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Defense SBIR Program Reviewed

May 23, 1997

The General Accounting Office (GAO) recently released its review of the policies and procedures of the Department of Defense (DoD) Small Business Innovation Research (SBIR) program. In FY 1997, approximately $1 billion, government wide, has been set-aside for this program. Approximately $500 million of that amount is projected to be funded by DoD.

The National Defense Authorization Act for Fiscal Year 1997 required GAO to review certain aspects of DoD's SBIR program. As part of the review process, GAO interviewed officials in the Small Business Administration, Department of Defense, and the participating DoD divisions and agencies, in addition to reviewing implementing instructions, guidelines, and other pertinent documents.

Based on its findings, GAO concluded that quality research is being conducted, competitive procedures are being followed, and the products and processes developed through the program are being used in military projects and programs.

As part of the review process, GAO examined a number of SBIR program statistics:

  • DoD SBIR Expenditures

GAO found that from 1992 to 1997 DoD spending on SBIR had increased 116 percent. The increase is due largely to the required increase from 1 percent to 2.5 percent of extramural research and development funding set aside for the SBIR program.

  • Percent of Phase I Proposals Funded

While spending has increased dramatically in the last several years, the percentage of Phase I proposals selected for funding has increased only slightly--from11.9 percent in 1992 to 13.6 percent in 1996.

  • Phase 1 Proposals That Went on to Phase II

GAO reported that from FY1983 through FY1996 12,988 Phase I proposals were funded, and 4,393 Phase II proposals were selected for further funding. This represents 33.8 percent of Phase I proposals going on to Phase II.

  • Commercialization Results

GAO also found that there was a high rate of commercialization with DoD being the largest market. The preliminary results of a GAO survey found approximately half of the respondents had sales of a product, process or service developed under DoD's SBIR program. Average sales per project was $756,000. Approximately 52 percent of the total sales have been made to DoD or its prime subcontractors and 35 percent to the private sector, with the remainder to other customers.

GAO is planning to examine in greater detail the management and implementation of the SBIR programs of all participating federal agencies, including DoD.

A copy of the GAO report, "Federal Research: DoD's Small Business Innovation Research Program" (GAO/RCED-97-122) can be obtained by calling the GAO at 202/512-6000.