selected through meritorious peer review. “NSF’s goal is to support the people, ideas and tools that together make discovery possible.”4
The NSF’s SBIR program follows the lead of the agency, emphasizing discovery and innovation that are put forward through a bottom-up process. Though the program defines topics, it defines them in ways that leave room for individual firms to decide what approach they will take. Its emphasis is on stimulating small firms to innovate, not on procuring goods and services that the agency needs.
The program encourages commercialization through the marketplace rather than through procurement channels. Unlike the defense agencies, the NSF would seldom be a customer for the results of its funded research. It was reportedly