The department learned, through trial and error, what they believe is the most effective way to ask awardees about Phase III. The key, they found, was to avoid asking about individual projects. A project-by-project approach was tempting because: (1) the agencies award and track individual projects, and (2) the GAO, in its earlier studies of SBIR, also used this approach. However, the project-by-project approach yielded inaccurate results because small businesses do not track their success in this way.

Small companies tend to track their success based on the products or services derived from SBIR projects. Therefore, DoE learned to ask companies to: (1) first, list all products and services that were derived from their DoE SBIR projects; (2) report on both sales and/or Phase III investment (including post-SBIR funding for further development) related to those products and services; and (3) then identify which Phase II projects contributed to the development of the products and services.

DoE SBIR office asks their Phase II awardees to report on two types of revenues: (1) sales, and (2) follow-on investment. Both categories are further broken down into federal and nonfederal sources of revenue. The second category, follow-on investment, could include funding for activities that are directly related to commercialization (marketing, setting up a production facility, etc.) or funding for further development of the technology. DoE considers all of these categories to be examples of “Phase III” funding.

Of the 787 companies that received 1,731 Phase II awards through 2002, 609 responded to DoE Phase II survey. Their responses are detailed in Table 8-2.