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National Research Council (US) Committee on Capitalizing on Science, Technology, and Innovation; Wessner CW, editor. SBIR and the Phase III Challenge of Commercialization: Report of a Symposium. Washington (DC): National Academies Press (US); 2007.

Cover of SBIR and the Phase III Challenge of Commercialization

SBIR and the Phase III Challenge of Commercialization: Report of a Symposium.

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Today’s knowledge economy is driven in large part by the nation’s capacity to innovate. One of the defining features of the U.S. economy is a high level of entrepreneurial activity. Entrepreneurs in the United States see opportunities and are willing and able to take on risk to bring new welfare-enhancing, wealth-generating technologies to the market. Yet, while innovation in areas such as genomics, bioinformatics, and nanotechnology present new opportunities, converting these ideas into innovations for the market involves substantial challenges.1 The American capacity for innovation can be strengthened by addressing the challenges faced by entrepreneurs. Public-private partnerships are one means to help entrepreneurs bring new ideas to market.2

The Small Business Innovation Research (SBIR) program is one of the largest examples of U.S. public-private partnerships. Founded in 1982, SBIR was designed to encourage small business to develop new processes and products and to provide quality research in support of the many missions of the U.S. government. By including qualified small businesses in the nation’s R&D effort, SBIR grants and contracts are intended to stimulate innovative new technologies to help agencies meet the specific research and development needs of the nation in many areas, including health, the environment, and national defense. The SBIR program is today the largest of the government’s efforts to draw on the inventiveness of small, high-technology firms, with a budget of $1.85 billion for 2005.3


As the SBIR program approached its twentieth year of operation, the U.S. Congress asked the National Research Council (NRC) to conduct a “comprehensive study of how the SBIR program has stimulated technological innovation and used small businesses to meet federal research and development needs” and make recommendations on improvements to the program. HR 5667 directs the NRC to evaluate the quality of SBIR research and evaluate the SBIR program’s value to the mission of the agencies that administer it. It calls for an assessment of the extent to which SBIR projects achieve some measure of commercialization, as well as an evaluation of the program’s overall economic and non-economic benefits. It also calls for additional analysis as required to support specific recommendations on areas such as measuring outcomes to enhance agency strategy and performance, increasing Federal procurement of technologies produced by small business, and overall improvements to the SBIR program.

It is important to note that the NRC Committee assessing the SBIR program was not asked to consider if SBIR should exist or not—Congress has affirmatively decided this question on three occasions.4 Rather, the Committee was charged with providing an empirically based assessment of the program’s operations, achievements, and challenges to improve public understanding of the program and to develop recommendations to enhance the program’s effectiveness.

With regard to the program’s effectiveness, it became apparent in the course of the Academies’ review that the Phase III element of the SBIR program would benefit from further examination. This need seemed particularly apparent for the agencies most often involved in the procurement of technologies developed using SBIR awards. Some in the SBIR community believe that this phase of the program could be improved. Some agencies seem to have adopted effective means of managing the Phase III transition. And in the course of the study, the prime contractors responsible for major systems at the Department of Defense (DoD) and the National Aeronautics and Space Administration (NASA) have shown greater interest in the SBIR program, seeing it increasingly as a wellspring of innovative technologies.

To capture these various perspectives, the Academies convened the conference on “SBIR and the Phase III Challenge of Commercialization” on June 14, 2005. The meeting focused on the commercialization of SBIR-funded innovations at DoD and NASA, where commercialization often takes the form of agency acquisition. It was held under the leadership of Jacques Gansler, vice president for research at the University of Maryland and former Under Secretary of Defense for Acquisition, Technology and Logistics.

A unique feature of the conference is that it brought together, for the first time, the program managers, small business leaders, and prime contractor personnel involved in commercializing the results of SBIR awards through procurement at the DoD and NASA. These participants identified the challenges as well as highlighted existing and evolving best practices among successful cases in the third (or commercialization) phase of the SBIR program. This conference, summarized in this report, covered a rich variety of topics though, given the one-day timeframe of the meeting and the richness of the subject, did not (and indeed could not) cover the many possible issues associated with the program. The conference and this report do have the virtue of focusing on a key element of the SBIR program—the Phase III transition.5


On behalf of the National Academies, we express our appreciation and recognition for the insights, experiences, and perspectives made available by the participants in the conference.

A number of individuals deserve recognition for their contributions to the preparation of the conference and this report. These include Ken Jacobson, Robin Gaster, Sujai Shivakumar, McAlister Clabaugh, and David Dierksheide. Without their collective efforts, amidst many other competing priorities, it would not have been possible to prepare this report in the required period.


This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures approved by the National Academies’ Report Review Committee. The purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional standards for quality and objectivity. The review comments and draft manuscript remain confidential to protect the integrity of the process.

We wish to thank the following individuals for their review of this report: Robert Archibald, College of William and Mary; Robert Genco, State University of New York at Buffalo; Jere Glover, Small Business Technology Coalition; and Richard Hendel, The Boeing Company.

Although the reviewers listed above have provided many constructive comments and suggestions, they were not asked to endorse the content of the report, nor did they see the final draft before its release. The review of this report was overseen by Robert White, Carnegie Mellon University, appointed by the National Academies, he was responsible for making certain that an independent examination of this report was carried out in accordance with institutional procedures and that all review comments were carefully considered. Responsibility for the final content of this report rests entirely with the authors and the institution.


Following this preface, the report’s introduction describes the challenges of early stage finance in the United States and the SBIR program as well as the particular challenges of procurement for DoD and NASA. It also summarizes the key issues from the conference. The final Proceedings section of this volume provides a detailed compilation of the presentations and discussion remarks of the various speakers at the conference.

Jacques S. Gansler

Charles W. Wessner



See Lewis M. Branscomb, Kenneth P. Morse, Michael J. Roberts, and Darin Boville, Managing Technical Risk: Understanding Private Sector Decision Making on Early Stage Technology Based Projects, Washington, D.C.: Department of Commerce/National Institute of Standards and Technology, 2000.


For a summary analysis of best practice among U.S. public-private partnerships, see National Research Council, Government-Industry Partnerships for the Development of New Technologies: Summary Report, Charles W. Wessner, ed., Washington, D.C.: National Academies Press, 2002.


U.S. Small Business Administration TechNet Data Base, < >, Accessed on July 25, 2006.


These are the 1982 Small Business Development Act and the subsequent multi-year reauthorizations of the SBIR program in 1992 and 2000.


This conference focuses on commercialization, one of four goals of the Small Business Innovation Research (SBIR) program. Created in 1982 through the Small Business Innovation Development Act, the program is designated with four distinct purposes: “(1) to stimulate technological innovation; (2) to use small business to meet federal research and development needs; (3) to foster and encourage participation by minority and disadvantaged persons in technological innovation; and (4) to increase private sector commercialization innovations derived from Federal research and development.”

Copyright © 2007, National Academy of Sciences.
Bookshelf ID: NBK11407
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