REVIEW OF THE

SBIR AND STTR

PROGRAMS AT THE DEPARTMENT OF ENERGY

Committee on the Review of the Small Business Innovation Research
and Small Business Technology Transfer Programs
at the Department of Energy

Board on Science, Technology, and Economic Policy

Policy and Global Affairs

A Consensus Study Report of

THE NATIONAL ACADEMIES PRESS
Washington, DC
www.nap.edu

THE NATIONAL ACADEMIES PRESS 500 Fifth Street, NW Washington, DC 20001

This activity was supported by a contract between the National Academy of Sciences and the U.S. Department of Energy (DE-EP0000026/DE-DT0013202). Any opinions, findings, conclusions, or recommendations expressed in this publication do not necessarily reflect the views of any organization or agency that provided support for the project.

International Standard Book Number-13: 978-0-309-67159-0
International Standard Book Number-10: 0-309-67159-0
Digital Object Identifier: https://doi.org/10.17226/25674

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Suggested citation: National Academies of Sciences, Engineering, and Medicine. 2020. Review of the SBIR and STTR Programs at the Department of Energy. Washington, DC: The National Academies Press. https://doi.org/10.17226/25674.

COMMITTEE ON THE REVIEW OF THE SMALL BUSINESS INNOVATION RESEARCH AND SMALL BUSINESS TECHNOLOCY TRANSFER PROGRAMS AT THE DEPARTMENT OF ENERGY

Maryann P. Feldman, Co-Chair, University of North Carolina at Chapel Hill

Scott Stern, Co-Chair, Massachusetts Institute of Technology

Daniel Erian Armanios, Carnegie Mellon University

Aaron Chatterji, Duke University Fuqua

Jeannette Colyvas, Northwestern University

Lisa D. Cook, Michigan State University

David Hsu, University of Pennsylvania

Kaye Husbands Fealing, Georgia Institute of Technology

Amol Joshi, Oregon State University

Jennifer Kuan, California State University Monterey Bay

Lauren Lanahan, University of Oregon

Robin Rasor, Duke University Office of Licensing and Ventures

Stephanie S. Shipp, University of Virginia, Biocomplexity Institute & Initiative

STUDY STAFF

Gail Cohen, Study Director

Rebecca Alcenius, Senior Project Assistant

Meghan Ange-Stark, Associate Program Officer

Paul Beaton, Senior Program Officer (through August 2018)

Jenny Carlson, Christine Mirzayan Science and Technology Policy Graduate Fellow

David Dierksheide, Program Officer

Frederic Lestina, Research Associate

Clara Savage, Financial Officer

Andrea Tumbaco, Senior Program Assistant (through May 2019)

CONSULTANTS

Evan E. Johnson, Principal Consultant

Remi Bellefleur, Consultant

Kyle Myers, Consultant

BOARD ON SCIENCE, TECHNOLOGY, AND ECONOMIC POLICY

Adam B. Jaffe, Chair, Brandeis University

Noël Bakhtian, Idaho National Laboratory

Jeff Bingaman, Former U.S. Senator, New Mexico

Brenda J. Dietrich (NAE), Cornell University

Brian G. Hughes, HBN Shoe, LLC, San Antonio, Texas

Adriana Kugler, Georgetown University

Arati Prabhakar (NAE), Founder and CEO, Actuate

Kathryn L. Shaw, Stanford University

Paula E. Stephan, Georgia State University

Scott Stern, Massachusetts Institute of Technology

John C. Wall (NAE), Cummins, Inc. (Retired)

John L. Anderson (NAE), Ex Officio Member, National Academy of Engineering

Victor J. Dzau (NAM), Ex Officio Member, National Academy of Medicine

Marcia McNutt (NAS), Ex Officio Member, National Academy of Sciences

STAFF

Gail Cohen, Director

Rebecca Alcenius, Senior Project Assistant

Meghan Ange-Stark, Associate Program Officer

David Dierksheide, Program Officer

William Gaieck, Christine Mirzayan Science and Technology Policy Graduate Fellow

Frederic Lestina, Research Associate

Clara Savage, Financial Officer

Preface

Since its founding in 1982, the Small Business Innovation Research (SBIR) program has become the largest and most comprehensive public research and development funding program of small business research in the United States. An underlying tenet of the SBIR program, and the related Small Business Technology Transfer (STTR) program, is that small and young firms are an important source of new ideas that provide the underlying basis for technological innovation, productivity increases, and subsequent economic growth. Predicated on the observation that it is difficult for small and young firms to find financial support for their ideas, the SBIR/STTR programs have become known as America’s Seed Fund. By involving qualified small businesses in the nation’s research and development efforts, SBIR/STTR grants stimulate the development of innovative technologies and help federal agencies achieve their missions and objectives.

This study of the Department of Energy (DOE) SBIR/STTR programs offers an opportunity for a timely assessment and new perspective on the programs. Our approach highlights three interrelated principles.

First, we view the DOE SBIR/STTR programs, together, as a critical element within the broader American energy innovation system. The DOE achieves its mission of ensuring America’s energy future through research at a variety of organizations, such as national laboratories, university departments, and demonstration projects funded by the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy that are most commonly undertaken in partnership with large firms such as utilities or large-scale manufacturers. The DOE SBIR/STTR programs thus provide a dedicated channel through which small and young firms are able to contribute in a meaningful and sustained way to the DOE mission. The SBIR/STTR programs prioritize the potential for entrepreneurs to contribute new approaches and technologies to enhance the nation’s energy security and competitiveness.

Second, we believe that the DOE SBIR/STTR programs are best understood on their own terms rather than in comparison to other federal funding efforts such as more basic research grants or private sector funding institutions such as venture capital. By statute, the DOE SBIR program is a “small business

innovation research” program. As such, our assessment focuses on the ways in which the DOE SBIR/STTR programs stimulate technological innovation by small (and young) firms that are directly linked to the broader mission needs of DOE. Our focus in this report is on the role of SBIR/STTR as a driver of innovations by smaller firms within the broader American energy innovation system. This directs us toward not simply considering the innovations that directly result from SBIR/STTR grants but also the follow-on innovation spillovers that are induced by grants and affect the larger innovation system over time.

Third, the effectiveness of the DOE SBIR/STTR programs depends importantly on the operational means by which the programs are administered within DOE. We focus significant attention in this report on assessing the operational performance of the programs, including the process of topic selection, community outreach, reviewer selection and the post-award process. Our intention is to understand the operations of the DOE SBIR/STTR programs and to offer suggestions to improve the operations of the programs and to make better use of the public’s investment.

We highlight two central takeaways from the report. First, the DOE SBIR/STTR programs play a critical and empirically demonstrable role in supporting the national energy innovation system through the systematic inclusion of small and young firms in the process of meeting the DOE mission. DOE SBIR/STTR awardees not only produce innovations related to stated DOE mission needs, but stimulate subsequent technological innovation in these areas. Second, given this contribution, the DOE has an opportunity to enhance the impact of the programs even further through a more sustained commitment to an inclusive innovation approach. Tapping into the creativity and skill of an even wider range of small companies—including those led by women and underrepresented minorities—is likely to allow DOE to help further its mission of advancing the nation’s energy security.

ACKNOWLEDGMENTS

We would also like to express our appreciation for insights, information, experiences, and perspectives provided by invited speakers while this study was being prepared. The committee also wants to especially thank Evan Johnson, principal consultant, and Kyle Myers and Remi Bellefleur for their invaluable contributions in research and technical assistance in the preparation of this report. Contributions from Jenny Carlson, Gabriel Carter, and Travis Howe have advanced our work. We also thank the reviewers and the production staff for their assistance in preparing this report for publication. Finally, we would particularly like to recognize the leadership of Gail Cohen, and the contributions of the National Academies staff, especially David Dierksheide, Paul Beaton, Fred Lestina, Rebecca Alcenius, and Andrea Tumbaco.

Acknowledgment of Reviewers

This Consensus Study Report was reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise. The purpose of this independent review is to provide candid and critical comments that will assist the National Academies of Sciences, Engineering, and Medicine in making each published report as sound as possible and to ensure that it meets the institutional standards for quality, objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process.

We thank the following individuals for their review of this report: William Brinkman, Princeton University (retired); Case Cortese, California Institute of Technology; Eva Garland, Eva Garland Consulting, LLC; Melissa Graebner, University of Illinois, Urbana-Champaign; Orin Herskowitz, Columbia University; Sabrina Howell, New York University; Georgia Kosmopoulou, University of Oklahoma; Alberto Sangiovanni-Vincentelli, University of California, Berkeley; and Winslow Sargeant, International Council for Small Business.

Although the reviewers listed above provided many constructive comments and suggestions, they were not asked to endorse the conclusions or recommendations of this report nor did they see the final draft before its release. The review of this report was overseen by Philip Neches, Teradata Corporation and Marcia Rieke, University of Arizona. They were responsible for making certain that an independent examination of this report was carried out in accordance with the standards of the National Academies and that all review comments were carefully considered. Responsibility for the final content rests entirely with the authoring committee and the National Academies.

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Contents

SUMMARY

1 INTRODUCTION

Background and Context for the Establishment of SBIR and STTR

Theoretical Support for SBIR and STTR

Conflicting Programmatic Goals

The National Academies Study

The SBIR Program: A History

Program Operation

The Challenge of Program Evaluation

Outline of This Report

2 SMALL BUSINESS INNOVATION AT THE U.S. DEPARTMENT OF ENERGY: FRAMEWORK FOR EVALUATING THE DOE SBIR/STTR PROGRAMS

Broad Policy Rationale

Empirical Literature Survey

Broad Challenges Facing SBIR/STTR Assessment

Committee’s Approach to Dealing with Evaluation Challenges

3 DOE SBIR/STTR PROCESSES

Chapter Overview

Overview of Administrative Structure at DOE SBIR/STTR

The DOE SBIR/STTR Topic Development and Application Process

Final Award Process

Post-award Process

Collaboration Across Offices

Commercialization Assistance

Diversity and Inclusion

In Closing

Findings

Recommendations

Annex: DOE Program Managers Interview Questions and and List of Attendees

4 THE LANDSCAPE OF DOE SBIR/STTR AWARDEES

Trends in distribution of Awards Across States

Collaboration Patterns for Awardees

Role of Multiple Award Recipients

Findings

Recommendations

5 THE IMPACT OF THE DOE SBIR/STTR PROGRAMS: INNOVATION, COMMERCIALIZATION, AND EMPLOYMENT

Innovation Outcomes

Commercialization Outcomes

Firm Demographics and Employment Growth

Findings

Recommendations

REFERENCES

APPENDIXES

A Agendas

B Biographies of Committee Members

C Technical Appendix to Chapter 5