Federal Research

Evaluation of Small Business Innovation Research Can Be Strengthened Gao ID: RCED-99-114 June 4, 1999

The United States depends heavily on innovation through research and development. The Small Business Innovation Development Act of 1982, which authorized the Small Business Innovation Research (SBIR) Program, emphasizes the benefits of technological innovation and the ability of small businesses to transform the results of research into new products. As the program has matured in the 1990s, congressional concern has focused on the companies' ability to commercialize the results of their research and on the concentration of awards in certain states and companies--commonly known as "frequent winners." This report discusses the (1) distribution of awards by company and geographic area, (2) extent to which federal agencies are considering commercial potential and the program's other goals in making their awards, and (3) previous evaluations of the SBIR program to identify opportunities to improve measurements of the program's outcomes. GAO summarized this report in testimony before Congress; see: Federal Research: Evaluation of Small Business Innovation Research Can Be Strengthened, by Susan D. Kladiva, Associate Director for Energy, Resources, and Science Issues, before the Subcommittee on Technology, House Committee on Science. GAO/T-RCED-99-198, June 17 (11 pages).

GAO noted that: (1) from fiscal year (FY) 1983 through FY 1997, the 25 most frequent winners received over $900 million, or about 11 percent of the program's awards; (2) these companies represent fewer than 1 percent of all the companies that have received awards; (3) the program has a high number of first-time participants; (4) one-third of the companies receiving awards from FY 1993 through FY 1997 were first-time winners, indicating that the program is attracting hundreds of new companies annually; (5) SBIR awards are concentrated in certain states, largely because companies in these states submitted the most proposals; (6) to broaden the geographic distribution of awards, agencies have made efforts to encourage the submission of proposals from companies in states with fewer awards; (7) in response to the 1992 reauthorization, agencies are considering commercial potential as an explicit criterion when evaluating proposals; (8) the reauthorization does not clarify how a company's commercialization record and the program's other goals should be used in evaluations of proposals; (9) this lack of clarity has led to differences across agencies in how they evaluate proposals; (10) early tests of the Department of Defense's (DOD) plan indicated that some of the most frequent winners that have been relatively unsuccessful in commercializing their research results would not have been penalized if only a few of their awards had resulted in sales; (11) at the same time, companies with far fewer awards and no previous sales might have been subject to penalties; (12) although DOD has revised its plan to avoid this problem, the lack of clarity in the legislation remains a concern; (13) federal agencies and others have used various methods to evaluate the program's commercial outcomes; (14) these methods have used snapshots of sales, data on additional developmental funding for the projects, success stories, and other indications of commercial success; (15) however, they become quickly outdated and do not provide an ongoing, consistent, and programwide record; (16) the use of a single method with uniform criteria for success focusing on commercial outcomes and other indicators of success would help to satisfy the requirements of the Government Performance and Results Act of 1993; (17) the Small Business Administration is developing a new database called Tech-Net; and (18) Tech-Net affords an opportunity to maintain current, consistent information about commercial and other outcomes and responds to the Results Act.


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