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Federal R&D Programs Reserved for Small Business The SMALL BUSINESS INNOVATION RESEARCH PROGRAM (SBIR) and related programs Ronald S. Cooper, Ph.D Office of Technology U.S. Small Business Administration SBIR Program Program structure Evolution and learning Economic impacts

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federal r d programs reserved for small business
Federal R&D ProgramsReserved for Small Business

The

SMALL BUSINESS INNOVATION

RESEARCH PROGRAM

(SBIR)

and related programs

Ronald S. Cooper, Ph.DOffice of TechnologyU.S. Small Business Administration

sbir program
SBIR Program
  • Program structure
  • Evolution and learning
  • Economic impacts
  • Outreach activities
small business innovation development act of 1982
Small Business Innovation Development Act of 1982

Congress designated 4 major goals of SBIR program:

  • Stimulate technological innovation
  • Use small business to meet federal R&D needs
  • Foster and encourage participation by minorities and disadvantaged persons in technological innovation
  • Increase private-sector commercialization of innovations derived from federal R&D
sbir program4
SBIR Program
  • National program providing $1.5 billion each year to small businesses for innovation
  • Over 1,500 firms receive over 5,000 awards each year
  • Enables US small businesses to engage in federally-funded R&D—with potential for commercialization
  • Enables/encourages federal agencies to utilize the innovation advantages of small firms
  • Established 1982, recently extended through FY 2008
program structure
Program Structure

Source of Funds for SBIR:

  • Federal agencies with “extramural” research budgets of over $100 million per year must reserve a percentage for small business through the SBIR program.

Amount of R&D budget to be set-aside for SBIR:

1982-861987-921993-941995-961997-present

0.2+% 1.25% 1.5% 2.0% 2.5%

program structure7
Program Structure
  • Each participating Federal agency administers its own SBIR program
    • Solicitations (with technology topic areas)
    • Proposal review & selection (scientific merit / commercial)
    • Highly competitive: 16% of proposals accepted - Phase I
  • SBA has oversight and outreach responsibilities - Policy directive - Monitoring - National conferences - Evaluation - Outreach programs - Reporting to Congress and activities
sbir participating agencies

TOTAL ~ $1.4 B

FY 2002

SBIR participating agencies
  • SBA (oversight)

$ millions

  • Defense (DOD) 600
  • Health (HHS,NIH) 487
  • Space (NASA) 110
  • Energy (DOE) 95
  • Science (NSF) 78
  • Agriculture (USDA) 17
  • Commerce (DOC) 7
  • Education (ED) 7
  • Environment (EPA) 6
  • Transportation (DOT) 6
sbir s 3 phase structure
SBIR’s 3-Phase Structure

PHASE I

  • Feasibility of idea
  • $100,000 (6-12 months)

PHASE II

  • Full R&D
  • $750,000 (2 years)
  • Commercialization plan

PHASE III

  • Commercialization stage
  • Use of non-SBIR funds (private capital or federal follow-on)
  • Fed: data rights, and noncompete
slide10

SBIR Eligibility—Who may apply?

  • Organized for-profit U.S. business
  • At least 51% ownedand controlled by U.S. citizens (individuals)
  • Small business located in the U.S.
  • 500 or fewer employees
  • Principal Investigator’s primary employmentmust be with the small business
  • Research partners are allowed/encouraged (up to 1/3 of Phase I, up to 1/2 of Phase II)
key features
Key features
  • Contracts & grants, not loans (high-risk research, no debt burden)
  • Small business owns intellectual property
    • Agencies must protect IP for 4 years
    • Agency retains royalty-free license for government use only of technical data (IP)
sbir program12
SBIR Program
  • Program structure
  • Evolution and learning
  • Economic impacts
  • Outreach activities
national policy context
National Policy Context
  • 1950s, 60s -- Federal role was to support basic research in Federal labs and large businesses
  • 1970s, 80s -- Policy shift towards: - commercialization of federal R&D - government-industry partnerships - greater role for small business
      • “Stevenson-Wydler Act” of 1980
      • “University and Small Business Patent Procedure Act” of 1980 (Bayh-Dole Act)
      • “Small Business Innovation Development Act” of 1982 established the SBIR program
sbir sttr historical relationships

Federal

Government

Small

Businesses

SBIR/STTR: Historical Relationships

1982

1997

sbir sttr historical relationships15

Federal

Government

State

Government

 Quasi-Government Corporations

 Economic Development Entities

 Technology Centers

Small

Businesses

SBIR/STTR: Historical Relationships

1998

1982

sbir sttr historical relationships16

Federal

Government

State

Government

 Quasi-Government Corporations

 Economic Development Entities

 Technology Centers

Academia

Small

Businesses

 University Research Parks

 Faculty & Graduate Students

 Technology Incubators

 Research Foundations

SBIR/STTR: Historical Relationships

2000

1982

small business technology transfer program sttr promoting small business university collaboration
Small Business Technology Transfer Program (STTR)Promoting Small Business-University Collaboration
  • Set-aside program to facilitate cooperative R&D between small businesses and U.S. research institutions
  • Established 1992, recently extended through 2009
  • Similar structure to SBIR, administered by SBIR offices
  • Funding:
    • Set-aside = 0.3 % of extramural R&D → $200 million
    • Agencies with extramural R&D > $1B must participate
  • FY2002: 356 Phase I awards 114 Phase II awards
sbir sttr participating agencies
SBIR/STTR participating agencies

Extramural Budget ($B)

  • Defense (DOD) SBIR/STTR 25.4
  • Health (HHS) SBIR/STTR 16.8
  • Space (NASA) SBIR/STTR 4.2
  • Energy (DOE) SBIR/STTR 3.5
  • Science (NSF) SBIR/STTR 2.8
  • Agriculture (USDA) SBIR .6
  • Commerce (DOC) SBIR .3
  • Education (ED) SBIR .3
  • Environment (EPA) SBIR .2
  • Transportation (DOT) SBIR .1

>$1 B/yr

sttr sbir differences
STTR - SBIR Differences
  • STTR requires research institution partner

University or college / non-profit research org. / FFRDC

      • Research partner share: min.= 30% max.= 60%

(SBIR: permits/encourages partners: Phase I: max. 33% Phase II: max. 50%)

      • Award always goes to small business
  • Requires written agreement allocating IPRs
  • Principal Investigator’s primary employment can be with research institution or small business

SBIR: Primary (>50%) employment must be with small business

sbir program20
SBIR Program
  • Program structure
  • Evolution and learning
  • Economic impacts
  • Outreach activities
sbir program impacts
SBIR program impacts
  • Is often only source of funding available
  • Enables new startups, spin-offs
  • Induces entrepreneurial activity (“demonstration effect”)
  • Enables small firms to develop innovative capacity
  • Complements private ventures (reduces risk)
  • “Success rate”: 39% of projects had sales attributable to SBIR (55% had sales or additional investment)
  • Addresses gap in innovation financing
sbir addresses innovation finance gap
SBIR addresses innovation finance gap

Dimensions of the gapSBIR program

1. Information Certification effect, outreach

2. Short timeframe  Awards/grants (no payback)

slide23

US Venture Capital Investmentsby Stage, 2002

Expansion

Late Stage

Early Stage

Start Up

Source: MoneyTree Survey—PricewaterhouseCoopers, Thompson Venture Economics, NVCA.

sbir addresses innovation finance gap25
SBIR addresses innovation finance gap

Dimensions of the GapSBIR program

1. Information Certification effect, outreach

2. Short timeframe  Awards/grants--no payback

3. Size of financing  Small grants (< $1m)

sbir addresses innovation finance gap27
SBIR addresses innovation finance gap

Dimensions of the GapSBIR program

1. Information Certification effect, outreach

2. Short Timeframe  Awards/grants--no payback

3. Size of financing  Small grants (< $1m)

4. Few technology areas  Wide range of technologies

5. Geographic specialization  Broad geographic coverage

slide28

Funding Sources for Early-stage Technology Development in U.S.

Lower estimate: $5.4 Bil. Upper estimate: $35.6 Bil.

Note: Proportional distribution is similar regardless of restrictive or inclusive definitions.

[Source: Philip Auerswald, Lewis Branscomb, Between Invention and Innovation]

slide29

Improving SBIR Program evaluation

  • Integrating commercialization reporting into on-line application
  • National Research Council (NRC) 3-year review
sbir program30
SBIR Program
  • Program structure
  • Evolution and learning
  • Economic impacts
  • Outreach activities
outreach assistance initiatives
Outreach & assistance initiatives:

“63% of SBIR projects need assistance with commercialization activities”

  • SBIR & STTR outreach to low-income communities, women-owned businesses, and socially/ economically disadvantaged
  • Federal & State Technology Partnership (FAST)
  • Rural Outreach Program
  • Coordinate with other programs (SBIC, VC/AC networks)
federal and state technology partnership fast program
Federal and State Technology Partnership (FAST) Program
  • Purpose: to provide support to state-level organizations that help small businesses in, or interested in, the SBIR program
    • Mentoring networks: Business advice & counseling
  • Matching grants to state-level organizations
    • incentive for states with lower levels of SBIR participation
    • administered by SBA
  • Target: All states eligible, one grant per state
  • Funding = FY 2001: $3 million, 30 grants FY 2002: $3 million, 27 grants FY 2004: $2 million, 10 grants(Grant size: $100K)
rural outreach program
Rural Outreach Program
  • Purpose: to geographically expand competition for SBIR awards by supporting outreach efforts in states with low levels of program participation.
  • Target: 25 rural states
  • Matching 5-year grants: one per state, 1:2 (state:federal)
  • Funding level: FY 2001: $1.5 million, 25 awards FY 2002: $500K, 10 awards FY 2004: $250K 5 awards
  • Grant sizes:$40K, $52K, $80K
sbir sttr programs office of technology u s small business administration
SBIR & STTR ProgramsOffice of Technology U.S. Small Business Administration

For more information

  • Contact individual agency websites
  • Cross-agency websites:

www.sba.gov/sbirwww.sbirworld.com

Ronald S. Cooper

ronald.cooper@sba.gov

(202) 205-6455