8 



new technology. The Small Business Innovation Act accomplished 

 this purpose of setting aside a fixed percentage of extramural R&D 

 funds for small business. Each Federal agency with an extramural 

 R&D budget greater than $100 million for any fiscal year must es- 

 tablish a SBIR Program. Currently, there are 11 participating 

 agencies under the original 1982 law. The set aside was .5 percent. 



Over the subsequent years, the program has slowly grown such 

 that the second reauthorization, P.L. 102564 set aside is currently 

 at 2 percent with an increase schedule for fiscal year 1997 to 2.5 

 percent. 



The small businesses v/in SBIR awards in grants or contracts 

 through a competitive process, in response to solicitations issued by 

 each participating agency. SBA is not a participating agency and 

 does not make R&D awards to businesses but serves as the coordi- 

 nator for the program. Under the act, the SBIR Program is a three- 

 phase process which must be followed. The three phases are Phase 

 I, awards of approximately 6 months and up to $100,000 are made 

 for research to evaluate the scientific and technical merit and fea- 

 sibility of an idea. 



Under Phase II, as a result of Phase I, those projects which are 

 the best are funded for 1 or 2 years up to a $750,000 to further 

 develop the proposed ideas to meet the agency's needs. 



Phase III, private sector investment and support help bring an 

 innovation to the marketplace. No SBIR funds are expended in 

 Phase III. There are no additional appropriations to fund this 

 work. All SBIR funding is set aside from existing R&D budgets of 

 the participating agencies. In its 13 years of performance, the SBIR 

 Program has met and surpassed all of its objectives. The program 

 has grown at a steady rate, in an orderly manner, and with impres- 

 sive accomplishments. 



In the history of the SBIR, in response to 158 solicitations, the 

 11 Federal agencies in the program have made over 37,000 com- 

 petitive awards with more than $5.3 billion. In fiscal year 1994, 

 based on preliminary results from reports just received, over 4,000 

 awards were made worth $700 million. The most satisfying accom- 

 plishment of the SBIR Program, however, is its success in develop- 

 ing and commercializing innovations derived from Federal re- 

 search. Preliminary results from an ongoing study of SBIR com- 

 mercialization indicate that the number of SBIR projects resulting 

 in high technology products and services has been successful be- 

 yond our expectations. The study suggests that fully 38.9 percent 

 of these projects were commercialized. 



It is not only the numbers that are so gratifying, but the range 

 of technological innovations developed. The list of accomplishments 

 is a long one, including environmental projects to improve our 

 water and air, medical products with a demonstrated ability to im- 

 prove our well being, educational products that help the handicap 

 learn, transportational projects that help us to travel efficiently 

 and safety, and many projects to improve our supply and use en- 

 ergy to help us communicate, to assure our national safety, and to 

 improve our food supply. 



In summary, the success of the SBIR Program is unqualified. 

 This attests to the strength of the small business entrepreneurs 

 and their creativity. 



