Federal Research:

Observations on the Small Business Innovation Research Program

T-RCED-98-218: Published: Jun 4, 1998. Publicly Released: Jun 4, 1998.

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GAO discussed the Small Business Innovation Research (SBIR) program, focusing on: (1) agencies' adherence to statutory funding requirements; (2) agencies' audits of extramural (external) research and development (R&D) budgets; (3) the effect of the application review process and funding cycles on award recipients; (4) the extent of companies' project activity after receiving SBIR funding and agencies' techniques to foster commercialization; (5) the number of multiple award recipients and the extent of project activity after receiving SBIR funding; (6) the occurrence of funding for single proposal awards; (7) participation by women-owned business and socially and economically disadvantaged business; (8) SBIR's promotion of the critical technologies; (9) the extent foreign firms benefit from SBIR results; and (10) the geographical distribution of SBIR awards.

GAO noted that: (1) agencies have adhered to the Small Business Research and Development Enhancement Act's funding requirements; (2) agency program officials reported that they are not using SBIR funds to pay for administrative costs of the program; (3) program officials believe that they are adhering to the statutory requirement to fund the program at 2.5 percent of agencies' extramural budget; (4) some officials believe that agencies are using different interpretations of the extramural budget definition, which may lead to incorrect calculations; (5) of the five agencies reviewed, only two have conducted audits of their extramural budgets; (6) while most SBIR officials interviewed said that neither the application review process nor current funding cycles have had an adverse effect on award recipients' financial status or ability to commercialize, some recipients have said that any interruption in funding awards affects them negatively; (7) most participating SBIR agencies have established programs to minimize funding gaps; (8) companies reported that approximately 50 percent of their projects had sales of products or services related to research or received additional developmental funding after receiving SBIR funding; (9) the agencies identified various techniques to foster the commercialization of SBIR-funded technologies; (10) the number of companies receiving multiple awards had grown from 10 companies in 1989 to 17 in 1996; (11) multiple-award recipients and non-multiple-award recipients commercialized at almost identical rates; (12) agencies rarely fund research for a given solicitation topic where only one proposal was received; (13) of the five agencies examined, all reported engaging in activities to foster the participation of women-owned or socially and economically disadvantaged small businesses; (14) all agencies' SBIR officials believed that the listings of critical technologies are used in developing their respective research topics or that the research being conducted falls within one of the two lists; (15) little evidence of foreign firms benefiting from technology or products developed as a direct result of SBIR-funded research; (16) a Small Business Administration study reported that one-third of the states received 85 percent of all SBIR awards and funds; and (17) previous studies of SBIR have linked the concentration of awards to local characteristics.

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