NRC An Assessment of SBIR Program - National Defense Industrial ...

An Assessment of the Small Business Innovation Research Program
http://www.nap.edu/catalog/11989.html
PREPUBLICATION COPY
their sunset provisions tend to ensure early recourse to private funding or national
procurement. In terms of project scale and timing in the innovation process, publicprivate
partnerships do not displace private finance. Properly constructed research and
development partnerships can actually elicit “crowding in” phenomena with public
investments in R&D providing the needed signals to attract private investment. 35 ”
Drawing on these recommendations, the December 2000 legislation mandated the current
comprehensive assessment of the nation’s SBIR program. This NRC assessment of SBIR is
being conducted in three phases. The first phase developed a research methodology that
was reviewed and approved by an independent National Academies panel of experts.
Information available about the program was also gathered through interviews with officials
at the relevant federal agencies and through two major conferences where these officials
were invited to describe program operations, challenges, and accomplishments. These
conferences highlighted the important differences in agency goals, practices, and evaluations.
They also served to describe the evaluation challenges that arise from the diversity in
program objectives and practices. 36
The second phase of the study implemented the research methodology. The Committee
deployed multiple survey instruments and its researchers conducted case studies of a wide
variety of SBIR firms. The Committee then evaluated the results, and developed the
recommendations and findings found in this report for improving the effectiveness of the
SBIR program.
The third phase of the study will provide an update of the survey and related case studies, as
well as explore other issues that emerged in the course of this study. It will, in effect,
provide a second snapshot of the program and the agencies’ progress and challenges
The Structure and Diversity of SBIR
Eleven federal agencies are currently required to set aside 2.5 percent of their extramural
research and development budget exclusively for SBIR awards and contracts. Each year
these agencies identify various R&D topics, representing scientific and technical problems
requiring innovative solutions, for pursuit by small businesses under the SBIR program.
35 David, Hall, and Toole survey the econometric evidence over the past 35 years. They note that the “findings
overall are ambivalent and the existing literature as a whole is subject to the criticism that the nature of the
“experiment(s)” that the investigators envisage is not adequately specified.” It seems that both crowding out
and crowding in can occur. The essential finding is that the evidence is inconclusive and that assumptions
about crowding out are unsubstantiated. The outcome appears to depend on the specifics of the circumstance,
and these are not adequately captured in available data. See Paul A. David, Bronwyn H. Hall, and Andrew A.
Toole, “Is Public R&D a Complement or Substitute for Private R&D? A Review of the Econometric
Evidence.” NBER Working Paper 7373, October 1999. Relatedly, Feldman and Kelley cite the “halo effect”
created by ATP awards in helping firms signal their potential to private investors. See Maryann Feldman and
Maryellen Kelley, “Leveraging Research and Development: The Impact of the Advanced Technology
Program,” in National Research Council, The Advanced Technology Program, C. Wessner, ed. Washington D.C.:
National Academy Press, 2001.
36 Adapted from National Research Council, SBIR: Program Diversity and Assessment Challenges, op. cit.
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