Pursuant to a legislative requirement, GAO reviewed the aggregate commercial trends in Phase III of the Small Business Innovation Research (SBIR) Program.

GAO found that: (1) Congress authorized the SBIR Program to strengthen the role of small, innovative companies in research and development; (2) Phase III involves the use of nonfederal funds for commercial application of technology or non-SBIR federal funds for government contracts for government application; (3) as of July 1991, the SBIR Program had generated about $1.1 billion in Phase III sales and additional funding for technical development; (4) according to a survey of 1,457 Phase II projects, 934 projects have remained active while 518 have been discontinued; (5) commercialization trends vary by agency; (6) reasons for such differences in commercialization trends include the wide variation in markets for SBIR projects or processes and in links between projects and agency missions; (7) issues that affect Phase III activity include the extent of the Department of Defense's (DOD) commitment to the goal of increasing private-sector commercialization, inconsistent procurement practices in requiring competition for SBIR projects entering phase III, and whether the company or the agency that funded the work should perform additional work after phase II if the agency wishes to continue work on the technology; and (8) the Small Business Administration (SBA) has initiated a study of the operating attributes of firms with multiple Phase II awards, since such companies have lower sales and require additional funding.

Status Legend:

Review Pending-GAO has not yet assessed implementation status.

Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.

Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.

Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.

• Review Pending
• Open
• Closed - implemented
• Closed - not implemented

Matters for Congressional Consideration

Matter: To further the goal of increasing private-sector commercialization, Congress may wish to consider whether DOD should place greater emphasis on commercialization through such means as identifying and selecting dual-use technologies for SBIR awards.

Status: Review Pending

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Matter: To eliminate inconsistent agency practices in requiring competition for federal, non-SBIR-funded follow-on contracts, Congress may wish to consider clarifying whether Phase III activity must comply with the Competition in Contracting Act's (CICA) competitive procedures or whether the competition in the earlier phases of the program satisfies CICA requirements.

Status: Review Pending

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Matter: To avoid misunderstandings between companies and federal agencies, Congress may wish to consider requiring the Administrator, SBA, to issue a policy directive for agencies that are planning to work on a company's SBIR technology after the end of SBIR funding. Such a directive would clarify the circumstances under which it may be appropriate for an agency to continue working with a company through a follow-on, non-SBIR-funded contract.

Status: Review Pending

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.