With respect to the Small Business Technology Transfer Pilot 

 Program, Title II of P.L. 102564 established this new program. The 

 program also involves small businesses in the Federal research and 

 development effort. The essential difference between the SBIR and 

 STTR Programs is that the small businesses must have a research 

 institution as a partner. The partner must be either a nonprofit re- 

 search institution, such as a university or a federally funded re- 

 search and development center. 



The STTR Program has three phases also. It consists of Phase 

 I which is basically a feasibility study; Phase II which is the actual 

 research and development effort; and Phase III, again a commer- 

 cialization phase. Its funding is based on a set aside of extramural 

 R&D budgets of those agencies with annual extramural budgets of 

 $1 billion or more. There are five agencies that meet this criteria 

 and all directed to set aside not less than .05 percent of the extra- 

 mural R&D obligations for fiscal year 1994 and will set aside .1 

 percent for fiscal year 1995 and .15 percent for 1996. 



As with the SBIR Program, the funding for this program is set 

 aside from existing expenditures. There are no funding obligations 

 for this program. It is much too soon to determine the success or 

 failure of the program based on completed projects, because the 

 program has just completed its first year and is only partially 

 through its second year. The activity of the first year indicates that 

 the program has been well received by small business and by the 

 research institutions. In the first year of operation, small firms 

 submitted 1,950 proposals for Phase I awards. Participating agen- 

 cies actually made 183 Phase I awards for over $17 million. 



In conclusion, the SBIR Program continues to grow and to de- 

 liver a wide spectrum of high technology innovations to improve 

 the lives of all Americans. The STTR Program, while still very new, 

 has been implemented efficiently in a timely manner. These pro- 

 grams play a vital role in the participation of small businesses in 

 our Federal research and development efforts. 



I will be pleased to answer any questions that you may have at 

 the end of this testimony. Thank you. 



[Mr. Neal's statement may be found in the appendix.] 



Chairman TORKILDSEN. Thank you very much, Mr. Neal. Now we 

 will hear from Mr. Victor Rezendes. 



TESTIMONY OF VICTOR S. REZENDES, DIRECTOR, ENERGY 

 AND SCIENCE ISSUES, RESOURCES, COMMUNITY, AND ECO- 

 NOMIC DEVELOPMENT DIVISION, U.S. GENERAL ACCOUNT- 

 ING OFFICE 



Mr. Rezendes. Thank you, Mr. Chairman. It is a pleasure to be 

 here today to talk about GAO's recent report on the interim status 

 of the SBIR Program. What I would like to do for you is just briefly 

 summarize those. 



We have three basic objectives in this report. One is whether the 

 quality of research has kept pace with the increase in the percent- 

 ages of awards. Second, whether implementation of the technical 

 assistance program has occurred at the various agencies. Finally, 

 whether there is any duplicate funding of research. 



The focus of our whole effort was on the five largest Federal 

 agencies with the most SBIR awards which account for about 90 



