Small Business:

Proposed Amendments to the Small Business Innovation Research Program

RCED-89-173: Published: Jun 30, 1989. Publicly Released: Jul 6, 1989.

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Pursuant to a legislative requirement, GAO reviewed four proposed amendments to the Small Business Innovation Research Program (SBIR) that would: (1) gradually increase the SBIR formula from 1.25 percent of agency external research and development funds to 3 percent; (2) make SBIR permanent with a formal congressional review every 10 years; (3) allocate a share of SBIR funds for administrative purposes; and (4) lower the threshold for federal agency participation in SBIR from $100 million to $20 million.

GAO does not advise altering SBIR as proposed by the four amendments. GAO believes that: (1) Congress should defer consideration of an increase in the funding percentage until solid evidence is available regarding the commercialization of SBIR-funded research and development activities; (2) making SBIR permanent would diminish Congress' oversight authority by eliminating the reauthorization review process; (3) the use of program funds for administrative purposes would mix those two sets of funds and create problems of budgetary control and oversight; and (4) the lowering of the threshold to $20 million would establish two extremely small programs that would be somewhat difficult to administer efficiently and would have little chance to make a significant contribution to meeting the SBIR goal of commercializing its research and development activities.

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