The Small Business Innovation Development Act of 1982 created the Small Business Innovation Research program. SBIR was designed to stimulate technological innovation among small private-sector businesses while providing the Government new, cost-effective, technical and scientific solutions to challenging problems. At the same time, SBIR encourages small businesses to market the SBIR technology in the private sector which, in turn, helps stimulate the U. S. economy.
Research and development are major factors in the growth and progress of industry. However, the expense of carrying on a serious R&D program is beyond the means of many small business concerns, placing them at an immediate competitive disadvantage.
The SBIR program helps establish an even playing field. At the front end of the process, the Government offers the small R&D business the opportunity to compete for contracts for federal research. The Government’s front-end funding of the high risk research allows the best ideas to surface. At the tail end of the process, SBIR offers the small business the opportunity and encouragement to commercialize the results of the SBIR project, while serving to lower the risk for most private investors interested in commercializing the technology.
Eleven federal agencies, including the Departments of Defense, Energy, Agriculture, Education, Commerce, Health and Human Services (HHS), Transportation, and NASA are required to set aside a portion of their research and development budget exclusively for SBIR contracts. (The Air Force SBIR budget for FY99 was over $193 million.)
Each year these agencies identify various R&D topics for small businesses to pursue under the SBIR program. These topics represent scientific and technical problems requiring innovative solutions. The Government bundles these topics into agency solicitations that it distributes to interested businesses.
After reviewing the solicitation material, a small business can identify an appropriate topic it wants to pursue and offer a proposal. Technical experts in the federal laboratories or research centers review and evaluate the proposals on a competitive basis. Each agency then selects the best proposals, awarding contracts to the most highly qualified small businesses with the most innovative solutions.
The SBIR program was designed and developed as a “pro small-business” engine for change and innovation. SBIR has four principal objectives:
Phase I contracts are valued up to $100,000 and are awarded for research efforts lasting nine months. Each project addresses a topic area identified in an agency solicitation. Phase I awards help determine the feasibility of a new technology. An agency’s technical and scientific experts choose Phase I winners competitively.
Phase II contracts are only awarded to successful Phase I contract winners and are valued up to $750,000. Awards of Phase II contracts are based on Phase I results and technical merit of the Phase II proposal. The potential of the concept for commercial applications is also given careful consideration. Approximately 50 percent of Phase I contract recipients receive follow-on funding for Phase II projects. Phase II awards typically cover two- to five-person-years of effort over a period generally not exceeding 24 months (subject to negotiation).
Phase III involves private sector or federal agency funding (outside the SBIR program) to commercialize a Phase II project. While small business is ultimately responsible for the commercial marketing and sale of the technology or product developed under SBIR, the Government encourages commercialization efforts. In this role the Government makes every reasonable effort to ensure that any Government follow-up actions to research, develop or produce technology developed under SBIR is accomplished through contracts with the same SBIR small business that originally worked on developing the technology.
Five federal agencies are participating in the Small Business Technology Transfer Program (STTR): DoD, Department of Health and Human Services, NASA, Department of Energy (DOE), and the National Science Foundation. The STTR program established by the Small Business Research and Development Enhancement Act of 1992, directs the Small Business Administration to oversee and coordinated implementation of the program.
STTR will be a three-year pilot program, funded with a small percentage of each agency’s extramural R & D budget - 0.05 percent in FY94 ($24 million), 0.10 percent in FY95 ($48 million), and 0.15 percent in FY96 ($72 million).
The existing SBIR program exploits commercially promising ideas that originate in the small business community. University involvement in SBIR projects, while common, tends to be in a minor consulting or subcontracting role. Researchers at universities and other research institutions are not allowed to participate in the SBIR program in a significant way as long as they remain primarily employed at the institution.
STTR, by contrast, will allow and require researchers at research institutions (universities, federally funded research and development centers, and non-profit research institutions) to play a significant role in each STTR project. Those researchers, by joining forces with a small company, can thus spin off their commercially promising ideas while remaining primarily employed at the research institution.
Mr. Steve Guilfoos
Air Force SBIR Program Manager
AFRL/XPTT
1864 4th Street, Suite 1 Bldg 15
Wright-Patterson AFB, OH 45433-7131
(800) 222-0336
In Dayton, call (937) 656-9021 
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