program’s objectives are described, moving commercialization to the top of the list.7

The term “commercialization” means, “reaching the market,” which some agency managers interpret as “first sale”—that is the first sale of a product in the market place, whether to public or private sector clients. This definition, however misses significant components of commercialization that do not result in a discrete sale. It also fails to provide any guidance on how to evaluate the scale of commercialization, an important element in assessing the degree to which SBIR programs successfully encourage commercialization. The metrics for assessing commercialization can also be elusive. It’s not straightforward, for example, to calculate the full value of an “enabling technology” that can be used across industries. Also elusive is the value of materials that enable a commercial service.8

In light of the difficulties in measuring commercialization effectively, the Navy SBIR program manager has suggested that a firm’s success in securing Phase III funding from an agency be substituted for the current weight accorded commercialization in the Commercialization Achievement Index (CAI) measure used during the proposal selection competition (the CAI is discussed in more detail in Chapter 6). Given the earlier noted variations in the S&T needs, sizes, and institutional arrangements of the services and units, applying this performance measure consistently is not always self evident.

In fact, efforts to identify Phase III results may have been unduly limited. The initial 1982 SBIR legislation noted that Phase III is not time-bound and can come long after the end of the Phase II; Phase III can include private sector sales. The law indicates that commercialization “may also involve non-SBIR, government-funded production contracts with a federal agency….”9

Moreover, Phase III funding comes via a wide variety of mechanisms. Firms receive modifications to add Phase III federal R&D funding to Phase II SBIR contracts, they have won production contracts or R&D contracts competitively, sold to prime contractors, received additional private sector funding, and sold products commercially. All of these are Phase III activities in accordance with the legislation and with the SBA policy directive. Consequently, a narrow definition of Phase III, as a noncompetitively awarded further R&D or production


These changes are described by R. Archibald and D. Finifter in “Evaluation of the Department of Defense Small Business Innovation Research Program and the Fast Track Initiative: A Balanced Approach” in National Research Council, The Small Business Innovation Research Program: An Assessment of the Department of Defense Fast Track Initiative, Washington, DC: National Academy Press, 2000.


For a discussion of this and related methodological challenges, see, National Research Council, Assessment of the Small Business Innovation Research Program—Project Methodology, Washington, DC: The National Academies Press, 2004, accessed at <>.


U.S. Government Accounting Office, Federal Research: Small Business Innovation Research Shows Success but Can Be Strengthened, GAO/RCED-92-37, op. cit., p. 14.

The National Academies | 500 Fifth St. N.W. | Washington, D.C. 20001
Copyright © National Academy of Sciences. All rights reserved.
Terms of Use and Privacy Statement