Federal Research

The Small Business Technology Transfer Pilot Program and the Small Business Innovation Research Program share similar goals: to emphasize the benefits of technological innovation and the ability of small business to translate the results of research and development into new products. The first program differs from the second primarily in requiring a company to form a partnership with a nonprofit research institution. This testimony is based on a January 1996 report (GAO/RCED-96-19) on the Small Business Technology Transfer Pilot Program that discussed the (1) quality and commercial potential of research proposals, (2) steps taken to avoid the conflict of interest that would arise if a party both submitted and evaluated program proposals, and (3) effect of and need for the program.

GAO noted that: (1) federal agencies rated the quality and commercial potential of STTR research proposals favorably in the first year of the program; (2) technical experts generally concluded that the proposals called for high-quality research; (3) as one example, the Department of Energy rated the quality of the proposed research in all of its winning proposals as being among the top 10 percent of the research in the Department; (4) at the time, however, the technical experts were somewhat cautious about the commercial potential; (5) the five agencies participating in the program have taken steps to avoid the potential conflicts that might arise if a federally funded research and development (R&D) center formed a partnership with a company submitting a STTR proposal and then helped a federal agency judge the merits of its own and other proposals; (6) for example, the Department of Defense approved only two R&D centers as research partners and planned to evaluate future proposals on a case-by-case basis to ensure that conflicts of interest would not occur; (7) agency officials expressed differing views on the effect of and need for the STTR Program; (8) the agencies provided no evidence in the first year of the program to suggest that it was competing for quality proposals with the Small Business Innovation Research (SBIR) Program or reducing the quality of agency R&D in general; (9) some officials noted potentially beneficial effects, such as greater collaboration between small businesses and research institutions in the SBIR Program; (10) the similarity of the two programs, however, raises three questions about the need for the pilot program: (a) is the technology originating primarily in the research institution as envisioned in the rationale for the program or is it originating in the small business? (b) is the mandatory collaboration between small business and the research institution effective in transferring the technology to the market place? and (c) can the SBIR Program accomplish the same objective without the collaboration required by the STTR Program?