This chapter describes and analyzes STTR awards and applications for the five study agencies—the Department of Defense (DoD), the Department of Energy (DoE), the National Aeronautics and Space Administration (NASA), the National Institutes of Health (NIH), and the National Science Foundation (NSF). Data for the STTR were drawn from the Small Business Administration (SBA) SBIR/STTR database for the program as a whole and from data provided by the study agencies for their own programs. With some variation for agency data, the analysis covers the period 2005 through 2014. This 10-year interval provides sufficient data to analyze trends and the evolution of the program. Additional agency-specific tables are included in Appendix F. A broader review of study data sources, methodological approaches, and potential biases can be found in Appendix A of this report.
This chapter reviews Phase I and Phase II STTR awards, in turn, and considers awards from a range of perspectives, including yearly trends, distribution by state, the impact of multiple awards to individual companies, and applications and success rates.
PHASE I STTR
Awards
In general, award and application patterns tend to follow those for SBIR.1 Figure 3-1 shows total Phase I STTR awards for fiscal years (FY) 2005-2014 for all five study agencies.
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1Unless otherwise stated, data on awards and amounts of funding for the entire program are drawn from the SBA SBIR/STTR awards database, available online at https://www.sbir.gov/sbirsearch/award/all. The SBA database houses the numbers reported by the individual agencies in a uniform format. SBA data do not always align perfectly with data provided by the agencies, either directly to the Academies or on their own web sites.
FIGURE 3-1 Phase I STTR awards, FY2005-2014.
SOURCE: SBA SBIR/STTR awards database.
Although overall numbers have remained approximately stable since 2008 (excluding the additional funding in 2009 and 2010 from the American Recovery and Reinvestment Act of 2009 [ARRA]), there has been considerable variation within agencies, especially DoD and NIH (see Figure 3-2).
Award numbers vary for many reasons and usually do not reflect deliberate agency decisions to increase or reduce the number of awards in a given year. Rather, variation can result inter alia from the complexity and riskiness of the research being funded, and the size and duration of awards. Variation can also result from changes in STTR program policy and agency budgets. For example, allowable award size has increased over time. Sequestration played a role in reducing award numbers in 2012, for example, while funding from ARRA increased award numbers at some agencies in 2009 and 2010. In some years, agencies might find that a preponderance of excellent Phase II proposals require funding, which may reduce the funds available for Phase I. In addition, shifts in application rates that are largely unrelated to the programs themselves might occur.
Awards by State
Award patterns by state are similar to those for SBIR, strongly correlated across and within states to reginal innovation centers.2 Further
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2National Research Council, SBIR at the Department of Defense, Washington, DC: The National Academies Press, 2014, pp. 30-32. Effective July 1, 2015, the institution is called the National
FIGURE 3-2 Phase I STTR awards by agency.
SOURCE: SBA SBIR/STTR database.3
differences in the rankings appear to reflect the distribution of partnering universities and research institutions (RIs)—not all states have strong RIs, and some highly respected research institutions do not participate heavily in STTR. For example, the Massachusetts Institute of Technology (MIT) maintains strong conflict of interest rules that make STTR less attractive for faculty than at some other research institutions.4 Funding amounts, awards, and award shares for the top 20 states are shown in Table 3-1.
Collectively, the top 20 states accounted for 84 percent of all STTR awards during the study period. Conversely, the bottom 10 states (excluding Puerto Rico) accounted for 1.6 percent. The full table for all states is provided in Appendix F.
Awards by Company
The top 20 companies accounted for 11 percent of Phase I STTR awards during the study period (see Table 3-2).
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Academies of Sciences, Engineering, and Medicine. References in this report to the National Research Council or NRC are used in an historic context identifying programs prior to July 1.
3In order to maximize comparability, data in Chapter 3 has been drawn primarily from the SBA SBIR/STTR database, which aggregates reports from all agencies. However, there are some discrepancies between data provided to the Academies by the individual agencies and the data gathered from SBA.
4Interview with Lita Nelson, Director, MIT Licensing Office, September 15, 2015.
TABLE 3-1 Phase I STTR Awards, Award Amounts, and Funding Shares for Top 20 States, FY2005-2014
State | Number of Awards | Amount of Awards (Millions of Dollars) | Share of Awards (Percent) | ||||||
CA | 910 | 124.0 | 16.8 | ||||||
MA | 624 | 78.6 | 11.5 | ||||||
VA | 355 | 42.2 | 6.5 | ||||||
TX | 267 | 34.4 | 4.9 | ||||||
MD | 249 | 35.3 | 4.6 | ||||||
NY | 241 | 36.5 | 4.4 | ||||||
CO | 220 | 27.3 | 4.1 | ||||||
OH | 201 | 24.8 | 3.7 | ||||||
PA | 184 | 28.4 | 3.4 | ||||||
IL | 181 | 21.8 | 3.3 | ||||||
FL | 154 | 18.7 | 2.8 | ||||||
NC | 136 | 27.1 | 2.5 | ||||||
AL | 134 | 15.4 | 2.5 | ||||||
MI | 130 | 17.9 | 2.4 | ||||||
NJ | 123 | 14.2 | 2.3 | ||||||
AZ | 113 | 14.9 | 2.1 | ||||||
CT | 90 | 15.2 | 1.7 | ||||||
GA | 84 | 12.1 | 1.5 | ||||||
WA | 83 | 12.5 | 1.5 | ||||||
OR | 71 | 13.8 | 1.3 | ||||||
SOURCE: Small Business Administration, SBIR/STTR awards database.
WOMEN AND MINORITIES
Regarding participation of women and minorities in the STTR program, data from the SBA database are too inaccurate for conclusions to be drawn because comparisons with data supplied by agencies reveal significant discrepancies in this area. Awards for women and minorities will be discussed separately in Chapter 5.
PHASE II STTR
Awards
The number of Phase II awards made by each agency is to a considerable extent driven by the number of previous Phase I awards made. Overall, the number of Phase II STTR awards remained largely steady at
TABLE 3-2 Top 20 Phase I-Recipient STTR Companies, FY2005-2014
Company | Number of Awards |
Physical Sciences | 60 |
CFD Research | 50 |
Luna Innovations | 43 |
Intelligent Automation | 43 |
Agiltron | 35 |
Lynntech | 33 |
Creare | 33 |
Infoscitex | 30 |
Charles River Analytics | 30 |
Muons | 25 |
Aptima | 25 |
NextGen Aeronautics | 24 |
NanoSonic | 23 |
UES | 19 |
Structured Materials Industries | 19 |
Toyon Research | 17 |
Aurora Flight Sciences | 17 |
SA Photonics | 14 |
Omega Optics | 14 |
HYPRES | 14 |
Top 20 Total | 568 |
All Phase I STTR | 5,420 |
Top 20 Percentage of Total Awards | 10.6 |
SOURCE: Small Business Administration SBIR/STTR database.
slightly more than 200 per year, except for variations largely explained by the impacts of ARRA in 2009 and 2010 and sequestration in 2012 (see Figure 3-3).
Awards by State
Table 3-3 shows the total number and amounts of STTR awards made in the top 20 states. Collectively, these states accounted for 84 percent of all STTR awards made in FY2005-2014. As would be expected, the top 20 states for Phase II are closely similar (though not identical) to those for Phase I.5
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5The order of states varies and Oregon (Phase II list) displaces Wisconsin (Phase I list).
BOX 3-1
Multiple STTR and SBIR Awards
There are a variety of pathways by which companies meet legislative objectives of the SBIR and STTR programs. As noted in Chapter 1 of this report, products do not develop according to a linear model, using one Phase I, one Phase II, and then perhaps a further contract to reach the market place. Some require that companies receive multiple awards. A cluster of awards may be necessary in some cases to develop core technology platforms and then devise different applications that arise from them.
Multiple awards are permitted by law and are often necessary to meet agency mission needs. For example, managers at DoD and NASA often turn to SBIR and STTR to solve their technical problems and develop new technologies for internal use. Both agencies publish long and detailed solicitations for technical help. Here, SBIR and STTR companies work within program rules when seeking out sequential opportunities to serve these agencies effectively. NSF, NIH and DOE similarly award multiple awards in selected cases to advance their missions.
Finally, SBIR awards are open to new entrants. About a third of awards go to companies who have not previously received an award from that agency. Multiple award winners thus do not crowd out new entrants.a For example in FY2013, more than one-third of companies offering SBIR/STTR proposals at NIH were new to the program, and about 23 percent of awards went to companies that had not received any prior awards from NIH.b
aNational Research Council, An Assessment of the SBIR Program, Washington, DC: The National Academies Press, 2008. In addition, the report found that “The common perception about the prevalence of mills in the SBIR program—i.e., that they have captured a large percentage of the awards, that they rarely commercialize, and that they do not meet agency research needs—is not substantiated by the evidence.” See p. 86.
bNational Academies of Sciences, Engineering, and Medicine, SBIR/STTR at the National Institutes of Health, Washington, DC: The National Academies Press, 2015, p. 105.
Phase II STTR Awards by Company
The companies that are most successful at winning Phase I STTR awards are in general slightly more successful in winning Phase II STTR awards (see Table 3-4). Only two of the Phase I top 20 award winners are not among the Phase II top 20 award winners. For Phase II, the top 20 companies accounted for 264 awards (12 percent of total Phase II awards) over the 10-year study period, and, in comparison, for Phase I the top 20 companies accounted for 568 awards (11 percent of the total Phase I awards) over the 10-year period.
FIGURE 3-3 Phase II STTR awards, FY2005-2014.
SOURCE: SBA SBIR/STTR database.
TABLE 3-3 Phase II STTR Awards for Top 20 States, FY2005-2014
State | Number of Awards | Amount of Awards (Millions of Dollars) | Share of Awards (Percent) | Share of Funding (Percent) | |||||
CA | 361 | 279.1 | 16.2 | 16.3 | |||||
MA | 265 | 195 | 11.9 | 11.4 | |||||
VA | 138 | 96.3 | 6.2 | 5.6 | |||||
TX | 113 | 82.6 | 5.1 | 4.8 | |||||
NY | 103 | 79.9 | 4.6 | 4.7 | |||||
CO | 97 | 69.3 | 4.3 | 4.0 | |||||
OH | 87 | 62.6 | 3.9 | 3.6 | |||||
PA | 87 | 69.9 | 3.9 | 4.1 | |||||
MD | 83 | 65 | 3.7 | 3.8 | |||||
IL | 79 | 57.6 | 3.5 | 3.4 | |||||
FL | 61 | 42.8 | 2.7 | 2.5 | |||||
AL | 56 | 44.6 | 2.5 | 2.6 | |||||
MI | 56 | 47.7 | 2.5 | 2.8 | |||||
AZ | 55 | 40.3 | 2.5 | 2.3 | |||||
NJ | 50 | 35.8 | 2.2 | 2.1 | |||||
WA | 47 | 37.8 | 2.1 | 2.2 |
State | Number of Awards | Amount of Awards (Millions of Dollars) | Share of Awards (Percent) | Share of Funding (Percent) | |||||
NC | 43 | 37.2 | 1.9 | 2.2 | |||||
GA | 41 | 36 | 1.8 | 2.1 | |||||
CT | 32 | 26.5 | 1.4 | 1.5 | |||||
WI | 30 | 25.7 | 1.3 | 1.5 | |||||
Top | 20 | Total | 1,884 | 1,431.70 | 84.3 | 83.4 | |||
Total | 2,234 | 1,715.90 | 100.0 | 100.0 | |||||
SOURCE: Small Business Administration, SBIR/STTR database.
TABLE 3-4 Top 20 Phase II STTR Companies, FY2005-2014
Company | Number of Awards |
Physical Sciences | 28 |
CFD Research | 25 |
Intelligent Automation | 20 |
Luna Innovations | 16 |
Aptima | 15 |
Muons | 13 |
Charles River Analytics | 13 |
Lynntech | 12 |
Creare | 12 |
Agiltron | 12 |
Aurora Flight Sciences | 12 |
TDA Research | 11 |
Toyon Research | 11 |
UES | 10 |
PRAXIS | 10 |
Structured Materials Industries | 9 |
NextGen Aeronautics | 9 |
Infoscitex | 9 |
Impact Technologies | 9 |
Omega Optics | 8 |
Top 20 | 264 |
All Phase II STTR | 2,234 |
Top 20 Percentage of Total | 11.8 |
SOURCE: Small Business Administration SBIR/STTR database.