clear to the program’s early developers from the outset that if the research results of funded projects were to be widely used, the use would have to come through avenues other than the agency’s procurement channels.5 Believing as they did that requiring companies to give attention to marketplace commercialization need not compromise the quality of research, the program designers were free to emphasize marketplace commercialization as a way to increase the economic impact of the agency’s new initiative.6

In summary, the driving force for the NSF’s SBIR program was to channel funding for innovative research to small firms for the purpose of generating a broad economic payoff, as a departure from funding only academic research. The driving force for the “mission” agencies’ SBIR programs was both to rectify the large disparity in research capability of large versus small firms, stemming in part from past federal procurement practices, and to increase procurement options for the agencies. However, the resulting program parameters were closely similar: agency grants were to be made to small businesses for innovation, and commercialization—defined broadly to encompass sales into the marketplace, agency procurement, and subcontracts and sales to prime contractors—was to be encouraged.


Basic Demographics of NSF Support for Small Business

The NSF’s funding for universities dwarfs that to small businesses. Its support for small business is centered in its SBIR/STTR [Small Business Technology Transfer] programs within the Office of Industrial Innovation (OII), and the SBIR program is much larger than the STTR program. Therefore, the demographics of the SBIR program, as summarized in Section 4.2, provide the principal demographics of NSF support for small business. In recent years, the NSF’s SBIR program has provided close to 300 awards annually, totaling nearly $100 million to small firms.

NSF Small Business Research Funding as a Share of NSF R&D Spending

While the SBIR program directs R&D funding to small businesses, it remains a small percentage of the total budget of the NSF. The congressionally directed


In contrast, some agencies—particularly DoD and NASA—are customers for the results of some of their SBIR grants. In fact, from the outset, a funded project might clearly have a single customer—the funding agency—and there might be a strong symbiotic relationship between the grantor and the grantee.


Interview with Ritchie Coryell, NSF SBIR program dtaff, on October 23, 2003. (Note that Mr. Coryell has since retired.)

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