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IV

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The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE IV PAPERS

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The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE This page in the original is blank.

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The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE Fast Track: Is It Speeding Commercialization of the Department of Defense Small Business Innovation Research Projects? Peter Cahill BRTRC, Inc. EXECUTIVE SUMMARY Objective This paper compares the commercialization potential and performance outcomes to date of research funded by the Department of Defense (DoD) Small Business Innovation Research (SBIR) program under standard program procedures and under Fast Track. It describes the operation of the SBIR program within DoD and discusses prior studies of SBIR commercialization. It further describes the methodology for establishing study and control group samples for the case studies and for surveys of both the contractors and government technical monitors of SBIR projects. Methodology A total of 379 projects were selected from among those that received Phase II awards during 1992–1996 for surveys of contractors and government technical monitors. The contractor questionnaire was derived from the one that the U.S. General Accounting Office (GAO) used in the 1991 seminal study of SBIR commercialization. The sample consisted of all 48 Fast Track winners in 1996, a control group representative of the 1996 DoD SBIR population (61 projects), 127 Ballistic Missile Defense Office (BMDO) co-investment projects awarded from 1992 to 1996, and a BMDO control group representative of the 1992–1996 DoD SBIR population (143 projects).

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The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE Results Key findings of the contractor survey (70 percent responding) were: Sixty-one percent of Fast Track winners (compared to 32 percent of all other winners) had no prior Phase II awards. At time of application, Fast Track firms were, on average, five years younger (median founding year 1994) and smaller in annual revenue than firms in the other groups. The Fast Track funding gap between Phase I and Phase II was half that of control group. Five times as many control group projects had to stop work because of the gap. The average additional developmental funding received by Fast Track projects ($1,193,000) is almost five times that of the control group and double that of the more mature BMDO Co-investment and BMDO Control projects. Twenty percent of Fast Track firms have received venture capital compared to 3 percent of all SBIR firms. Although only 14 percent of Fast Track projects have completed Phase II, their average sales are already over $100,000. At $8,950,000, the average sales that Fast Track projects expect to achieve by the end of 2001 is over six times greater than expected by the 96 Control group and more than double that expected by the other two groups. Five times as many Fast Track firms have sold or are negotiating sale of partial ownership. (Such sales, probably linked to obtaining third-party funding, are viewed negatively by some SBIR participants and positively by others.) Conclusions Whether it is the validation by a third party to the commercial potential, the timing and magnitude of the additional funding, or merely the reduction in funding gap that contributes most to Fast Track, the program is working. By each primary measurement of commercialization success used in past SBIR studies (sales, additional developmental funding, and expected sales), Fast Track projects are clearly outperforming those in the control group.

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The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE INTRODUCTION This paper documents a portion of the overall National Research Council evaluation of the Department of Defense (DoD) Small Business Innovation Research (SBIR) program and the Fast Track Initiative. It describes the operation of the SBIR program within DoD and discusses prior studies of SBIR commercialization. It further discusses the survey effort used to examine the program and the sampling methodology used to target the surveys of contractors. The samples used for the contractor survey provided the basis for the survey of government technical monitors of SBIR projects and the case studies, which were conducted by other members of the research team. The contractor surveys indicate that Fast Track is working. It is selecting projects that should succeed in commercialization and it is apparently contributing to their success. SBIR PROGRAM WITHIN DoD Background Congress established the SBIR Program in 1982 to strengthen the research and development (R&D) role of small innovative companies. Ten federal agencies participate in the program in proportion to the size of their external R&D budget. As the agency with the largest R&D budget, DoD provides over half of the total federal SBIR funding. SBIR has become the primary vehicle through which DoD funds R&D projects at small technology companies. With funding of over a half billion dollars in 1998, the program offers DoD a unique opportunity to harness the talents of small technology companies —which studies show to be a potent source of innovation—for the benefit of DoD and the U.S. economy. SBIR legislation describes three phases for SBIR projects. Phases I and II, funded by the SBIR Program, develop the innovative idea. Phase III involves follow-on non-SBIR government contracts for government application or use of nonfederal funds for commercial application of a technology. Commercial sales are a principal focus of Phase III. Goals and Administration The program is authorized by the Small Business Innovation Research Program Reauthorization Act of 1992. In the accompanying House Report, Congress noted that programs that effectively stimulate innovation and accelerate technological advance were key to national economic growth. The report stressed the concentration of scientific and technical talent in small companies and the ability of small businesses to transform R&D results into new products. The legislation addressed the congressional concern that although small businesses were the most productive source of significant innovation in the nation, their share of federally funded R&D was not commensurate with their abilities.

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The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE In authorizing the SBIR program, Congress designated four major goals: to stimulate technological innovation, to use small business to meet federal R&D needs, to foster and encourage participation by minority and disadvantaged persons in technological innovation, to increase private-sector commercialization of innovations derived from federal R&D. In addition to establishing goals, the legislation determined agency participation and funding for the program. Agencies spending more than $100 million annually for external R&D were required to set aside a percentage of their total R&D funds for SBIR. This proportion has grown from 1.25 percent during 1987-1992 to 1.5 percent in 1993 and 1994 to 2.0 percent in 1995 and 1996. Since 1997, not less than 2.5 percent of external R&D funds have been set aside for SBIR. Each agency with an SBIR program is unilaterally responsible for targeting research areas and administering its own SBIR funding agreements. SBIR funding agreements include any contract, grant, or cooperative agreement entered into between a federal agency and any small business for the performance of experimental, developmental, or research work funded in whole or in part by the federal government. As indicated in the preceding section, DoD is by far the largest of the federal agencies participating in SBIR. The Office of Small and Disadvantaged Business Utilization in the Office of the Secretary of Defense coordinates these efforts, providing oversight and setting policy in coordination with the Director of Defense Research and Engineering (DDR&E). DoD decentralizes most of the administration of the SBIR program to the three Services, four agencies, and one staff element with R&D budgets meeting the legislated requirements: Army, Navy, Air Force, the Defense Advanced Research Projects Agency (DARPA), the Ballistic Missile Defense Office (BMDO), the Defense Special Weapons Agency (DSWA), the U.S. Special Operations Command (USSOCOM), and DDR&E. The Air Force SBIR program is larger than all of the SBIR programs at the other nine federal agencies, and the Army, Navy, DARPA, and BMDO programs each exceed the size of the programs at seven of the nine other federal agencies. Thus, how well DoD meets the goals of the SBIR program has a major impact on how well the overall program meets its goals. The legislation requires agencies to issue a solicitation that sets the SBIR process in motion. The solicitation, a formal document issued by each agency, lists and describes the topics to be addressed and invites small businesses to submit proposals for consideration. Twice a year, DoD issues a combined research solicitation for its eight component programs, indicating each program's R&D needs and interests and invit-

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The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE ing R&D proposals from small companies. Companies apply first for a six-month Phase I award of up to $100,000 to test the scientific, technical, and commercial merit and feasibility of a particular concept. If Phase I proves successful, the company may be invited to apply for a two-year Phase II award of up to $750,000 to further develop the concept, usually to the prototype stage. Proposals are judged competitively on the basis of scientific, technical, and commercial merit. Following completion of Phase II, small companies are expected to obtain Phase III funding from the private-sector or non-SBIR military customers to develop the concept into a product for sale in military and/or private-sector markets. The law requires the Small Business Administration (SBA) to issue policy directives for the general conduct of the SBIR programs within the federal government. These policy directives include elements such as simplified, standardized, and timely SBIR solicitations; a simplified, standardized funding process; and minimization of the regulatory burden for small businesses participating in the program. The most recent policy directive was issued in January 1993. Federal agencies are required to report key data to SBA, which in turn publishes annual reports on the progress of the program. According to SBA’s SBIR program policy directive, to be eligible for an SBIR award, a small business must be independently owned and operated, other than the dominant firms in the field in which it is proposing to carry out SBIR projects, organized and operated for profit, the employer of 500 or fewer employees (including employees of subsidiaries and affiliates), the primary source of employment for the project’s principal investigator at the time of award and during the period when the research is conducted, and at least 51 percent owned by U.S. citizens or lawfully admitted permanent resident aliens. Program Administration Within DoD Commercialization success depends on many factors, some of which are influenced by the agency that makes the SBIR award. Does the topic describe a general need, or a very specific problem? The specificity of the topic may limit proposals and innovative approaches, which may reduce the private-sector appeal of proposals in response to a very specific DoD topic. On the other hand, such specificity may indicate a well-understood need that will result in DoD procurement of the solution to that need. Broad topics give more latitude for a firm to propose something with private-sector appeal; however, the agency may not select the proposal if it sees no clear payoff to DoD. How are topics selected? How

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The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE are proposals evaluated—decentralized or centralized, rolling evaluation as received or batched evaluation, first solicitation of the Fiscal Year, second solicitation, or both? Are the procurement officials of the agency involved with topic selection? How rapidly are contracts let? Is bridge funding available between phases? Does the agency fund projects that exceed the Phase II funding limit? Is the agency using SBIR to supplement other research? How often does the agency provide follow-on Phase III R&D funding? What prior relationship has existed between the SBIR firm and the agency or command/laboratory within the agency? All of these factors, which may affect commercialization, vary within and among DoD agencies as described herein. As indicated earlier, the program administration of SBIR is decentralized in DoD. The reason for this decentralization is that SBIR is part of R&D and, in DoD, R&D is decentralized because each of the agencies conducting R &D has a different mission, structure, and R&D focus. Two of the three Services have had 200 years and the third has had 50 years to evolve its structures in response to changing missions. Although each has the mission to recruit, train, organize, and equip forces for deployment under joint commanders, the differences in equipment needs between Army Divisions, Navy Carrier Groups, and Air Force Wings are dramatic. These differences lead to differences in the kinds of topics, and in the way that the Services have structured their own acquisition organizations and the research, development, and engineering organizations that support them. Certain needs common to all Services have been made the responsibility of a single Service, whose needs and capabilities were predominant. For example, among the Army’s lead service, R&D responsibilities are small arms, food, clothing, and wheeled vehicles. Each Service has R&D organizations at various locations supported by contracting offices. In their areas of interest, Services conduct basic and advanced research, develop and demonstrate technology, and develop and engineer systems. Most of this effort is accomplished through universities and defense contractors. The Services also must provide support in maintaining and upgrading equipment that is already in the field. DARPA focuses on high-risk, high-payoff critical defense technologies that may support any of the Services or other DoD needs. Most of its focus is on technology development and demonstration. It makes use of Service R&D organizations and contracting agencies to evaluate and support its efforts, which are largely contracted. Much of the DARPA organization is transient. The Services provide people to work at DARPA as program managers for two to three years (less than the life cycle of SBIR from topic generation to completion of Phase II). DARPA gauges success of an R&D project (including SBIR projects) on whether, at the end of the project, the technology is transitioned into one of the Services. BMDO has the mission its name implies. Much of its R&D is supported out of Huntsville, Alabama, home of one of the Army ’s principal Research, Development, and Engineering Centers. The large expenditure in technology development over the past two decades and the national debate over the affordability and

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The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE efficacy of fielding a missile defense system in the near future is indicative that BMDO is pushing the state of the art in many technologies. A larger, more structured and focused organization than DARPA, BMDO also uses the Services to help execute its R&D mission. Neither DARPA nor BMDO has responsibilities for system acquisition or support and upgrade of systems in the field. DSWA focuses its R&D on the effects of nuclear, chemical, and biological weapons (the latter two for defense against such weapons). It does not actually develop or procure weapons, thus limiting the potential for SBIR Phase III funding for their topics. Private-sector sale of SBIR Phase II results tends to be limited to occasional spinoffs of the actual technology in the SBIR. The U.S. Special Operations Command has a small R&D program focused on near-term needs of Special Operating Forces provided by the Services. The Office of the Secretary of Defense DDR&E has a small SBIR program, which has attempted to establish topics with a high potential for dual use. The SBIR process within a Service must operate within the organization and research, development, and acquisition (RDA) processes used by that Service. In decentralized systems such as those employed by the Navy, SBIR procedures vary among the systems commands. In general, SBIR is integrated into the R&D programs of each systems command. In the Navy, the Acquisition Program Executive Officers play a significant role in topic generation and selection of proposals, especially for Phase II. Acquisition Program Offices frequently fund Phase III or provide additional Phase II funding. The usefulness of the SBIR results to the Navy is an important part of the selection process. In many cases this may lead to selection of more mature technologies and less risk taking, trading a higher probability of success for a lower potential for payoff. Air Force SBIR management is also very decentralized but nevertheless quite different from that of the Navy. The Air Force has program managers operating in two tiers. The top tier (at command level) reports to the Air Force SBIR program manager and the second tier (at lab level) reports to the first tier. Technical Officers within the labs write the topics. Approvals are made by the Lab Chief Scientist and generally supported by the Command Chief Scientist and the Air Force SBIR program managers although rewrites are sometimes required. Proposal approval is decentralized to the Directorate level. The Air Force awards Phase I for $100,000 for nine months rather than the nominal $75,000 for six months. The extra time and dollars help to bridge to Phase II. Technical officers are evaluated on their ability to transition technology; thus they have a bias toward helping SBIR to transition into the Air Force or commercially. Contractors claim that overall reductions in Air Force advanced development funding result in lab topics that cover work formerly done under the Air Force’s R&D program. Such topics are alleged to be difficult to commercialize. The Army, on the other hand, centralizes topic, Phase I, and Phase II proposal selection; this centralized process began with FY 1992 topics and Phase I proposals in late 1992. As in the Air Force, topics are allocated to the laborato-

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The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE ries on the basis of the lab’s R&D budget.1 The Service calculates how much of the annual SBIR funding will be needed to fund new Phase II projects and to pay the second year of Phase II projects that were approved the prior year; then it determines how many Phase I contracts can be awarded with the remaining funds. Anticipating about 1.5 Phase I contracts per topic allows estimation of the number of topics that can be supported.2 Labs are also allocated backup topics in the event that their primary topics do not survive the centralized selection process. The Army ’s 10 senior scientists/technologists, who receive input from evaluators and managers at the laboratories, head the centralized selection of topics and proposals. The Director of the Army Research Office heads the Source Selection Board for Phase I. The Army SBIR process is not as formally connected to its acquisition community as is the case in the other Services. Unlike the Services and other agencies, BMDO has a small number of broad topics. The topics are largely the same each year, evolving gradually from year to year, and providing great flexibility to proposing firms. Topic development and proposal decisions are centralized. Volunteer evaluators from the Services, DSWA, and BMDO assist in the evaluation and serve as technical monitors. Commercialization plans are an important factor in evaluation, with co-investment considered a strong indicator that commercialization will occur. Nevertheless, BMDO has a reputation for funding only high-risk projects. In DARPA, topic selection and proposal decisions are decentralized to the Technical Office directors. In DSWA, the five technical Directorates control the topics, but the proposal decisions are made by a board composed of the deputies from each directorate. BMDO allows all Phase I winners to submit Phase II proposals. All of the Services and other agencies invite proposals from firms that are doing well in Phase I. In both DSWA and the Army, the centralized decision process for Phase II only meets once a year, which delays the award of Phase II. DoD conducts two SBIR solicitations a year, the first closing in January and the second closing in July. Solicitations announce the topics and provide directions and formats for submission of proposals. The Air Force and BMDO participate only in the first solicitation. The Army participates only in the second. The Navy and the other agencies participate in both solicitations. Prior Commercialization Studies In 1991, the General Accounting Office (GAO) conducted a study across all federal agencies (including DoD) that fund SBIR, to evaluate the aggregate com- 1   The Air Force also allocates the number of funded Phase I projects. 2   The Navy allocates the money rather than the topics, allowing each command to determine how the money will be spent. Navy contractors sometimes experience a long time before Phase II approval or disapproval, implying that the awarding organization was waiting for the following year’s funding.

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The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE mercial trends of products in the third phase of SBIR. The 1991 survey questionnaire was sent to all Phase II awardees from the first four years—1984 through 1987—in which the agencies made Phase II awards. GAO chose the earliest recipients because studies by experts on technology development concluded that five to nine years are needed for a company to progress from a concept to a commercial product. Their rationale for not including Phase II recipients from 1988 or later was that, in most cases, those project recipients had not had sufficient time to “make or break” themselves in Phase III. Responses to the GAO study indicated that 10 percent of the projects studied had not completed Phase II and even the earliest projects studied had had inadequate time to mature. Although upbeat about the overall early indications of commercialization, GAO expressed some concern over the rate of commercialization in DoD. In 1996, the Deputy Director of Research and Engineering directed a study of commercialization of SBIR within DoD. The contractor3 used the same methodology and survey instrument that GAO had used five years earlier, for example, surveying all Phase II awardees through at least four years prior to the 1992 study. Use of this methodology allowed direct comparison of results. In 1998, the SBA employed the same contractor to survey Phase II winners from the other (non-DoD) 10 federal agencies.4 Once again the same methodology and survey instrument were used. Several lessons from the earlier studies affected the survey conducted for this effort. In 1991, GAO allowed six months for responses and conducted three mailings of the survey as well as telephonic follow-up in selected cases. Despite this effort, 10 percent of the awardees could not be contacted because of bad addresses. In 1996, the second and third survey mailings were targeted after extensive phone contacts and use of the Internet to find firms who had not responded. Prior to any mailings, the 80 DoD offices that manage SBIR programs reviewed and updated SBIR firm addresses. After seven months of survey effort, one out of seven potential respondents still could not be located. Prior to the 1996 study, DoD was aware of a number of commercialization successes. Several had been uncovered by the GAO study and others were discovered by the Services in an unsystematic fashion. A number of these known successes did not respond to the survey, indicating that the absence of a response did not mean the absence of success. The 1998 study required even more extensive effort to locate SBIR awardees. The SBA database of awardee addresses is not updated as frequently as that of DoD. Numerous mailings and phone calls and extensive Internet searches over 11 months could locate only three-fourths of the awardees. The three earlier surveys demonstrated the mobility of award winners. Fre- 3   BRTRC of Fairfax, Virginia. DoD has not published the final report. 4   Projects surveyed included those from the Nuclear Regulatory Commission, which no longer participates in SBIR.

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The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE Appendix C—continued F $156,433   $0   $123,636   $56,818   G $6,556   $3,310   $4,221   $7,500   H $20,778   $8,333   $8,208   $5,523   I $0   $0   $896   $0   J $0   $2,381   $2,758   $693   BJ $880,556   $86,738   $590,152   $447,989   AJ $1,113,623   $288,389   $851,719   $564,115   Q6-A Fast Track ’96 Control BMDO BMDO Control 2 1 2% 0 0.00% 5 6.49% 7 7.95% 1 12 27% 11 26.19% 21 27.27% 18 20.45% 0 32 71% 33 78.57% 51 66.23% 63 71.59% Q6-B Fast Track ’96 Control BMDO BMDO Control 2 0 0% 0 0.00% 0 0.00% 0 0.00% 1 0 0% 0 0.00% 2 2.60% 1 1.14% 0 45 100% 42 100.00% 75 97.40% 87 98.86% Q6-C Fast Track ’96 Control BMDO BMDO Control 2 5 11% 0 0.00% 2 2.60% 2 2.27% 1 5 11% 1 2.38% 2 2.60% 1 1.14% 0 35 78% 41 97.62% 73 94.81% 84 95.45% Q6-D Fast Track ’96 Control BMDO BMDO Control 2 1 2% 1 2.38% 2 2.60% 1 1.14% 1 5 11% 3 7.14% 7 9.09% 4 4.55% 0 39 87% 38 90.48% 68 88.31% 83 94.32% Q6-E Fast Track ’96 Control BMDO BMDO Control 2 1 2% 0 0.00% 3 3.90% 1 1.14% 1 6 13% 5 11.90% 11 14.29% 12 13.64% 0 38 84% 37 88.01% 63 81.82% 75 85.23% Q6-F Fast Track ’96 Control BMDO BMDO Control 2 1 2% 1 2.38% 2 2.60% 6 6.82% 1 9 20% 8 19.05% 6 7.79% 21 23.86% 0 35 78% 33 78.57% 69 89.61% 61 69.32% Q6-G Fast Track ’96 Control BMDO BMDO Control 2 1 2% 0 0.00% 5 6.49% 1 1.14% 1 9 20% 3 7.14% 10 12.99% 10 11.36% 0 35 78% 39 92.86% 62 80.52% 77 87.50%

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The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE Appendix C—continued Q6-H Fast Track ’96 Control BMDO BMDO Control 2 0 0% 1 2.38% 1 1.30% 3 3.41% 1 2 4% 1 2.38% 2 2.60% 7 7.95% 0 43 96% 40 95.24% 74 96.10% 78 88.64% Q7-A Fast Track ’96 Control BMDO BMDO Control 4 0 0% 2 5% 7 9% 3 3.41% 3 10 22% 6 14% 14 18% 19 21.59% 2 21 47% 17 41% 19 25% 31 35.23% 1 7 16% 3 7% 11 14% 11 12.50% 0 7 16% 14 33% 26 34% 24 27.27% Q7-B Fast Track ’96 Control BMDO BMDO Control 4 7 16% 10 24% 20 26% 18 20.45% 3 9 20% 4 10% 10 13% 12 13.64% 2 10 22% 4 10% 3 4% 9 10.23% 1 7 16% 5 12% 5 7% 7 7.95% 0 12 27% 19 45% 39 51% 42 47.73% Q7-C Fast Track ’96 Control BMDO BMDO Control 4 2 4% 3 7% 12 16% 8 9.09% 3 3 7% 1 2% 3 4% 8 9.09% 2 16 36% 14 33% 22 29% 21 23.86% 1 14 31% 5 12% 9 12% 15 17.05% 0 10 22% 19 45% 29 38% 36 40.91% Q7-D Fast Track ’96 Control BMDO BMDO Control 4 5 11% 9 21% 13 17% 13 14.77% 3 7 16% 1 2% 2 3% 8 9.09% 2 11 24% 8 19% 21 27% 18 20.45% 1 15 33% 4 10% 9 12% 13 14.77% 0 12 27% 20 48% 32 42% 36 40.91% Q7-E Fast Track ’96 Control BMDO BMDO Control 4 0 0% 3 7% 6 8% 5 5.68% 3 2 4% 0 0% 0 0% 0 0.00% 2 0 0% 0 0% 2 3% 5 5.68% 1 1 2% 1 2% 0 0% 1 1.14% 0 40 89% 38 91% 69 90% 77 87.50% Q8 Fast Track ’96 Control BMDO BMDO Control 8-1 28   23   56   38   8-2 6   4   8   26  

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The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE Appendix C—continued 8-3 0 1 2 2 8-4 8 3 6 9 8-5 1 0 0 1 blank/NA 6 11 8 17 Q9-A Fast Track ’96 Control BMDO BMDO Control 99 0 2 0 5 98 8 4 3 9 97 3 1 7 9 96 0 0 1 7 95 0 0 2 1 Q9-BC Avg Fast Track ’96 Control BMDO BMDO Control B $106,000 $47,945 $61,961 $209,722 C $89 $0 $16,571 $375 BC $106,089 $47,945 $78,533 $210,097 Q10*9BC Avg Fast Track ’96 Control BMDO BMDO Control A $19,900 $12,446 $60,918 $68,157 B $74,043 $15,130 $130 $60,514 C $3,885 $8,107 $16,835 $3,636 D $0 $0 $130 $16,563 E $0 $357 $130 $5,331 F $0 $0 $0 $991 G $8,261 $11,905 $390 $41,672 H $0 $0 $0 $11,473 SUM $106,089 $47,945 $78,533 $208,337 Q11-A Fast Track ’96 Control BMDO BMDO Control 2003 1 0 1 2 2002 0 2 8 1 2001 4 4 7 5 2000 14 12 13 17 1999 8 6 17 14 Sales no yr 13 7 14 28 Q11-BC Avg Fast Track ’96 Control BMDO BMDO Control B $6,546,111 $817,500 $4,445,584 $2,657,500 C $1,895,778 $411,905 $316,883 $384,034 BC $8,441,889 $1,229,405 $4,762,468 $3,041,534

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The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE Appendix C—continued Q12 Fast Track ’96 Control BMDO BMDO Control 12-1 40 0 0 4 12-2 2 1 36 0 12-3 2 33 34 71 blank/NA 3 8 7 14 Q13 Fast Track ’96 Control BMDO BMDO Control 13-1 13 0 5 1 13-2 19 1 17 0 13-3 3 1 15 2 13-4 7 0 22 7 blank/NA 10 40 37 78 Q14 Fast Track ’96 Control BMDO BMDO Control 23 0 0 0 0 22 0 0 1 0 21 0 0 0 0 20 0 0 0 0 19 0 0 1 0 18 0 0 3 0 17 0 0 0 0 16 0 0 1 0 15 0 0 0 0 14 0 1 0 0 13 0 0 1 0 12 3 0 6 2 11 0 0 0 0 10 1 0 1 0 9 3 0 1 1 8 2 0 2 0 7 0 0 0 0 6 10 2 7 0 5 1 0 0 0 4 8 0 3 0 3 8 0 2 0 2 4 0 0 0 1 0 1 2 0 0 5 38 45 85 Q15 Fast Track ’96 Control BMDO BMDO Control 15-1 6 12 28 23 15-2 5 8 5 13 15-3 2 0 2 1 15-4 3 2 3 1 15-5 14 1 6 3 15-6 10 7 15 25

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The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE Appendix C—continued 15-7 2   2   5   6   15-8 0   1   3   3   blank/NA 18   20   35   40   Q16 Fast Track ’96 Control BMDO BMDO Control 5 13 29% 16 38% 23 30% 31 35% 4 13 29% 20 48% 29 38% 29 33% 3 12 27% 1 2% 11 14% 15 17% 2 4 9% 4 10% 10 13% 9 10% 1 2 4% 0 0% 3 4% 3 3% 0 1 2% 1 2% 1 1% 1 1% Q17 Fast Track ’96 Control BMDO BMDO Control 98 0   1   2   0   97 1   0   0   0   96 9   2   1   1   95 7   3   6   5   94 5   1   4   3   93 3   0   6   7   92 2   6   11   11   91 4   2   6   3   90 3   0   2   7   89 0   0   5   7   88 1   3   3   9   87 0   0   2   2   86 0   1   6   5   85 1   2   3   1   84 0   2   0   2   83 0   3   8   3   82 5   2   1   1   81 1   0   3   0   80 0   1   1   1   pre-80 2   12   7   20   N/A 1   0   0   0   Q18-1 Fast Track ’96 Control BMDO BMDO Control 10 1   0   0   0   9 0   1   0   0   8 0   0   0   0   7 0   0   0   0   6 0   0   0   0   5 0   1   2   2   4 3   2   1   6   3 16   5   9   13   2 9   18   25   30   1 13   15   39   36   N/A 3   0   1   1  

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The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE Appendix C—continued Q18-2 Fast Track ’96 Control BMDO BMDO Control >5 1   3   1   5   5 1   0   1   1   4 1   1   4   0   3 2   2   1   6   2 9   3   8   11   1 12   9   18   16   0 19   24   44   49   45 45 42 42 77 77 88 86   Q18-3 Fast Track ’96 Control BMDO BMDO Control >5 0   0   0   0   5 1   0   0   1   4 0   0   1   0   3 1   2   2   3   2 7   6   4   7   1 20   8   24   25   0 16   26   46   52   Q19 Fast Track ’96 Control BMDO BMDO Control 19-1 39   32   55   69   19-2 15   8   26   23   19-3 2   5   5   4   blank/NA 3   2   5   3   Q20 Fast Track ’96 Control BMDO BMDO Control 6 4 9% 6 14% 8 10% 10 11% 5 5 11% 13 31% 16 21% 18 21% 4 11 24% 12 29% 28 36% 36 41% 3 13 29% 6 14% 10 13% 11 13% 2 8 18% 5 12% 13 17% 9 10% 1 1 2% 0 0% 2 3% 4 5% blank/NA 3 7% 0 0% 0 0% 0 0% Q21-1 Fast Track ’96 Control BMDO BMDO Control >100 0   3   4   6   75-100 0   1   2   1   50-75 0   4   2   2   40-49 0   0   5   4   30-39 2   2   1   1   20-29 3   4   3   6   19 0   0   0   0   18 0   0   0   2   17 0   0   1   1   16 0   1   0   1  

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The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE Appendix C—continued 15 0 0 1 1 14 0 1 1 0 13 1 2 0 1 12 0 0 3 1 11 0 0 2 0 10 1 0 0 4 9 0 0 1 3 8 0 2 1 2 7 1 1 5 3 6 0 1 4 1 5 4 1 7 6 4 1 2 2 6 3 5 5 12 11 2 3 5 6 8 1 13 4 5 15 0 11 3 9 2 Q21-2 Fast Track ’96 Control BMDO BMDO Control >100 0 1 0 2 75-100 0 2 1 0 50-75 0 0 3 3 40-49 0 0 0 1 30-39 0 0 1 1 20-29 0 5 6 2 19 0 1 0 0 18 0 2 0 1 17 0 0 0 1 16 0 0 3 0 15 0 0 1 3 14 3 0 1 2 13 1 1 0 0 12 0 0 0 0 11 0 0 0 0 10 0 2 2 3 9 0 0 1 2 8 0 1 1 2 7 0 1 2 0 6 1 2 0 3 5 1 0 3 2 4 2 1 3 2 3 1 4 5 8 2 3 3 9 9 1 7 4 10 13 0 26 12 25 28

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The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE Appendix C—continued Q22-A1 Fast Track ’96 Control BMDO BMDO Control >10 1 0 2 0 10 0 0 1 0 9 0 0 0 0 8 1 0 0 0 7 0 0 0 0 6 0 0 3 0 5 0 0 1 0 4 3 0 1 0 3 2 1 3 3 2 1 1 11 5 1 8 7 12 18 0 29 33 43 60 Q22-B1 Fast Track ’96 Control BMDO BMDO Control >10 0 0 0 0 10 0 0 2 0 9 0 0 0 0 8 0 0 0 0 7 1 0 0 0 6 0 0 2 0 5 0 0 0 0 4 0 0 0 0 3 0 0 2 2 2 3 0 6 2 1 2 1 12 10 0 39 41 53 74 Q22-A2 Fast Track ’96 Control BMDO BMDO Control >10 0 0 0 0 10 0 0 0 0 9 0 0 0 0 8 0 0 0 0 7 0 0 0 0 6 0 0 0 0 5 0 0 0 1 4 0 0 0 0 3 1 0 0 0 2 1 0 0 0 1 2 0 1 2 0 41 42 76 84 Q22-B2 Fast Track ’96 Control BMDO BMDO Control >10 0 0 0 0 10 0 0 0 0 9 0 0 0 0

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The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE Appendix C—continued 8 0 0 0 0 7 0 0 0 0 6 0 0 0 0 5 0 0 0 0 4 0 0 0 0 3 1 0 0 0 2 1 0 0 0 1 1 0 1 2 0 42 42 76 86 Q22-A3 Fast Track ’96 Control BMDO BMDO Control >10 1 0 0 3 10 0 1 0 1 9 0 0 0 0 8 0 0 0 0 7 0 0 2 0 6 0 1 1 1 5 1 0 2 5 4 1 0 2 4 3 4 2 5 7 2 4 3 3 14 1 5 5 11 6 0 29 30 49 47 Q22-B3 Fast Track ’96 Control BMDO BMDO Control >10 1 1 2 3 10 0 0 2 2 9 0 0 0 0 8 0 2 0 0 7 0 0 2 1 6 0 0 1 1 5 1 0 3 4 4 1 0 1 7 3 5 3 6 9 2 6 3 9 19 1 4 5 12 6 0 28 28 39 36 Q23 Fast Track ’96 Control BMDO BMDO Control 23-1 0 0 4 1 23-2 1 0 1 1 23-3 4 3 4 4 23-4 40 34 66 77 N/A 0 2 1 5

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The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE Appendix C—continued Q23-YR Fast Track ’96 Control BMDO BMDO Control 98 0 0 4 1 97 0 0 0 0 96 0 0 0 0 95 0 0 0 0 94 0 0 0 0 Q23-CO Fast Track ’96 Control BMDO BMDO Control 5 0 0 0 0 4 0 0 0 0 3 0 0 0 0 2 1 0 1 0 1 3 3 3 4 Q24 Fast Track ’96 Control BMDO BMDO Control 24-1 21 33 67 70 24-2 4 23 35 34 24-3 12 6 26 33 24-4 4 2 3 4 24-5 25 1 6 4 N/A 5 7 4 7 Q24-Months Fast Track ’96 Control BMDO BMDO Control >15 0 1 11 7 15 0 0 1 3 14 0 0 3 0 13 0 1 3 0 12 1 1 8 9 11 1 2 2 2 10 0 0 4 3 9 2 3 3 8 8 1 2 10 5 7 0 2 1 1 6 3 5 12 17 5 1 3 1 5 4 4 3 5 4 3 4 2 2 4 2 3 5 1 1 1 1 2 0 0 Q26 Avg Fast Track ’96 Control BMDO BMDO Control A 32.42 61.90 21.82 34.67 B 53.51 122.17 58.39 65.07 C 6.88 4.67 2.15 3.51

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The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE Appendix C—continued Q27 Fast Track ’96 Control BMDO BMDO Control 27-1 1 2 4 2 27-2 31 28 50 54 27-3 31 31 51 68 27-4 0 1 1 3 blank/NA 2 0 2 3