SBTC Aiding SBIR Program Evaluation
Nov 22, 2003
 
The federal Small Business Innovation Research (SBIR) program is receiving an extensive technical evaluation, and SBTC is actively assisting in the effort.

When it renewed the SBIR program in late 2001, Congress asked the National Research Council to weigh the program’s effectiveness as compared to other federal government research and development programs.

The NRC assigned this multi-year study to the National Academy of Sciences. As the study got underway, the SBTC Board of Directors formed a Task Force to assist it. SBTC Board member James Woo, CEO of InterScience, Inc., heads the Task Force.

Here are some of the issues that the SBTC Task Force has been raising in its work with NAS:


• The SBIR program’s purpose is to encourage some of the nation’s most agile and resourceful small technology companies to provide innovations needed by the federal government. But the federal agencies participating in the program have very different missions. So any careful evaluation of SBIR should distinguish between those diverse missions. Some agencies, like the Defense Department, utilize R&D from the SBIR program internally. Others, like the National Science Foundation, underwrite the R&D with the expectation that research institutions or the private sector will ultimately utilize it. Still other agencies, like NASA, utilize some types of R&D internally and promote the commercialization of others. These different agency missions require differing metrics of SBIR effectiveness.

• “Publications and citations”, a metric often used in evaluating the impact of scientific research, is frequently inappropriate in the SBIR environment. For one thing, SBIR research conducted for the Defense Department, NASA or the Energy Department may be classified. For another, trade secrets and proprietary information are important considerations in a program that stresses commercialization. A better metric would be a comparison between patents granted to innovations from SBIR projects and patents arising from other federal R&D programs.

• The innovation process is non-linear, and the “commercialization” of an innovation may take many paths. So should any evaluation of commercialization of SBIR innovations. Commercialization may occur when an agency procures the fruits of an innovation to advance its own mission, as often happens with DoD. It may occur when the technology leads to licenses and spinoff products. It also may occur when entrepreneurs move from one company to another, taking the innovation with them. And it may occur when outside investors, like venture capital funds, step in to move a technology from the lab to the marketplace. In promoting the goal of commercializing SBIR technologies, agencies – and evaluators – should be careful not to assume that commercialization follows a “one size fits all” template.

• Federal agencies must be particularly careful to avoid forcing small technology companies into business models that are unrealistic and potentially dangerous to the companies’ financial well-being. Even under the most optimistic scenarios, most small technology businesses will never become large, publicly-traded companies. So the SBIR program should not implicitly or explicitly equate “commercialization success” with this outcome or paths that appear to lead to it. Commercialization can be achieved using a variety of business models. The SBIR program will work best for the government and the public if all realistic business models are equally respected.

• In particular, it is important not to equate “commercialization” with “venture capital funding interest”. Venture capital funding suits particular types of commercialization scenarios. Typically, these are situations that promise high-margin, near-term commercial successes in clearly-defined target markets. Generally, venture funding does not suit various other commercialization scenarios, such as long-term, broad-based commercial adoptions, licensing strategies, spinoff potentials, and internal government utilization.

• The clarity and simplicity of the SBIR program, and the agencies’ twenty years of experience with it, has led some of them to channel ever-larger proportions of their small business technology acquisitions through it. This is a distortion of the program. SBIR’s purpose is to stimulate innovation, not to provide agencies with a fast track for purchasing mature technologies.

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