SMALL BUSINESS ADMINISTRATION'S SMALL 

 BUSINESS INNOVATION RESEARCH (SBIR) 

 PROGRAM 



THURSDAY, APRIL 6, 1995 



House of Representatives, 

 Subcommittee on Government Programs, 



Committee on Small Business, 



Washington, DC. 



The subcommittee met, pursuant to notice, at 10:05 a.m., in room 

 2359-A, Raybum House Ofifice Building, Hon. Peter Torkildsen, 

 (chairman of the subcommittee), presiding. 



Chairman ToRKILDSEN. Good morning. The subcommittee will 

 come to order. This hearing marks the last in a series of hearings 

 reviewing the Small Business Administration Programs. It is ap- 

 propriate that the last of these hearings should be on the most for- 

 ward looking of its programs, the SBIR or Small Business Innova- 

 tion Researcn Program. As we look toward the future of small busi- 

 ness, we must necessarily include high technology. It is in this sec- 

 tor that some of the highest paying jobs are created. It is from this 

 sector that much of the greatest growth will come. 



Technology-oriented small businesses are fertile ground for inno- 

 vation that suffer under a number of constraints. Access to capital 

 is the most obvious problem and it is one that we have addressed 

 in other hearings of the full committee. But the more challenging 

 issue and the one which the SBIR Program attempts to address is 

 this. How do we take the tremendous creativity and flexibility of 

 the small company and give it a forum where the innovative tech- 

 nologies these companies develop can be utilized by the Govern- 

 ment and the commercial marketplace? 



We have all heard stories of commercialization of technologies 

 developed for the space program or the NIH yielding tremendous 

 benefits for the consumer and companies that nave commercialized 

 them. Should not small companies have a similar opportunity? The 

 SBIR Program was created to help answer that question. 



SBIR challenges agencies and departments that have massive, 

 extramural research budgets in excess of $100 million to take a 

 nominal percentage of those funds and set them aside for small 

 business which competes for research projects at two levels — the 

 feasibility study and the research phase — in which then they com- 

 mercialize the resulting product or technology. 



The percentage of research and development dollars set aside for 

 small business increases every 2 years from 1.5 percent in 1993 

 and 1994 to 2 percent in 1995 and 1996 and not less than 2.5 per- 



(1) 



