National Research Council Finds SBIR Program Supports Small Business and Stimulates Innovation

The Small Business Advocate, November 2007 | Go to article overview

National Research Council Finds SBIR Program Supports Small Business and Stimulates Innovation


The Small Business Innovation Development Act of 1982 established the Small Business Innovation Research (SBIR) program to strengthen the role of innovative small business concerns in federally funded research and development. Under SBIR, 11 federal agencies are required to reserve 2.5 percent of their R&D research budget for the program. These agencies are the Departments of Agriculture, Commerce, Defense, Education, Energy, Health and Human Services, Homeland security, and Transportation; and the Environmental Protection Agency, National Aeronautics and Space Administration, and the National Science Foundation.

The Small Business Administration is the statutory coordinating agency for SBIR. It directs the 11 agencies' implementation of SBIR, reviews their progress, and reports annually to Congress on its operation. SBA is not involved in the agencies' SBIR contract awards.

SBIR is a three-phase program. The startup phase (Phase I) consists of contract awards of up to $100,000 to support exploration of the technical merit or feasibility of an idea or technology. Phase I winners may receive Phase II awards of up to $750,000 to expand their results. During this time, the developer performs R&D work and evaluates the idea's commercialization potential. In Phase III, the innovation moves from the laboratory to the marketplace, but no SBIR funds support this phase. The small business must find funding in the private sector or through another federal agency program.

Between 1992 and 2005, more than 14,880 firms received at least one Phase II award. A total of $17.9 billion has been awarded to innovative small firms since 1982. In 2005, participating agencies received 30,183 proposals and made 6,171 awards amounting to $1.87 billion. The top five agency participants are the Department of Defense ($943 million), NASA ($103 million), Health and Human Services ($562 million), Department of Energy ($104 million), and the National Science Foundation ($79 million).

The American public benefits from new products and services developed by companies through SBIR. For example, broadband acoustic doppler current profiler (ADCP) products-ocean research instruments-are widely used by the Defense Department to measure physical properties of the ocean in regions of interest to the U. …

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National Research Council Finds SBIR Program Supports Small Business and Stimulates Innovation
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