Congress requested that the National Research Council (NRC) of the National Academies conduct a “comprehensive study of how the SBIR program has stimulated technological innovation and used small businesses to meet federal research and development needs,” and make recommendations on improvements to the program.2 Mandated as a part of SBIR’s renewal in December 2000, the NRC study has assessed the SBIR program as administered at the five federal agencies that together make up 96 percent of SBIR program expenditures. The agencies are, in 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 SBIR program at DoD is the largest of all the SBIR programs. At $943 million in 2005, DoD accounts for over half the program’s funding.

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 an evidence based assessment of the program’s operations, achievements, and challenges 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 contracts. 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 and qualifying 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 grant, a process now immensely facilitated by the Internet. 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. Since the SBIR program’s inception at DoD, all SBIR awards have been contracts awarded on a competitive basis.

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

  • Phase I grants essentially fund feasibility studies in which award win-

2

See Public Law 106-554, Appendix I—H.R. 5667, Section 108.

3

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



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