persons in technological innovation; and (4) to increase private sector commercialization derived from federal research and development.”2

A distinguishing feature of SBIR is that it embraces the multiple goals listed above, while maintaining an administrative flexibility that allows very different federal agencies to use the program to address their unique mission needs.

SBIR legislation currently requires federal agencies with extramural R&D budgets in excess of $100 million to set aside 2.5 percent of their extramural R&D funds for SBIR. In 2005, the 11 federal agencies administering the SBIR program disbursed over $1.85 billion dollars in innovation awards. Five agencies administer over 96 percent of the program’s funds. They are the Department of Defense (DoD), the Department of Health and Human Services (particularly the National Institutes of Health [NIH]), the Department of Energy (DoE), the National Aeronautics and Space Administration (NASA), and the National Science Foundation (NSF). (See Figure 1-1.)

As the Small Business Innovation Research (SBIR) program approached its twentieth year of operation, the U.S. Congress asked the National Research Council (NRC) to carry out 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.3 The NRC’s charge is, thus, to assess the operation of the SBIR program and recommend how it can be improved.4

This report provides an overview of the NRC assessment. It is a complement to a set of five separate reports that describe and assess the SBIR programs at the Departments of Defense and Energy, the National Institutes of Health, the National Aeronautics and Space Administration, and the National Science Foundation.

The purpose of this introduction is to set out the broader context of the SBIR program. Section 1.1 provides an overview of the program’s history and legislative reauthorizations. It also contrasts the common structure of the SBIR program with the diverse ways it is administered across the federal government. Section 1.2 describes the important role played by SBIR in the nation’s innovation system, explaining that SBIR has no public or private sector substitute. Section 1.3 then lists the advantages and limitations of the SBIR concept, including benefits and challenges faced by entrepreneurs and agency officials. Section 1.4 summarizes some of the main challenges of the NRC study and opportunities for


The Small Business Innovation Development Act (PL 97-219).


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


At the conference launching the NRC assessment, James Turner, Counsel to the House Science Committee, noted that the study is not expected to question whether the program should exist. “We’re 20 years into the SBIR now,” he said. “It is a proven entity; it’s going to be with us.” He suggested that the appropriate goals for the study would be to look ahead and craft a series of sound suggestions on how to improve the program and to give good advice to Congress on what legislative changes, if any, are necessary. See National Research Council, SBIR: Program Diversity and Assessment Challenges, Charles W. Wessner, ed., Washington, DC: The National Academies Press, 2004.

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