SMALL BUSINESS 

RESEARCH 

PROGRAMS

Most Agencies Met 

Spending 

Requirements, but 

DOD and EPA Need 

to Improve Data 

Reporting

Report to Congressional Committees

May 2017

GAO-17-453

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-17-453, a report to 

congressional committees

May 2017

SMALL BUSINESS RESEARCH PROGRAMS

Most Agencies Met Spending Requirements, but DOD 

and EPA Need to Improve Data Reporting

Why GAO Did This Study

Through the SBIR and STTR 

programs, federal agencies have 

awarded contracts and grants totaling 

about $44 billion to small businesses to 

develop and commercialize innovative 

technologies. The Small Business Act 

requires agencies with extramural R&D 

obligations that meet certain 

thresholds—$100 million for SBIR and 

$1 billion for STTR—to spend a 

percentage of these funds on the 

programs. The agencies are to report 

on their activities to SBA and, in turn, 

SBA is to report to Congress.

The 2011 reauthorization of the 

programs includes a provision for GAO 

to review agencies’ compliance with 

SBIR and STTR spending and 

reporting requirements and other 

program aspects. This report 

examines, for fiscal year 2015, (1) the 

extent to which participating agencies 

met spending requirements, (2) the 

extent to which agencies and SBA met

certain reporting requirements, (3) the

potential effects of basing spending 

requirements on total R&D budget

authority instead of on extramural R&D 

obligations, and (4) what is known 

about the amounts agencies spent to 

administer the programs. GAO 

reviewed agency spending data and 

reports and interviewed program 

officials from SBA and the 11

participating agencies.

What GAO Recommends

GAO recommends that DOD and EPA 

establish procedures to report 

obligations data or propose to 

Congress an alternative methodology 

for calculating spending requirements.

DOD and EPA agreed with GAO’s 

recommendation.

What GAO Found

Data submitted to the Small Business Administration (SBA) indicate that most of 

the agencies participating in the Small Business Innovation Research (SBIR) and 

Small Business Technology Transfer (STTR) programs met spending 

requirements for fiscal year 2015. Nine of the 11 agencies participating in the 

SBIR program and 4 of the 5 agencies participating in the STTR program 

submitted the required data on obligations for extramural research or research 

and development (R&D)—which is generally conducted by nonfederal employees 

outside of federal facilities—needed to determine whether they met spending 

requirements. Of the agencies that submitted the required obligations data, 8 of 9 

met SBIR spending requirements and all 4 met STTR spending requirements for 

fiscal year 2015. GAO could not determine compliance for 2 agencies—the 

Department of Defense (DOD) and the Environmental Protection Agency 

(EPA)—because these agencies did not submit the required obligations data. 

Officials at most agencies, including DOD and EPA, identified difficulties in using 

extramural R&D obligations data to calculate spending requirements and 

determine compliance. A working group of several participating agencies is 

considering proposing an alternative methodology to calculate spending 

requirements, according to an agency official involved in leading the effort. Until 

DOD and EPA find ways to provide obligations data or until the calculation 

methodology is changed, these 2 agencies will not know whether they have met

the spending requirements, which limits SBA’s reporting of that information to 

Congress.

Agencies inconsistently met certain requirements to report to SBA on their 

methodologies for calculating their extramural R&D budgets in fiscal year 2015, 

and SBA officials said they are taking steps to expedite SBA’s required reporting 

to Congress. Five of the 11 agencies submitted their required methodology 

reports on time. Most agencies provided detailed information in these reports, but 

they did not consistently provide all of the information required. Regarding SBA’s 

own reporting requirements, as of May 2017, SBA had not submitted its report for 

fiscal year 2015. GAO has previously made recommendations to SBA to address 

these issues, and SBA is in the process of implementing them.

GAO’s analysis shows that basing SBIR and STTR spending requirements on an 

agency’s total R&D budget authority instead of on its extramural R&D obligations

for fiscal year 2015 would have increased spending requirements and the 

number of agencies required to participate in the programs. Officials from each of 

the participating agencies identified benefits or drawbacks of this potential 

change. For example, agency officials identified more awards to small 

businesses as a benefit, but officials from several agencies also stated that such 

a change could limit resources for other R&D programs.

Total administrative spending for the SBIR and STTR programs for fiscal year 

2015 is unknown, but 9 agencies participating in an administrative pilot 

program—which permits agencies to fund new administrative activities—reported 

spending about $33.9 million on these activities for that year. Agencies are not 

required to and generally do not track their total administrative costs, so GAO 

could not determine total spending.

View GAO-17-453. For more information, 

contact John Neumann at (202) 512-3841 or 

neumannj@gao.gov.
Page i GAO-17-453 Small Business Research Programs

Letter 1

Background 7

Agency Data Indicate Most Participating Agencies Met Spending 

Requirements, but Not All Submitted the Required Data 9

Participating Agencies Inconsistently Met Certain Reporting 

Requirements, and SBA Officials Report Having Taken Steps to 

Expedite Its Reporting to Congress 17

Basing Spending Requirements on Total R&D Budget Authority 

Would Have Increased Spending Requirements and 

Participation with Potential Benefits and Drawbacks 21

Total Administrative Spending for Fiscal Year 2015 Is Unknown, 

but Nine Agencies Spent $33.9 Million on the Administrative 

Pilot Program 27

Conclusions 33

Recommendation for Executive Action 34

Agency Comments and Our Evaluation 34

Appendix I Agencies’ Spending and Spending Requirements for the Small 

Business Innovation Research Program for Fiscal Year 2015, 

According to Agency Data 37

Appendix II Agencies’ Spending and Spending Requirements for the Small 

Business Technology Transfer Program for Fiscal Year 2015, 

According to Agency Data 39

Appendix III Comments from the Department of Defense 41

Appendix IV Comments from the Environmental Protection Agency 43

Appendix V GAO Contacts and Staff Acknowledgments 45

Contents
Page ii GAO-17-453 Small Business Research Programs

Tables

Table 1: Agencies Participating in the Small Business Innovation 

Research (SBIR) and Small Business Technology 

Transfer (STTR) Programs 2

Table 2: Proposed Spending and Actual Amounts Obligated for 

the Administrative Pilot Program in Fiscal Year 2015 29

Table 3: Actual Amounts Obligated for the Administrative Pilot 

Program, per Goal, in Fiscal Year 2015 (dollars) 30

Table 4: Examples of Agencies’ Uses of Administrative Pilot 

Program Funds during Fiscal Year 2015 31

Table 5: Agency Spending and Spending Requirements for the 

Small Business Innovation Research (SBIR) Program for 

Fiscal Year 2015, According to Agency Data 37

Table 6: Agency Spending and Spending Requirements for the 

Small Business Technology Transfer (STTR) Program for 

Fiscal Year 2015, According to Agency Data 39

Figures

Figure 1: Percentage of Extramural Research or Research and 

Development (R&D) Obligations That Participating 

Agencies Reported Spending on the Small Business 

Innovation Research (SBIR) Program in Fiscal Year 2015 12

Figure 2: Percentage of Extramural Research or Research and 

Development (R&D) Obligations That Participating 

Agencies Reported Spending on the Small Business 

Technology Transfer (STTR) Program in Fiscal Year 

2015 14

Figure 3: Fiscal Year 2015 Spending Requirements for the Small 

Business Innovation Research (SBIR) and Small 

Business Technology Transfer (STTR) Programs 

Compared to an Alternative Scenario Using Current 

Percentages 22

Figure 4: Fiscal Year 2015 Spending Requirements for the Small 

Business Innovation Research (SBIR) and Small 

Business Technology Transfer (STTR) Programs 

Compared to an Alternative Scenario Using Lower 

Percentages 25
Page iii GAO-17-453 Small Business Research Programs

Abbreviations

Commerce Department of Commerce

DHS Department of Homeland Security

DOD Department of Defense

DOE Department of Energy

DOT Department of Transportation

Education Department of Education

EPA Environmental Protection Agency

HHS Department of Health and Human Services

NASA National Aeronautics and Space Administration

NSF National Science Foundation

R&D research or research and development

SBA Small Business Administration

SBIR Small Business Innovation Research 

STTR Small Business Technology Transfer 

USDA U.S. Department of Agriculture

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.
Page 1 GAO-17-453 Small Business Research Programs

441 G St. N.W.

Washington, DC 20548

May 31, 2017

Congressional Committees

Federal agencies support research or research and development (R&D) 

projects at small businesses through the Small Business Innovation 

Research (SBIR) and Small Business Technology Transfer (STTR) 

programs. Through these programs, federal agencies awarded about 

5,200 contracts and grants, totaling about $2 billion, in 2015 and have 

awarded about 159,000 contracts and grants, totaling about $44 billion, 

since the programs’ inceptions in 1982 and 1992, respectively. These 

awards are intended to support the development and commercialization 

of innovative technologies. For example, one award from 2015 was 

intended to help a company develop a tool to prevent surgical wound 

infections. Another award from 2015 was intended to help a company 

identify and evaluate improved materials and designs for components of 

aerospace wind tunnel facilities. The SBIR and STTR programs are 

similar in that participating agencies identify topics for R&D projects and 

support small businesses, but the STTR program requires the small 

business to partner with a nonprofit research institution, such as a 

nonprofit college or university or a federally funded research and 

development center.1

Federal agencies with obligations of $100 million or more for extramural 

R&D are required to participate in the SBIR program, and federal 

agencies with obligations of $1 billion or more for extramural R&D are 

required to also participate in the STTR program.2 Currently, 11 agencies 

participate in the SBIR program, and 5 of these agencies also participate 

in the STTR program, as shown in table 1.

 1Federally funded research and development centers are government-funded entities 

operated by nongovernmental organizations to meet long-term research or development 

needs that cannot be met as effectively by existing governmental or contractor resources. 

These entities typically assist government agencies with scientific research and analysis, 

systems development, and system acquisition.

2Agencies’ R&D efforts generally include funding for two types of R&D: intramural and 

extramural. Intramural R&D is conducted by employees of a federal agency in or through 

government-owned, government-operated facilities. Extramural R&D is generally 

conducted by nonfederal employees outside of federal facilities.

Letter
Page 2 GAO-17-453 Small Business Research Programs

Table 1: Agencies Participating in the Small Business Innovation Research (SBIR) 

and Small Business Technology Transfer (STTR) Programs

Program

Agency SBIR STTR

Department of Agriculture X

Department of Commerce X

Department of Defense X X

Department of Education X

Department of Energy X X

Department of Health and Human Services X X

Department of Homeland Security X

Department of Transportation X

Environmental Protection Agency X

National Aeronautics and Space Administration X X

National Science Foundation X X

Source: Small Business Administration.  |  GAO-17-453

The Small Business Act, which authorizes the SBIR and STTR programs, 

establishes the minimum percentage of an agency’s extramural R&D 

obligations that it must spend on the programs annually.3 In fiscal year 

2015, agencies participating in the SBIR program were required to spend 

at least 2.9 percent of their extramural R&D obligations on the program, 

and agencies participating in the STTR program were required to spend 

at least 0.40 percent of their extramural R&D obligations on the program. 

The SBIR and STTR policy directives, which provide direction to the 

participating agencies for the general operation of the programs, require 

participating agencies to submit data to the Small Business 

 3The Small Business Act requires an agency to spend a minimum percentage of its

extramural R&D “budget” on the SBIR and STTR programs annually, but the act defines 

the extramural R&D budget in terms of obligations. More specifically, the act defines an 

agency’s extramural R&D budget as the sum of an agency’s total R&D obligations minus 

amounts obligated for research conducted by employees of the agency in or through 

government-owned and government-operated facilities. In 2014, the Small Business 

Administration (SBA), which oversees the program, changed the terminology it uses from 

“extramural R&D budget” to “extramural R&D obligations” to clarify how agencies are 

required to calculate their spending requirements for the programs. In this report, we 

generally use the term extramural R&D obligations to be consistent with SBA’s 

terminology. We use the term “spending” to refer to agencies’ obligations for extramural 

R&D efforts, including those for the SBIR and STTR programs, and we refer to the 

amounts resulting from applying the mandated percentages to extramural R&D obligations 

as “spending requirements.”
Page 3 GAO-17-453 Small Business Research Programs

Administration (SBA) each year on the amount of their extramural R&D 

obligations and the amount they obligate for SBIR and STTR awards, 

among other information.4

The Small Business Act also establishes certain reporting requirements 

for participating agencies and SBA. Among other things, within 4 months 

of the enactment of agencies’ annual appropriations, the agencies must 

report to SBA on their methodologies for calculating their extramural R&D 

obligations. Furthermore, SBA must annually report to Congress on the 

participating agencies’ SBIR and STTR programs.

Both programs were reauthorized in 2011. The SBIR/STTR 

Reauthorization Act of 2011 (reauthorization act)5 directed SBA to allow 

agencies to participate in a pilot program, known as the administrative 

pilot program, that permitted the funding of administrative and certain 

other costs in fiscal years 2013 through 2015.6 This administrative pilot 

program, as outlined in the reauthorization act and policy directives, 

allows agencies to use not more than 3 percent of the funding allocated to 

the SBIR program for new activities, including program administration; 

outreach; commercialization; standardization and simplification of 

program procedures; prevention of waste, fraud, and abuse; and 

reporting. The SBIR and STTR policy directives specifically note that 

funding under the pilot program may not replace current agency 

administrative funding for SBIR or STTR activities. Instead, the 

administrative pilot program is intended to supplement the agency’s 

existing administrative efforts. In November 2015, the National Defense 

Authorization Act for Fiscal Year 2016 extended the pilot program through 

September 30, 2017.7 In December 2016, the National Defense 

 4SBA’s Office of Investment and Innovation is responsible for overseeing and coordinating 

the participating agencies’ efforts for the SBIR and STTR programs by setting overarching 

policy and issuing policy directives, collecting program data, reviewing agency progress, 

and reporting annually to Congress, among other responsibilities.

5SBIR/STTR Reauthorization Act of 2011, Pub. L. No. 112-81, div. E, tit. LI, §§ 5001-

5168, 125 Stat. 1298, 1822-62 (codified at 15 U.S.C. §§ 638-638b (2017)).

6SBIR/STTR Reauthorization Act of 2011 § 5141 (codified as amended at 15 U.S.C. § 

638(mm) (2017)).

7National Defense Authorization Act for Fiscal Year 2016, Pub. L. No. 114-92, § 873(e), 

129 Stat. 726, 939 (2015) (codified at 15 U.S.C. § 638(mm)(1) (2017)).
Page 4 GAO-17-453 Small Business Research Programs

Authorization Act for Fiscal Year 2017 extended the SBIR and STTR 

programs through fiscal year 2022 but did not extend the pilot program.8

The reauthorization act includes a provision for us to annually review the 

participating agencies’ compliance with spending and reporting 

requirements for the programs, as well as other aspects of the programs. 

We issued four reports from September 2013 through May 2016 in 

response to this provision.9 This report covers fiscal year 2015 and 

addresses (1) the extent to which participating agencies met SBIR and 

STTR program spending requirements, (2) the extent to which 

participating agencies and SBA met certain program reporting 

requirements, (3) the potential effects of basing the spending 

requirements for the programs on an agency’s total R&D budget authority 

instead of on its extramural R&D obligations,10 and (4) what is known 

about the amounts agencies spent to administer the programs.

To accomplish these objectives, we generally followed the methodology 

that we used for our previous four reports on these issues. Specifically, to 

examine the extent to which participating agencies met SBIR and STTR 

program spending requirements in fiscal year 2015, we used the data that 

agencies submitted to SBA and calculated each agency’s spending 

requirement by applying the mandated percentages to the agency’s 

reported extramural R&D obligations for fiscal year 2015. We then 

compared the spending requirements we calculated with the total 

program obligations data the agency submitted to SBA for fiscal year 

2015. We reported that an agency met its spending requirement if the 

agency’s spending for these programs was greater than or equal to the 

 8National Defense Authorization Act for Fiscal Year 2017, Pub. L. No. 114-328, § 1834 

(2016).

9GAO, Small Business Research Programs: Actions Needed to Improve Compliance with 

Spending and Reporting Requirements, GAO-13-421 (Washington, D.C.: Sept. 9, 2013);

Small Business Research Programs: More Guidance and Oversight Needed to Comply 

with Spending and Reporting Requirements, GAO-14-431 (Washington, D.C.: June 6, 

2014); Small Business Research Programs: Challenges Remain in Meeting Spending and 

Reporting Requirements, GAO-15-358 (Washington, D.C.: Apr. 15, 2015); and Small 

Business Research Programs: Agencies Have Improved Compliance with Spending and 

Reporting Requirements, but Challenges Remain, GAO-16-492 (Washington, D.C.: May 

26, 2016).

10Budget authority, which is provided by federal law, allows an agency to enter into 

financial obligations that will result in immediate or future outlays involving federal 

government funds.
Page 5 GAO-17-453 Small Business Research Programs

spending requirement we calculated.11 To assess the reliability of the 

data, we interviewed agency officials about the sources and quality 

control procedures for the data; examined the integrity of the data, which 

included looking for outliers and obvious errors; and reviewed relevant 

documentation. We found the data to be sufficiently reliable for the 

purposes of assessing whether agencies met their spending 

requirements. In cases in which agencies did not submit extramural R&D 

obligations data, we interviewed officials from those agencies and SBA 

about the data submitted to identify the reasons an agency did not 

provide the required data. In these cases, we determined the data these 

agencies submitted could not be used to determine whether these 

agencies met their spending requirements. We also discussed agencies’

compliance with the spending requirements—including reasons agencies 

did not meet the spending requirements—with program managers at each 

of the participating agencies.

To examine the extent to which participating agencies and SBA met 

certain program reporting requirements for fiscal year 2015, we compared 

information in the reports that agencies submitted to SBA to describe the 

methodology for calculating their extramural R&D obligations, referred to 

as their methodology reports, with requirements in the Small Business Act 

and program guidance. We reported that a participating agency met its 

reporting requirements if the agency submitted a methodology report to 

SBA, submitted the report on time (within 4 months of receiving 

appropriations), itemized exclusions from its extramural R&D obligations, 

and explained those exclusions. We also examined whether the 

methodology reports included other information requested by SBA. 

Additionally, we discussed the status of SBA’s required reports to 

Congress with SBA program officials.

To examine the potential effects of basing spending requirements for the 

SBIR and STTR programs on an agency’s total R&D budget authority 

instead of on its extramural R&D obligations, we used fiscal year 2015 

data on total R&D budget authority as reported by the Office of 

 11We used agencies’ data on total program obligations to represent spending for the 

programs, in part because obligations data were readily available from each of the 

agencies for program purposes, and because obligations provided a reasonable measure 

of the spending for the programs in each year. 
Page 6 GAO-17-453 Small Business Research Programs

Management and Budget.12 We used these data to calculate potential 

spending requirements for each federal agency under alternate 

scenarios, assuming that the same spending percentages currently 

required by the Small Business Act would apply to total R&D budget 

authority. We also assumed that current spending thresholds that, under 

the current law, require agencies to participate in SBIR and STTR 

programs would apply to the total R&D budget authority. As in our 

previous reports, we compared the spending requirements from the 

alternate scenarios with requirements under current law to determine the 

potential effects that changing the methodology for calculating spending 

requirements would have had in fiscal year 2015. We also analyzed 

additional scenarios that used smaller percentages than those currently 

required by the Small Business Act to determine whether they would lead 

to different outcomes. We spoke to program managers at all participating 

agencies about how potential changes to the calculation methodology 

could affect their programs.

To examine what is known about how much agencies spent to administer 

the SBIR and STTR programs in fiscal year 2015, we requested and 

analyzed administrative spending data from the 11 participating agencies 

and spending data associated with the administrative pilot program from 

the 9 agencies that participated in the pilot.13 We discussed these data 

with officials and determined that the administrative spending data for the 

participating agencies were incomplete and came from such varied 

sources that we could not calculate the total amount the agencies spent 

to administer their programs. We also reviewed the total amounts the 9 

agencies had estimated they would spend on the administrative pilot 

program in fiscal year 2015 as described in their proposals for the 

program; we then compared those amounts with the amounts the 

agencies reported spending. Further, we reviewed how the agencies 

used administrative pilot program funds to meet program goals. To 

assess the reliability of the data associated with the administrative pilot 

 12Office of Management and Budget, Analytical Perspectives, Budget of the United States

Government, Fiscal Year 2017 (Washington, D.C.: 2016). Because agencies did not 

include information on their total R&D budget authority in the data they submitted to SBA, 

and we were seeking information across all government agencies, we relied on the 

amount of budget authority reported in the Analytical Perspectives volume to calculate the 

spending requirements for the alternative scenarios.

13To participate in the administrative pilot program, an agency must submit a work plan to 

SBA. For the purpose of this report, we define agencies as participating if they submitted 

such a work plan, even if they did not spend any of the proposed funds.
Page 7 GAO-17-453 Small Business Research Programs

program, we discussed the completeness and accuracy of the data with 

officials from the 9 agencies that participated in the program. We 

determined that the data were sufficiently reliable for the purposes of 

determining the amounts that agencies spent on the administrative pilot 

program.

We conducted this performance audit from July 2016 to May 2017 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

The SBIR program was initiated in 1982 and has four main purposes: (1) 

use small businesses to meet federal R&D needs, (2) stimulate 

technological innovation, (3) increase commercialization of innovations 

derived from federal R&D efforts, and (4) encourage participation in 

technological innovation by small businesses owned by women and 

disadvantaged individuals. The STTR program was initiated a decade 

later, in 1992, and has three main purposes: (1) stimulate technological 

innovation, (2) foster technology transfer through cooperative R&D 

between small businesses and research institutions, and (3) increase 

private sector commercialization of innovations derived from federal R&D. 

Legislation enacted in 2011 reauthorized the programs for fiscal years 

2012 through 2017,14 and legislation enacted in 2016 extended the 

programs for fiscal years 2018 through 2022.15

The SBIR and STTR programs each include three phases:

• In phase I, agencies make awards to small businesses to determine 

the scientific and technical merit and feasibility of ideas that appear to 

have commercial potential. Phase I awards normally do not exceed

$150,000. For SBIR, phase I awards generally last up to 6 months. 

For STTR, these awards generally last 1 year.

• In phase II, small businesses with phase I projects that demonstrate 

scientific and technical merit and feasibility, in addition to commercial 

 14SBIR/STTR Reauthorization Act of 2011, §§ 5001-5168.

15National Defense Authorization Act for Fiscal Year 2017, § 1834. 

Background
Page 8 GAO-17-453 Small Business Research Programs

potential, may compete for awards of up to $1 million to continue the 

R&D for an additional period, normally not to exceed 2 years.

• In phase III, small businesses pursue commercialization of technology 

developed in prior phases. Phase III work derives from, extends, or 

completes an effort made under prior phases, but it is funded by 

sources other than the SBIR and STTR programs. In this phase, small 

businesses are expected to raise funds from private investors, the 

capital markets, or funding sources within the agency that made the 

initial award other than the agency’s SBIR or STTR program. 

Agencies can also participate in phase III by, for example, purchasing 

the technology developed in prior phases.16

SBA’s Office of Investment and Innovation is responsible for overseeing 

and coordinating the participating agencies’ efforts for the SBIR and 

STTR programs. As part of SBA’s oversight and coordination role, the 

agency issued SBIR and STTR policy directives to explain and outline 

requirements for agencies’ implementation of these programs.17 The 

policy directives include a list of the data that agencies must submit to 

SBA annually, such as their extramural R&D obligation amounts and the 

amounts they obligated for awards for their SBIR and STTR programs.

Each participating agency must manage its SBIR and STTR programs in 

accordance with program laws and regulations and the policy directives 

issued by SBA. In general, the programs are similar across participating 

agencies. All of the participating agencies follow the same general 

process to obtain proposals from and make awards to small businesses 

for both the SBIR and STTR programs. However, each participating 

agency has considerable flexibility in designing and managing specific 

aspects of these programs, such as determining research topics, 

selecting award recipients, and administering funding agreements. At 

least annually, each participating agency issues a solicitation requesting 

proposals for projects in topic areas determined by the agency. Each 

participating agency uses its own process to review proposals and 

determine which proposals should receive awards. The agencies that 

 16For examples of how one agency has participated in phase III by purchasing technology 

developed in prior phases, see GAO, Small Business Innovation Research: DOD’s 

Program Supports Weapon Systems, but Lacks Comprehensive Data on Technology 

Transition Outcomes,GAO-14-96 (Washington, D.C.: Dec. 20, 2013).

17Small Business Administration, Small Business Innovation Research (SBIR) Program 

Policy Directive (Washington, D.C.: Feb. 24, 2014), and Small Business Technology 

Transfer (STTR) Program Policy Directive (Washington, D.C.: Feb. 24, 2014).
Page 9 GAO-17-453 Small Business Research Programs

participate in both SBIR and STTR programs usually use the same 

process for both programs. Also, each participating agency determines 

whether to provide the funding for awards as grants or contracts.

Agency data indicate that most of the agencies participating in the SBIR

and STTR programs met spending requirements for fiscal year 2015. 

Nine of the 11 agencies that participate in the SBIR program and 4 of the 

5 agencies that also participate in the STTR program submitted the 

extramural R&D obligations data required to determine compliance with 

spending requirements. For 2 of the 11 agencies, we could not determine 

compliance with the spending requirements because these agencies did 

not submit required obligations data to SBA. Of the 9 agencies that 

submitted the required data, 8 met their SBIR spending requirements, 

and all of the 4 that also participate in the STTR program met their 

spending requirements for fiscal year 2015.

Nine of the 11 agencies participating in the SBIR program and 4 of the 5 

agencies also participating in the STTR program submitted to SBA the 

extramural R&D obligations data required to determine whether they met 

the respective program spending requirements for fiscal year 2015. The 

Small Business Act requires agencies to spend a minimum percentage of 

their extramural R&D obligations on the SBIR and STTR programs 

annually. Determining whether an agency met the minimum spending 

requirement for its SBIR or STTR program requires data on the agency’s 

obligations for the program as well as its total extramural R&D 

obligations. All participating agencies reported obligations data to SBA for 

their spending on the programs for fiscal year 2015. However, 2 

agencies—the Department of Defense (DOD) and Environmental 

Protection Agency (EPA)—did not report total extramural R&D obligations 

data; instead, they reported budget authority amounts for extramural 

R&D.

According to a SBA report and officials, SBA has been working with 

agencies for several years to clarify that they should be reporting 

extramural R&D obligations data to SBA. In our June 2014 report 

covering SBIR and STTR spending for fiscal year 2012, we 

recommended that SBA provide additional guidance to agencies about 

submitting data and calculating spending requirements.18 In response to 

 18GAO-14-431.

Agency Data Indicate 

Most Participating 

Agencies Met 

Spending 

Requirements, but 

Not All Submitted the 

Required Data

Most Agencies Submitted 

the Obligations Data 

Required to Determine 

Whether Spending 

Requirements Were Met, 

But Two Agencies Did Not 

Collect and Submit These 

Data
Page 10 GAO-17-453 Small Business Research Programs

our recommendation, SBA provided guidance in the template that 

agencies used to report data for fiscal year 2013; this guidance directed 

agencies to report actual obligations for both extramural R&D and the 

SBIR and STTR programs. SBA’s reporting template for fiscal year 2015 

continued this effort by providing the definition of total extramural R&D 

obligations and asking agencies to confirm that the amount reported was 

the amount actually obligated. SBA’s efforts to clarify the required data 

have improved agencies’ reporting. In fiscal year 2013, only 2 of the 11 

agencies reported extramural R&D obligations data to SBA. This number 

increased to 8 agencies in fiscal year 2014 and 9 agencies in fiscal year 

2015.

Officials from DOD and EPA told us their agencies did not report 

extramural R&D obligations for fiscal year 2015 because their program 

offices have no procedures to capture total extramural R&D obligations 

for a particular fiscal year. Moreover, they said they have no plans to 

establish such procedures, and establishing them would be challenging. 

For example, EPA officials told us that their agency’s financial system 

does not distinguish extramural from intramural R&D funds, and that the 

agency’s multi-year appropriations, which allow funds to be obligated over 

2 years, make it hard to know in which fiscal year the extramural R&D 

funding was obligated. DOD officials told us that obtaining obligations 

data would require requesting information from more than 10 individual 

program offices that, in turn, would have to request the information from 

various DOD comptrollers, which would be a major effort. In contrast, all 

of the other agencies reported fiscal year 2015 obligations.

Officials at most agencies, including DOD and EPA, identified difficulties 

in using extramural R&D obligations data to determine spending 

requirements. As we also reported in May 2016, officials from several 

agencies told us that they believe it is unfair or impractical to hold their 

agencies to a requirement based on obligations, which are not known 

until after the end of the fiscal year, when it is not possible to obligate 

additional money for the SBIR and STTR programs.19 Because of these 

difficulties, a working group of several participating agencies is 

considering proposing a recommendation to base spending requirements 

on extramural R&D budget authority, according to a Department of 

Energy (DOE) official involved in leading the effort. If Congress were to 

 19GAO-16-492.
Page 11 GAO-17-453 Small Business Research Programs

take up such a proposal, it might eliminate the data collection challenges 

that some agencies have identified.

Until DOD and EPA find ways to provide the required data, or the 

spending requirements are changed and the identified data collection 

challenges are resolved, DOD and EPA will not know whether they have 

met the spending requirements. Further, without DOD and EPA reporting 

the required data, SBA will continue to be limited in its ability to accurately 

report that information to Congress, as we previously found.20

Eight of the 9 agencies that submitted the required extramural R&D 

obligations data met or exceeded their SBIR spending requirements for 

fiscal year 2015, according to the agencies’ data (see fig 1).21 Those 8 

agencies spent from 2.9 percent to 5.6 percent of their extramural R&D 

obligations on the program. The remaining agency, the U.S. Department 

of Agriculture (USDA), spent 2.5 percent—less than the required 2.9 

percent. We could not determine compliance with spending requirements 

for DOD and EPA because, as previously discussed, those agencies did 

not submit the required obligations data. However, the data those 2 

agencies submitted indicate that DOD spent $956.9 million on the SBIR 

program, while EPA spent $4.7 million on the program. Appendix I 

provides more details on agencies’ SBIR spending and spending 

requirements.

 20In our April 2015 report (GAO-15-358), we found that SBA’s ability to determine 

compliance was limited because agencies were not submitting the required obligations 

data. In that report, we recommended that SBA notify Congress in its annual report if it 

cannot determine compliance because agencies did not report the required data, or 

develop a proposal to Congress that would change the requirement. In response to our 

recommendation, in SBA's March 2016 report to Congress on the SBIR and STTR 

programs for fiscal year 2013, SBA reported that it could not accurately determine whether 

agencies complied with spending requirements for those agencies that did not submit the 

required obligations data. 

21For the purposes of this report, we defined compliance as spending at least 2.9 percent 

of an agency’s reported extramural R&D obligations on the SBIR program in fiscal year 

2015, as required in the Small Business Act. This method is consistent with SBA’s 

approach for calculating spending requirements in its reports to Congress on the program.

Agency Data Indicate 

Most Agencies Met SBIR 

and STTR Spending 

Requirements, and Some 

Have Developed Practices 

to Help Meet Them
Page 12 GAO-17-453 Small Business Research Programs

Figure 1: Percentage of Extramural Research or Research and Development (R&D) 

Obligations That Participating Agencies Reported Spending on the Small Business 

Innovation Research (SBIR) Program in Fiscal Year 2015

Notes: Small Business Administration (SBA) officials told us that they w ill continue verifying agency 

data until SBA submits its report to Congress about program spending.

Tw o agencies w ith SBIR programs—the Department of Defense and Environmental Protection 

Agency—are not represented in the figure because they did not submit the obligations data required 

by the Small Business Act. Therefore, we could not determine the percentages of extramural R&D 

obligations they spent on SBIR and their compliance w ith spending requirements.

a

When determining w hether agencies had met their spending requirement for the SBIR program, w e 

rounded the calculated percentages to the nearest tenth of a percent. The percentages for the 

National Science Foundation and the Department of Commerce rounded up to the spending 

requirement of 2.9 percent.

In our September 2013 report, we recommended that SBA direct 

participating agencies to include in their annual reports if they did not 

meet the spending requirements, the reasons why they did not, and how 
Page 13 GAO-17-453 Small Business Research Programs

they planned to meet the spending requirements in the future.22 SBA 

updated the annual report template for fiscal year 2015 data to request 

such information from agencies that did not meet the spending 

requirements. Given that this change may have improved agencies’

compliance with spending requirements for fiscal year 2016, we are not 

making a new recommendation at this time.

Of the 5 agencies that also participated in STTR, 4 agencies submitted 

the required obligations data, and all 4 met their STTR spending 

requirements for fiscal year 2015, according to the agencies’ data (see 

fig. 2).23 According to the agencies’ data, these 4 agencies spent from 

0.40 percent to 0.45 percent of their extramural R&D obligations on their 

STTR programs, meeting or exceeding the required minimum spending 

requirement of 0.40 percent. We could not determine compliance with the 

spending requirement for the fifth participating agency—DOD—because it 

did not submit the required extramural R&D obligations data. However, 

DOD’s submitted data shows that DOD spent $125.5 million on the STTR 

program for fiscal year 2015. Appendix II provides more details on 

agencies’ STTR spending and spending requirements.

 22GAO-13-421.

23For the purposes of this report, we defined compliance as spending at least 0.40 percent 

of an agency’s reported extramural R&D obligations on the STTR program in fiscal year 

2015, as required in the Small Business Act. This method is consistent with SBA’s 

approach for calculating spending requirements in its reports to Congress on the program.
Page 14 GAO-17-453 Small Business Research Programs

Figure 2: Percentage of Extramural Research or Research and Development (R&D) 

Obligations That Participating Agencies Reported Spending on the Small Business 

Technology Transfer (STTR) Program in Fiscal Year 2015

Notes: Small Business Administration (SBA) officials told us that they w ill continue verifying agency 

data until SBA submits its report to Congress about program spending.

One agency w ith an STTR program—the Department of Defense—is not represented in the figure 

because it did not submit the obligations data required by the Small Business Act. Therefore, we 

could not determine its percentage of extramural R&D obligations spent on STTR and its compliance 

w ith its spending requirement.

a

When determining w hether agencies had met their spending requirements for the STTR program, we 

rounded the calculated percentages to the nearest hundredth of a percent. The percentage for the 

National Science Foundation rounded up to the spending requirement of 0.40 percent.

Officials, including those from agencies that met their SBIR and STTR 

spending requirements and those from the agency that did not, cited a 

number of potential difficulties with meeting the requirements, including:

• Minimum spending requirement is unknown until the end of the fiscal 

year. Consistent with our previous reviews, agency officials said that it 

is difficult to meet the minimum spending requirements because the 

spending requirements are based on extramural R&D obligations, 

which are not known until after the end of the fiscal year. If an 

agency’s actual extramural R&D obligations at the end of the fiscal 
Page 15 GAO-17-453 Small Business Research Programs

year turn out to be higher than estimated, the agency’s estimate of 

spending requirements for the programs may turn out to be too low, 

according to some agency officials.24 For example, USDA officials told 

us that their agency estimated total extramural R&D spending for 

fiscal year 2015 would be $697 million, which set their SBIR program 

budget at $20.2 million. USDA data submitted to SBA shows that 

USDA spent $22.7 million, which was more than the amount 

estimated earlier in the year. However, some agencies, including 

USDA, receive multi-year appropriations, which generally may be 

carried forward from one fiscal year to the next. According to the 

USDA officials, other programs that provide extramural R&D funding 

carried over about $240 million from fiscal year 2014, which increased 

extramural R&D obligations in fiscal year 2015 and thus increased the 

agency’s SBIR spending requirement by about $6 million beyond the 

amount officials had estimated based on 2015 appropriations. As a 

result, USDA did not meet the spending requirement for fiscal year 

2015 even though, according to USDA program managers, the 

agency spent the amount it budgeted for the SBIR program.

• Agency cannot always issue all expected awards. Agency officials 

said that they cannot always make all of the awards that they 

anticipated at the beginning of the fiscal year. For example, officials at 

DOE and the Department of Commerce (Commerce) told us of 

instances when, late in the award process, a small business declined 

an award or was found to be ineligible to receive the award and the 

agency was not able to make an award to another small business 

before the end of the fiscal year, hindering its ability to meet the 

minimum spending requirements.

• Agency carries over program funds to the next fiscal year. According 

to some agency officials, agencies do not always spend their SBIR or 

STTR funding in the fiscal year in which it is appropriated for various 

reasons. For example, DOD officials told us that circumstances such 

as receiving agency appropriations later in the fiscal year can delay 

spending, as we have previously reported.25 This can make it difficult 

to meet the spending requirement for that year. USDA officials 

 24According to SBA’s fiscal year 2013 report to Congress and officials from some 

participating agencies, actual extramural R&D obligations at the end of the fiscal year may 

differ from agencies’ earlier estimates for many reasons, such as budget rescissions or 

supplemental appropriations during the fiscal year, carried-over multi-year funds from prior 

years, or challenges in estimating extramural R&D funds as a portion of general R&D 

funds.

25GAO-15-358. 
Page 16 GAO-17-453 Small Business Research Programs

explained that they may choose to spend their SBIR funds over 

multiple fiscal years to help spend the funds properly and efficiently. 

However, DOE officials told us that if an agency carries over SBIR or 

STTR funds into the next fiscal year, it might not spend enough to 

meet the spending requirement in the current fiscal year, although the 

carried-over funds may help the agency meet or exceed the spending 

requirement in the following year.

Despite the difficulties cited above, officials at most agencies told us that 

they had developed practices to help ensure they meet the minimum 

spending requirements. Those practices include:

• Budget more than the minimum estimated spending requirement. 

Commerce officials told us that in fiscal year 2015, one of their 

subunits estimated its SBIR budget using a higher percentage than 

the minimum spending requirement. According to agency officials, this 

helps ensure that the subunit meets the spending requirement, even if 

actual extramural R&D obligations exceed the amount estimated. 

DOE officials told us that they estimated the required SBIR budget 

based on the statutory minimum percentage but used some 

assumptions that led to an estimate of the agency’s total extramural 

R&D obligations that exceeded the actual obligation amount, which 

helped DOE exceed its minimum spending requirement in fiscal year 

2015. Department of Education (Education) officials told us they 

budget a set amount each year, $7.5 million, which has been higher 

than their minimum SBIR spending requirement.

• Spend funds beyond the minimum estimated spending requirement 

budgeted. Department of Homeland Security (DHS) and Department 

of Health and Human Services (HHS) officials told us their agencies 

generally spend funds beyond the minimum spending requirements 

for which they budgeted. EPA officials told us that, in addition to funds 

designated for SBIR awards, EPA provides annual administrative 

funding that typically exceeds the actual administrative costs for the 

agency’s SBIR program. As a result, EPA can potentially fund an 

additional SBIR award with the excess funding.

• Spend program funds across agency subunits. HHS officials told us 

that agency subunits independently spend SBIR funds. However, if 

one subunit realizes that it cannot spend all of its SBIR funds, HHS 

officials identify a meritorious application to award from another 

subunit, which enables HHS to spend all the funds in that fiscal year.

• Spend multi-year funds in the year appropriated. Officials from EPA 

and National Science Foundation (NSF) said that they try to spend all 
Page 17 GAO-17-453 Small Business Research Programs

of their multi-year funds for SBIR in the same year that they are 

appropriated to better ensure that they meet the minimum spending 

requirement.

All of the agencies participating in the SBIR and STTR programs 

submitted methodology reports to SBA for fiscal year 2015, and about 

half of these agencies submitted them on time. While most agencies 

provided detailed information in their methodology reports, they did not 

consistently provide all of the information required by SBA’s policy 

directive. As of May 2017, SBA had not submitted its annual report on the 

programs to Congress for fiscal year 2015, but SBA officials said they 

have taken steps to expedite reporting.

All 11 participating agencies submitted their required methodology reports 

to SBA for fiscal year 2015, and about half of these agencies submitted 

their reports on time. According to the Small Business Act, agencies must 

submit to SBA a report describing the methodology they use to calculate 

their extramural R&D budgets, and the submission must occur within 4 

months of enactment of their annual appropriations. Most participating 

agencies’ appropriations for fiscal year 2015 were enacted in midDecember 2014, so their methodology reports were due by mid-April 

2015.26 Five agencies—DHS, DOE, EPA, HHS, and the National 

Aeronautics and Space Administration (NASA)—submitted their required 

methodology reports on time in fiscal year 2015.27 More agencies 

 26Consolidated and Further Continuing Appropriations Act, 2015, Pub. L. No. 113-235,

128 Stat. 2130 (enacted December 16, 2014). The exception among the participating 

agencies was DHS, for which appropriations for fiscal year 2015 were enacted on March 

4, 2015, so the agency’s methodology report to SBA was due in early July 2015. 

Department of Homeland Security Appropriations Act, 2015, Pub. L. No. 114-4, 129 Stat. 

39 (enacted March 4, 2015).

27Commerce has two subunits—the National Oceanic and Atmospheric Administration 

(NOAA) and the National Institute of Standards and Technology (NIST)—that separately 

administer SBIR programs and separately submitted methodology reports for fiscal year 

2015. NOAA submitted its fiscal year 2015 methodology report on time, while NIST did 

not. 

Participating 

Agencies 

Inconsistently Met 

Certain Reporting 

Requirements, and 

SBA Officials Report 

Having Taken Steps 

to Expedite Its 

Reporting to 

Congress

About Half of the Agencies 

Submitted Their 

Methodology Reports on 

Time, but Agencies Did 

Not Consistently Provide 

Required Information
Page 18 GAO-17-453 Small Business Research Programs

provided timely submissions in fiscal year 2015 than in fiscal year 2014, 

when only 2 of the 11 agencies submitted their methodology reports on 

time.

Those agencies that submitted their methodology reports late generally 

did so only after SBA sent an e-mail in August 2015 requesting that the 

agencies submit their reports. Officials at Education, USDA, Commerce, 

and the Department of Transportation (DOT) told us that they had not 

known that they needed to submit the methodology report or had not 

known the deadline. In contrast, officials from the agencies that reported 

on time told us that they have routine procedures to submit the 

methodology report each year.

As we found in our September 2013 report, the late submission of the 

methodology reports makes it difficult for SBA to promptly analyze the 

methodologies and provide agencies with timely feedback to assist them 

with accurately calculating their spending requirements. Without such 

review and feedback, agencies may be calculating their extramural R&D 

obligations incorrectly, which could lead to agencies spending less than 

the required amounts on the SBIR and STTR programs. In our June 2014 

report, we recommended that SBA request that the agencies submit their 

methodology reports within 4 months of the enactment of appropriations. 

SBA generally agreed with the recommendation, and SBA officials sent 

an e-mail to participating agencies in February 2016 requesting that they 

submit their fiscal year 2016 methodology reports on time. Given that 

SBA’s request may have improved the timeliness of agencies’

submissions for fiscal year 2016, we are not making a new 

recommendation on requesting the methodology reports at this time.

While most agencies provided detailed information in their methodology 

reports, they did not consistently provide all of the information required by 

SBA. According to the program policy directives, in addition to describing 

their methodology for calculating their extramural R&D budgets, agencies 

are to itemize the programs they exclude from their extramural R&D 

calculations and the reasons for the exclusions.28 For fiscal year 2015, all 

 28Under the Small Business Act, certain subunits or programs must or can be excluded in 

calculating agencies’ extramural R&D obligations. For example, agencies are not required 

to include subunits in the intelligence community when calculating their extramural R&D 

obligations,and the Department of Transportation is required to exclude the Federal 

Highway Administration’s State Planning & Research Program from its extramural R&D 

obligations.
Page 19 GAO-17-453 Small Business Research Programs

11 participating agencies submitted descriptions of their methodologies, 9 

agencies at least partially itemized exclusions from their calculations of 

extramural R&D, and 8 agencies at least partially explained the reasons 

for these exclusions.29

Further, where agencies did provide the required information, they did so 

using different levels of detail. For example, 5 of the 11 agencies provided 

dollar amounts for total, intramural, and extramural R&D budgets. EPA 

and Commerce officials told us that providing such information reflects 

guidance that SBA had provided in prior years. Six agencies provided the 

dollar amounts of their planned SBIR funding. This funding information 

was explicitly requested in SBA’s August 2015 e-mail, but SBA sent this 

guidance to only those agencies that had not yet submitted their reports.

In our April 2015 report, we concluded that the varying detail in agencies’

methodology reports makes it difficult for SBA to analyze the reports and 

provide accurate information to Congress, and we recommended that 

SBA assess the methodology reporting requirement and revise its 

guidance, if necessary, to require adequate information.30 SBA included 

updated reporting requirements in a proposed policy directive.31 If 

implemented, the language in the proposed policy directive would expand 

the required information to include the planned amount of SBIR funding, 

which SBA officials said would make the reporting more useful for SBA’s 

analysis of agencies’ program funding.32 SBA’s proposed policy directive 

 29We counted an agency as meeting the itemization requirement if its report listed 

exclusions or specified that the agency had no exclusions. We counted an agency as 

partially meeting the itemization requirement if its report discussed exclusions for some 

but not all of the agency’s subunits. 

30GAO-15-358.

31In April 2016, SBA published a notice of proposed amendments to the SBIR and STTR 

policy directives in the Federal Register. Small Business Innovation Research Program 

and Small Business Technology Transfer Program Policy Directive, 81 Fed. Reg. 20,484 

(Apr. 7, 2016). According to SBA officials, SBA withdrew the draft policy directive from 

Office of Management and Budget consideration in January 2017 and it is under further 

internal consideration in light of a recent executive order. 

32The proposed policy directive asks that an agency’s report include the agency’s plan to 

meet the program funding requirement for the current fiscal year rather than only the 

agency’s methodology to calculate total extramural R&D. Specifically, the directive asks 

that the report include three main elements:(1) an explanation of the calculations of total 

extramural R&D, (2) a review of the prior year’s funding process to determine if it enabled 

the agency to meet the spending requirement, and (3) a funding plan for the current fiscal 

year showing how the agency expects to at least meet expected minimum spending 

requirements for the program.
Page 20 GAO-17-453 Small Business Research Programs

was not in force for fiscal year 2015, so we could not evaluate the effect 

of this guidance on methodology reporting, and we are not making 

additional recommendations at this time.

The Small Business Act requires SBA to report to certain congressional 

committees on the SBIR and STTR programs—including an analysis of 

the agencies’ methodology reports—not less than annually, but the act 

does not specify a date when the report is due. SBA issued its report to 

Congress on the SBIR and STTR programs for fiscal year 2013 in March 

2016, but it has not submitted its report for fiscal years 2014 or 2015.

In our September 2013 report, we concluded that without more rigorous 

oversight by SBA and its more timely and detailed reporting, it would be 

difficult for SBA to ensure that intended benefits of the SBIR and STTR 

programs are being attained and that Congress is receiving critical 

information to oversee these programs. In that report, we recommended 

that SBA provide Congress with a timely annual report. SBA agreed and 

stated that it planned to implement the recommendation.

However, SBA has not yet done so, and as we found previously and in 

this review, it continues to lag in its submissions to Congress. SBA issued 

its fiscal year 2012 report to Congress in November 2014, 19 months 

after the agencies’ data were due to SBA. SBA issued its fiscal year 2013 

report to Congress in March 2016, 2 years after the agencies’ data were 

due to SBA. As of May 2017, SBA was continuing to develop the reports 

for fiscal years 2014 and 2015, about 26 months and 14 months after the 

agencies’ data were due to SBA, respectively. SBA officials said that they 

have not set issuance dates for either the fiscal year 2014 or fiscal year 

2015 report to Congress, in part because it is difficult to predict the 

completion of an Office of Management and Budget review that is not in 

their control. Additionally, according to these officials, report production 

has been slowed by SBA staff leaving the agency. Given that SBA 

officials told us that they are working to respond to our previous 

recommendation by taking steps to expedite the submission of the 

reports, such as by hiring contractors to help prepare the reports, we are 

not making additional recommendations at this time.

SBA Has Not Submitted 

Its Required Report to 

Congress for Fiscal Year 

2015, but Officials Said 

Steps Have BeenTaken to 

Expedite Reporting
Page 21 GAO-17-453 Small Business Research Programs

Changing the methodology for calculating SBIR and STTR spending 

requirements to use total R&D budget authority rather than extramural 

R&D obligations would have increased agencies’ spending requirements 

and the number of agencies required to participate in the programs for 

fiscal year 2015. Agency officials identified several benefits and 

drawbacks that changing the calculation methodology could have for their 

agencies’ SBIR and STTR programs.

Changing the methodology for calculating SBIR and STTR spending 

requirements to use an agency’s total R&D budget authority rather than 

its extramural R&D obligations would have increased spending 

requirements for fiscal year 2015. Specifically, we estimated that the total 

spending requirements for the SBIR and STTR programs in fiscal year 

2015 would have increased from $2.5 billion to $4.4 billion, or by 76 

percent, assuming the same percentages and participation thresholds 

defined in current law. The increase would have occurred for two 

reasons: (1) an agency’s total R&D budget authority is larger than its 

extramural R&D obligations, and therefore agencies that currently 

participate would have been required to spend more on the programs, 

and (2) additional agencies would have been required to participate. 

Figure 3 shows the effects at each agency of changing the calculation 

methodology from current law, which is based on a percentage of 

extramural R&D obligations, to an alternative scenario that applies the 

same percentages to total R&D budget authority. These effects are 

consistent with our findings in previous reports.33

 

33GAO-13-421, GAO-14-431, GAO-15-358, and GAO-16-492. 

Basing Spending 

Requirements on 

Total R&D Budget 

Authority Would Have 

Increased Spending 

Requirements and 

Participation with 

Potential Benefits and 

Drawbacks

Changing the Calculation 

Methodology to Total R&D 

Budget Authority Would

Have Increased Spending 

Requirements and 

Participation in the 

Programs
Page 22 GAO-17-453 Small Business Research Programs

Figure 3: Fiscal Year 2015 Spending Requirements for the Small Business Innovation Research (SBIR) and Small Business 

Technology Transfer (STTR) Programs Compared to an Alternative Scenario Using Current Percentages

Note: Calculations may be affected by rounding.

a

Each agency’s total research and development (R&D) budget authority is derived from the Office of 

Management and Budget’s Analytical Perspectives, Budget of the United States Government, Fiscal 

Year 2017. We excluded the “facilities and equipment” category that is included in the document from 

the total R&D amount because agencies do not include this information in their calculations.

b

Each agency’s’ extramural R&D obligations are derived from data submitted by the agencies to the 

Small Business Administration (SBA). Neither the Department of Defense (DOD) nor the 

Environmental Protection Agency (EPA) submitted obligations data for extramural R&D. Instead, 

these agencies submitted budget authority data. We present the data that DOD and EPA submitted 

for the purpose of this analysis.

c

Each agency’s spending requirement for the SBIR program under the current law is calculated as 2.9 

percent of its extramural R&D obligations. Because DOD and EPA did not submit obligations data, we 

could not determine their actual spending requirements. For the purpose of this analysis, w e used the 

budget authority data they submitted to SBA as a proxy for their obligations data to calculate their 

spending requirements.
Page 23 GAO-17-453 Small Business Research Programs

d

This alternative scenario calculates each agency’s SBIR spending requirement as 2.9 percent of its 

total R&D budget authority, w hich is the percentage currently required under the current law, and 

assumes no reductions for excluded programs.

e

Each agency’s spending requirement for the STTR program under current law is calculated as 0.40 

percent of its extramural R&D obligations. Because DOD did not submit obligations data, w e could 

not determine its actual spending requirement. For the purpose of this analysis, w e used the budget 

authority data it submitted to SBA as a proxy for its obligations data to calculate its spending 

requirement.

f

This alternative scenario calculates each agency’s STTR spending requirement as 0.40 percent of its 

total R&D budget authority, w hich is the percentage required under the current law , and assumes no 

reductions for excluded programs.

g

Agency did not participate in the program in fiscal year 2015.

h

Agency’s total R&D budget authority did not meet the threshold for participating in STTR under the 

alternative scenario.

As shown in figure 3, some agencies’ spending requirements would have 

increased more than others under the alternative scenario. This variation 

is due primarily to differences in the relative proportions of the agencies’

extramural and intramural R&D obligations, but it is also affected by how 

many programs are excluded by statute. Under the alternative scenario, 

agencies that fund primarily extramural research would have seen smaller 

increases to their spending requirements for the SBIR and STTR 

programs, while agencies that fund more intramural research would have 

seen larger increases in their spending requirements, a finding consistent 

with those of our previous reports. Examples are as follows:

• NSF used 96.4 percent of its total R&D budget authority to fund 

extramural research in fiscal year 2015 and was required, based on 

data it submitted to SBA, to spend $156 million on its SBIR program 

that year. Under the alternative scenario, NSF’s SBIR spending 

requirement would have been $162 million, an increase of about 4 

percent.

• Commerce, on the other hand, used 24.5 percent of its total R&D 

budget authority to fund extramural research in fiscal year 2015 and 

was required to spend about $9 million on its SBIR program that year. 

Under the alternative scenario, Commerce’s spending requirement 

would have more than quadrupled to about $37 million. Furthermore, 

assuming that the thresholds for participating in the program did not 

change, this scenario would have required Commerce to spend 

approximately $5 million on a new STTR program in fiscal year 2015. 

The alternative scenario would have required Commerce to spend 

about $33 million more on the SBIR and STTR programs in fiscal year 

2015, an increase of more than 360 percent.
Page 24 GAO-17-453 Small Business Research Programs

As noted above, changing the calculation methodology from basing the 

spending requirement on extramural R&D obligations to basing it on total 

R&D budget authority would also require additional agencies to 

participate in the SBIR and STTR programs, assuming that the dollar 

thresholds for participation remain the same. Under the alternative 

scenario, 3 additional agencies—the Department of Veterans Affairs, the 

Department of the Interior, and the U.S. Agency for International 

Development—would have been required to participate in SBIR during 

fiscal year 2015.34 Adding these agencies to the SBIR program would 

have increased total SBIR spending requirements by $65 million, in 

addition to the $1.6 billion increase in spending requirements at the 11 

agencies that currently participate in the SBIR program. Likewise, under 

the alternative scenario, 3 additional agencies—USDA, Commerce, and 

the Department of Veterans Affairs—would have been required to 

participate in STTR.35 Adding these agencies to the STTR program would 

have increased total STTR spending requirements by $19 million, in 

addition to the $210 million increase in spending requirements at the 5 

agencies that currently participate in STTR.

Alternatively, basing the SBIR and STTR spending requirements on an 

agency’s total R&D budget authority and applying a lower percentage 

than required under current law could result in total spending 

requirements similar to those under current law. However, our analysis 

shows that such a scenario would lower spending requirements at some 

agencies and raise them at others. As shown in figure 4, if the percentage 

applied to an agency’s total R&D budget authority had been 1.65 percent 

for the SBIR program and 0.23 percent for the STTR program in fiscal 

year 2015, and the thresholds for participation had remained the same, 

total required spending on the programs would be similar to required 

spending under current law. Using these lower percentages, spending 

requirements would have increased at agencies that primarily fund 

intramural research, such as EPA and Commerce. In contrast, spending 

 34Based on the data as reported by the Office of Management and Budget in Analytical 

Perspectives, Budget of the United States Government, Fiscal Year 2017, each of these 3

agencies had total R&D budget authority in excess of $100 million. Under current law, a 

federal agency with more than $100 million in extramural R&D obligations is required to 

participate in the SBIR program.

35Based on the data as reported by the Office of Management and Budget in Analytical 

Perspectives, Budget of the United States Government, Fiscal Year 2017, each of these 3

agencies had a total R&D budget authority in excess of $1 billion. Under current law, a 

federal agency with more than $1 billion in extramural R&D obligations is required to 

participate in the STTR program.
Page 25 GAO-17-453 Small Business Research Programs

requirements would decrease at agencies that primarily fund extramural 

research, such as HHS and NSF. In this scenario, the spending 

requirement reductions, including $203.7 million at HHS and $63.8 million 

at NSF, were large enough to offset increases in spending requirements 

at other agencies.36

Figure 4: Fiscal Year 2015 Spending Requirements for the Small Business Innovation Research (SBIR) and Small Business 

Technology Transfer (STTR) Programs Compared to an Alternative Scenario Using Lower Percentages

Note: Calculations may be affected by rounding.

a

Each agency’s total research and development (R&D) budget authority is derived from the Office of 

Management and Budget’s Analytical Perspectives, Budget of the United States Government, Fiscal 

 36In this scenario, spending requirements would also be reduced at Education ($2.4

million) and DHS ($843,400).
Page 26 GAO-17-453 Small Business Research Programs

Year 2017. We excluded the “facilities and equipment” category that is included in the document from 

the total R&D amount because agencies do not include this information in their calculations.

b

Each agency’s extramural R&D obligations are derived from data submitted by the agencies to the 

Small Business Administration (SBA). Neither the Department of Defense (DOD) nor the 

Environmental Protection Agency (EPA) submitted obligations data for extramural R&D. Instead, 

these agencies submitted budget authority data. We present the data that DOD and EPA submitted 

for the purpose of this analysis.

c

Each agency’s spending requirement for the SBIR program under the current law is calculated as 2.9 

percent of its extramural R&D obligations. Because DOD and EPA did not submit obligations data, we 

could not determine their actual spending requirements. For the purpose of this analysis, w e used the 

budget authority data they submitted to SBA as a proxy for their obligations data to calculate their 

spending requirements.

d

This alternative scenario calculates each agency’s SBIR spending requirement as 1.65 percent of its 

total R&D budget authority and assumes no reductions for excluded programs.

e

Each agency’s spending requirement for the STTR program under current law is calculated as 0.40 

percent of its extramural R&D obligations. Because DOD did not submit obligations data, w e could 

not determine its actual spending requirement. For the purpose of this analysis, w e used the budget 

authority data it submitted to SBA as a proxy for its obligations data to calculate its spending 

requirement.

f

This alternative scenario calculates each agency’s STTR spending requirement as 0.23 percent of its 

total R&D budget authority and assumes no reductions for excluded programs.

g

Agency did not participate in the program in fiscal year 2015.

h

Agency’s total R&D budget authority did not meet the threshold for participating in STTR under the 

alternative scenario.

Officials at each of the participating agencies identified potential benefits 

or drawbacks to changing the calculation methodology for their SBIR and 

STTR spending requirements to use total R&D budget authority rather 

than extramural R&D obligations. For example, agency officials told us 

that changing the calculation method could simplify how the spending 

requirement is determined, increase the number and dollar amount of 

SBIR and STTR awards, and speed up disbursements of funds to 

program offices. However, officials also told us that the change could also 

have drawbacks for their agencies. First, changing the spending 

requirement to total R&D budget authority and keeping the same 

percentage requirement could negatively affect other R&D efforts, 

including intramural R&D, by shifting resources away from them to the 

SBIR and STTR programs, according to officials at several agencies. 

Shifting these resources could more broadly undermine their agency’s 

ability to accomplish its mission, according to officials from Commerce’s 

National Institute of Standards and Technology. For example, these 

officials said that work that is done within the agency may need highly 

specialized and unique equipment that may not be available to small 

businesses. In addition, agency officials at DOD, DOT, and NASA told us 

that a significant increase in the spending requirements resulting from the 

change could also strain their administration of the SBIR and STTR 

programs by requiring additional staffing and resources to manage the 

Agency Officials Identified 

Potential Benefits and 

Drawbacks to Changing 

the Calculation 

Methodology to Total R&D 

Budget Authority
Page 27 GAO-17-453 Small Business Research Programs

larger programs. As a result, officials at these agencies suggested that if 

the calculation methodology is changed to base spending requirements 

on total R&D budget authority, the percentages should be lowered to 

avoid shifting resources away from other programs and straining the 

administration of the SBIR and STTR programs.

Total administrative spending for the SBIR and STTR programs for fiscal 

year 2015 is unknown because the agencies that participate in the 

programs generally do not—and are not required to—fully track these 

costs. The 9 agencies that participated in the administrative pilot program 

reported spending $33.9 million in fiscal year 2015, but this amount does 

not represent total administrative spending. Officials from all 11 agencies 

participating in the SBIR and STTR programs told us that the 

administrative pilot program is beneficial, but officials from a few agencies 

also told us there are constraints to participating in it.

The total amount that the 11 participating agencies spent to administer 

their SBIR and STTR programs for fiscal year 2015 is unknown because 

the agencies generally do not—and are not required to—track these 

costs.37 Officials at 9 of these 11 agencies told us that it is challenging to 

accurately estimate total administrative costs because staff and 

contractors that help administer the program also spend time on other 

programs, and the agencies do not have systems in place to track the 

time they spend specifically on the SBIR and STTR programs. Officials at 

1 of the 2 remaining agencies, Education, told us that it is not challenging 

to estimate the expenses because the department has one person 

engaged nearly full time with its SBIR program, and it also has estimates 

for the hours that staff from other program offices contributed to the SBIR 

program. Officials from the other remaining agency, DOT, told us that 

they have implemented a system that allows them to track most of their 

administrative expenses for the programs, but they acknowledged that 

they are not able to track all their expenses, particularly for staff that do 

not spend much time on SBIR activities.

 37Prior to the implementation of the administrative pilot program, agencies were generally 

prohibited from spending program funds on program administration. 

Total Administrative 

Spending for Fiscal 

Year 2015 Is 

Unknown, but Nine 

Agencies Spent $33.9 

Million on the 

Administrative Pilot 

Program

Total Administrative 

Spending for Fiscal Year 

2015 Is Unknown
Page 28 GAO-17-453 Small Business Research Programs

In response to our requests for data on their fiscal year 2015 

administrative costs, 9 of the 11 participating agencies provided 

information on some categories of administrative costs and partial 

estimates of costs.38 These estimates ranged from about $288,000 to 

$10.4 million. As with the cost data for fiscal years 2011 through 2014 we 

obtained from the agencies for our previous reports, these data were 

incomplete and unverifiable.

Nine agencies—Commerce, DOD, DOE, DOT, Education, HHS, NASA, 

NSF, and USDA—participated in the administrative pilot program in fiscal 

year 2015, and these agencies reported spending $33.9 million on 

administrative and oversight activities as part of the program.39 This 

represents an increase in the number of participating agencies from 

previous years—6 agencies participated in fiscal year 2013, and 7 

agencies participated in fiscal year 2014.

The policy directives require each agency that participates in the 

administrative pilot program to submit to SBA a work plan that includes, 

among other information, a prioritized list of initiatives, the estimated 

percentage of funds or amounts to be spent on each initiative, and the 

expected results to be achieved. After the fiscal year has ended, agencies 

are to report on their actual spending on the administrative pilot program.

In fiscal year 2015, agencies proposed that they would spend $59.8 

million on the administrative pilot program, but our analysis of the work 

plans and data that agencies submitted to SBA shows that the agencies 

obligated $33.9 million, or 57 percent of the proposed amount (see table 

2). This represents an increase over previous years; agencies obligated 

$12.3 million (21 percent of the proposed amount) in fiscal year 2013 and 

$19.1 million (34 percent of the proposed amount) in fiscal year 2014. 

Officials from 2 agencies told us that they propose the maximum 

allowable amount in their work plans to give them the ability to spend 

those funds, but they do not necessarily intend to spend the full amount. 

Officials from other agencies told us they either proposed what they 

planned to spend or higher than what they planned but not the maximum 

 38DOD and HHS did not provide estimates of their administrative funding for the SBIR and 

STTR programs.

39To participate in the administrative pilot program, an agency must submit a work plan to 

SBA. For the purpose of this report, we define agencies as participating if they submitted 

such a work plan, even if they did not spend any of the proposed funds.

Nine Agencies 

Participated in the 

Administrative Pilot 

Program in Fiscal Year 

2015 and Spent $33.9 

Million
Page 29 GAO-17-453 Small Business Research Programs

amount. The 9 agencies that participated in the administrative pilot 

program varied greatly in the extent to which they actually obligated what 

they proposed to spend on the program. For example, DOE obligated 

almost all of its proposed amounts, but Education obligated little of its 

proposed amount. Officials at Education told us they proposed to spend 

funds on several outreach activities but obligated far less when they 

found they had time to attend only one conference.

Table 2: Proposed Spending and Actual Amounts Obligated for the Administrative Pilot Program in Fiscal Year 2015

Agency

Proposed spending for fiscal 

year 2015 administrative

pilot program (dollars)

Obligations for fiscal

year 2015 administrative

pilot program (dollars)

Percentage of proposed 

spending obligated

in fiscal year 2015

Department of Agriculture 582,450 220,253 38

Department of Commerce 116,000 36,256 31

Department of Defense 29,679,802 20,724,739 70

Department of Education 15,000 651 4

Department of Energy 1,357,065 1,274,251 94

Department of Health and 

Human Services 20,600,000 10,272,276 50

Department of Transportation 107,500 95,061 88

National Aeronautics and Space 

Administrationa 5,700,000 0 0

National Science Foundation 1,700,000 1,261,929 74

Total 59,857,817 33,885,417 57

Source: GAO analysis of agency data.  |  GAO-17-453

Note: Calculations may be affected by rounding. 

a

The National Aeronautics and Space Administration submitted a w ork plan to participate in the 

administrative pilot program in fiscal year 2015, but agency officials told us that they submitted the 

w ork plan late in the fiscal year and thus could not obligate funds during that year. Officials told us 

they intend to participate in the program in fiscal year 2016.

Although funding for the pilot program cannot replace current agency 

administrative funding, the administrative pilot program provides agencies 

with new flexibility to undertake activities they otherwise could not have 

undertaken.40 Agencies that participated in the administrative pilot 

program in fiscal year 2015 used funds towards six goals developed by 

 40The policy directives state that the purpose of the pilot program is to assist with the 

substantial expansion in commercialization activities;prevention of fraud, waste, and 

abuse; expansion of reporting requirements by agencies; and other agency activities 

required for the programs.
Page 30 GAO-17-453 Small Business Research Programs

SBA in consultation with agency officials, as shown in table 3. Our review 

of the funds agencies spent on the administrative pilot program showed 

that some goals received more attention than others. In particular, 8 of 

the agencies that participated in the administrative pilot program spent 

funds to increase outreach to underserved communities, 5 agencies 

spent funds to help awardees commercialize their products, and 4 

agencies spent funds to streamline and simplify the application and award 

process. Four agencies also spent funds on preventing fraud, waste, and 

abuse, and fewer agencies spent funds on congressional and interagency 

reporting.

Table 3: Actual Amounts Obligated for the Administrative Pilot Program, per Goal, in Fiscal Year 2015 (dollars)

Agency Outreach Commercialization

Streamlining 

and 

Simplification

Prevention and

Detection of

Fraud, Waste,

and Abuse

Reporting -

Administrative, 

Congressional 

and Interagency

Administration 

and 

Implementation of 

Reauthorization

Department of 

Agriculture 28,407 5,141 0 0a 0a 186,705

Department of 

Commerce 36,256 0 0 0 0 0

Department of 

Defense 4,766,690 8,289,896 3,937,700 414,495 2,072,474 1,243,484

Department of 

Education 651 0 0 0 0 0

Department of Energy 840,348 0 0 903 0 433,000

Department of Health 

and Human Services 2,200,012 1,391,414 1,720,016 13,367 3,296,305 1,651,163

Department of 

Transportation b b b b 0 b

National Aeronautics 

and Space 

Administrationc 0 0 0 0 0 0

National Science 

Foundation 924,929 187,000 150,000 0 0 0

Number of Agencies 

Obligating Funds 

per Goal 8 5 4 4 2 5

Source: GAO analysis of agency data. | GAO-17-453

Note: We considered the agency as not obligating funds tow ard a specific goal of the administrative 

pilot program if the agency did not report it.

a

The Department of Agriculture (USDA) reported that it completed activities related to this goal of the 

administrative pilot program, but it considered these activities as in-kind support from the department 

to the SBIR program. For example, in December 2014 (fiscal year 2015), USDA Small Business 

Innovation Research (SBIR) program staff provided fraud, waste, and abuse training at the Phase II 

commercialization w orkshop and had 98 percent of Phase II companies in attendance, according to 

the department’s annual SBIR report to the Small Business Administration. In addition, the SBIR 
Page 31 GAO-17-453 Small Business Research Programs

program coordinator w orked with the Office of Information Technology at the National Institute of 

Food and Agriculture to modify the current database to meet new SBIR reporting requirements, 

including unaw arded and awarded data, according to the same source.

b

The Department of Transportation reported that it obligated funds related to this goal of the 

administrative pilot program, but it did not specify the amount.

c

The National Aeronautics and Space Administration submitted a w ork plan to participate in the 

administrative pilot program in fiscal year 2015, but agency officials stated that they submitted the 

w ork plan proposal late in the fiscal year and thus could not obligate funds during that year. Officials 

stated that they intend to participate in the program in fiscal year 2016.

Within each of these six goals, agencies developed a variety of specific 

uses for their funds for the administrative pilot program. Table 4 provides 

examples of these uses.

Table 4: Examples of Agencies’ Uses of Administrative Pilot Program Funds during Fiscal Year 2015

Outreach • The Departments of Agriculture (USDA), Commerce, Defense (DOD), Education, Energy 

(DOE), Health and Human Services (HHS), and Transportation (DOT), and the National 

Science Foundation (NSF) conducted outreach, such as by traveling to states that have been 

underrepresented in the Small Business Innovation Research (SBIR) and Small Business 

Technology Transfer (STTR) programs and by meeting with local business and economic 

development organizations and other organizations, such as the National Society of Black 

Engineers.

• NSF funded an entrepreneurial program with the University of Illinois to connect academic and 

entrepreneurial groups to increase awareness about NSF’s SBIR and STTR programs.

• DOE awarded a contract to provide application support and assistance services to potential 

DOE applicants.

Commercialization • HHS hired “Investors-in-Residence” and “Entrepreneurs-in-Residence” to advise applicants and 

awardees on commercialization.

• DOT created the Commercialization Assistance Program designed to assist SBIR program 

awardees in planning for and implementing commercialization activities, including the 

development of their Phase II proposal commercialization strategy.

• USDA developed a survey to determine the success of past USDA SBIR Phase II awardees. 

Streamlining and 

Simplification

• The Air Force continued to modernize its web server environment, which is intended to improve 

its reporting procedures for the SBIR and STTR programs.

• DOT implemented pre-proposal conference calls for Phase II awardees to help them discuss 

research goals and prepare proposals.

Prevention of Fraud, Waste, 

and Abuse

• DOT conducted outreach to both current awardees and Contracting Officer Representatives to 

inform them about activities that would be considered fraud, waste, and abuse.

• HHS hired support staff to assist in prevention and detection of fraud, waste, and abuse.

• The Air Force partnered with the Air Force Office of Special Investigations to increase tracking 

and reporting of instances of fraud, waste, and abuse.

Reporting - Administrative, 

Congressional and 

Interagency

• HHS covered personnel costs, including costs for the program manager, a program analyst, 

and other contractor support.

• The Navy updated its program management databases to manage its reporting requirements, 

which officials said it resulted in improved accuracy of reporting Phase II and III awards and 

funding. 
Page 32 GAO-17-453 Small Business Research Programs

Administration and 

Implementation of 

Reauthorization

• DOE upgraded the system it uses to manage its application and award process.

• HHS developed an evaluation framework and tools to improve collection, storage, and analysis 

of data related to STTR and the mission of the National Institutes of Health.

Source: GAO analysis of agency data. | GAO-17-453

Officials from all 11 agencies participating in the SBIR and STTR 

programs told us that the administrative pilot program is beneficial. For 

example, officials at 4 agencies told us that benefits include allowing them 

to conduct outreach and other activities, which would not have been 

possible without funding from the administrative pilot program. Further, 

officials at 1 agency told us that the increased outreach seems to have 

resulted in more applications, including from underserved states.

However, officials also identified the following constraints to participating 

in the administrative pilot program:

• Administrative pilot program authority is temporary. Officials at 2 

agencies told us that the temporary nature of the administrative pilot 

program constrained them from implementing longer-term activities. 

For example, officials at 1 agency said that the temporary nature limits 

them to projects that can be completed within 1 year, and officials at 

the other agency told us that the temporary nature prevents them from 

hiring additional staff that would allow them to more fully implement 

the pilot. Program managers at 8 of the 9 agencies participating in the 

administrative pilot program told us they supported making it 

permanent.41 SBA officials acknowledged that the temporary nature of 

the pilot program is its biggest constraint. As of May 2017, the 

administrative pilot program has not been extended past fiscal year 

2017.

• Funds can be used only for new activities, and some program officials 

were unsure about how long certain activities would be considered as 

new. Agencies can only spend the funds from the administrative pilot 

program on new activities, and officials at 4 agencies told us that 

written clarification regarding how SBA defined new activities would 

 41Officials from the remaining agency, Education, told us they want to participate in the 

pilot program longer before deciding whether it should become permanent. 

Officials Identified Benefits 

and Constraints that Affect 

Participation and 

Spending on the 

Administrative Pilot 

Program
Page 33 GAO-17-453 Small Business Research Programs

be helpful, particularly because the administrative pilot program has 

been in effect for a few years.42

SBA is required to collect data and report on the use of funds to achieve 

the objectives of the administrative pilot program.43 In May 2016, we 

recommended that SBA could include in its annual report to Congress an 

evaluation of the constraints that have hindered agencies’ participation in 

the administrative pilot program and steps to address these constraints.44

SBA officials told us they probably will not discuss potential constraints in 

the fiscal year 2014 report to Congress because SBA is not required to 

discuss such constraints in its annual reports and has not collected 

information on constraints from all the participating agencies. As of April 

2017, SBA officials said that SBA is in the process of completing its 

follow-up with agencies to document agencies’ utilization of the 

administration pilot program. Officials said they will draft a report once 

SBA receives the information requested from the agencies. As of April 

2017, a formal date for completing and submitting the report has not been 

established.

We continue to believe that having SBA include an evaluation of potential 

constraints to participating in the administrative pilot program could be 

useful if Congress decides to continue the program in the future. Without 

such information, SBA and Congress will not have the information they 

need to address the constraints and help ensure agencies are 

implementing the administrative pilot program to the fullest extent.

Under the SBIR and STTR programs, federal agencies have awarded 

billions of dollars to small businesses to develop and commercialize 

innovative technologies. In our previous reports on these programs, we 

identified some steps SBA could take to better ensure agencies’

compliance with spending and reporting requirements and to improve 

management of the administrative pilot program. SBA has taken some of 

these steps, such as revising its annual reporting template to clarify the 

 42We found in our May 2016 report that officials at 2 agencies told us that the requirement 

to expend funds on only new activities constrained their ability to participate in the 

program and that the requirement puts a heavy burden on offices with smaller budgets, as 

they must start up new activities as well as continue existing activities with limited 

budgets. See GAO-16-492.

4315 U.S.C. § 638(mm)(6) (2017).

44GAO-16-492.

Conclusions
Page 34 GAO-17-453 Small Business Research Programs

required data that agencies should submit. One key remaining issue is 

ensuring that all agencies submit the data required for SBA to determine 

whether they have met spending requirements. In fiscal year 2015, 2 

participating agencies—DOD and EPA—did not submit these data 

because they do not have procedures for collecting the data, and they 

face challenges in collecting these data. A working group of agencies 

participating in the SBIR and STTR programs is considering proposing an 

alternative methodology to calculate spending requirements for the 

programs. Until DOD and EPA find ways to provide the required data or 

until the spending requirements are changed or the identified data 

collection challenges are resolved, DOD and EPA will not know whether 

they have met the spending requirements, and SBA will be limited in its 

ability to accurately report that information to Congress.

To ensure full compliance with SBIR and STTR spending and reporting 

requirements, we recommend that the Secretary of Defense and the EPA 

Administrator establish procedures to collect and submit obligations data 

or—through SBA, independently, or through a working group of agencies 

participating in the SBIR and STTR programs—propose to Congress an 

alternative methodology for calculating spending requirements for their 

agencies.

We provided a draft of this report to SBA and the 11 participating 

agencies for review and comment. In written comments, DOD and EPA

agreed with the recommendation, and EPA stated that it will work with 

SBA to develop an alternative methodology for calculating spending 

requirements. DOD’s and EPA’s comments are reproduced in appendixes 

III and IV. Three agencies—Commerce, HHS, and NSF—provided 

technical comments, which we incorporated as appropriate. Seven 

agencies—DHS, DOE, DOT, Education, NASA, SBA, and USDA—had no 

technical or written comments. 

We are sending copies of this report to the appropriate congressional 

committees; the Secretaries of Agriculture, Commerce, Defense, 

Education, Energy, Health and Human Services, Homeland Security, and 

Transportation; the Administrators of the Small Business Administration, 

the Environmental Protection Agency, and the National Aeronautics and 

Space Administration; the Director of the National Science Foundation; 

and other interested parties. In addition, the report is available at no 

charge on the GAO website at http://www.gao.gov.

Recommendation for 

Executive Action

Agency Comments 

and Our Evaluation
Page 35 GAO-17-453 Small Business Research Programs

If you or your staff members have any questions about this report, please 

contact me at (202) 512-3841 or neumannj@gao.gov. Contact points for 

our Offices of Congressional Relations and Public Affairs may be found 

on the last page of this report. GAO staff who made key contributions to 

this report are listed in appendix V.

John Neumann

Director, Natural Resources and Environment
Page 36 GAO-17-453 Small Business Research Programs

List of Committees

The Honorable James Risch

Chairman

The Honorable Jeanne Shaheen

Ranking Member

Committee on Small Business & Entrepreneurship

United States Senate

The Honorable Lamar Smith

Chairman

The Honorable Eddie Bernice Johnson

Ranking Member

Committee on Science, Space, and Technology

House of Representatives

The Honorable Steve Chabot

Chairman

The Honorable Nydia M. Velázquez

Ranking Member

Committee on Small Business

House of Representatives
Appendix I: Agencies’ Spending and Spending 

Requirements for the Small Business 

Innovation Research Program for Fiscal Year 

2015, According to Agency Data

Page 37 GAO-17-453 Small Business Research Programs

Nine of the 11 agencies participating in the SBIR program submitted the 

extramural research or research and development (R&D) obligations data 

required to determine compliance with program spending requirements 

for fiscal year 2015. Eight of these 9 agencies met or exceeded their 

SBIR spending requirements for fiscal year 2015, according to the 

agencies’ data. For the purposes of this report, we defined compliance as 

spending at least 2.9 percent of an agency’s reported extramural R&D 

obligations on the SBIR program in fiscal year 2015, as required by the 

Small Business Act. This method is consistent with the Small Business 

Administration’s approach for calculating spending requirements in its 

reports to Congress on the program. We could not determine compliance 

with spending requirements for the Department of Defense and the 

Environmental Protection Agency because those agencies did not submit 

the required extramural R&D obligations data. Table 5 shows agency 

SBIR spending for all 11 participating agencies and spending 

requirements for the 9 agencies that submitted the required obligations 

data.

Table 5: Agency Spending and Spending Requirements for the Small Business Innovation Research (SBIR) Program for 

Fiscal Year 2015, According to Agency Data

Dollars in millions

Agency 

Extramural research 

or research and 

development (R&D) 

obligations (dollars) 

Amount spent 

on SBIRa

(dollars)

Calculated 

spending 

requirementb

(dollars)

Difference between 

amount spent and 

spending 

requirement 

(dollars)

Percentage of 

extramural 

R&D 

obligations 

spent on SBIR

Department of Defensec N/A 956.9 N/A N/A N/A

Department of Health and Human 

Services 24,244.5 713.4 703.1 10.3 2.9

Department of Energy 6,054.7 193.6 175.6 18.0 3.2

National Science Foundation 5,367.0 155.4 155.6 (0.2) 2.9d

National Aeronautics and Space 

Administration 4,960.3 158.2 143.8 14.4 3.2

Department of Agriculture 904.5 22.7 26.2 (3.5) 2.5

Department of Homeland Security 372.6 20.7 10.8 9.9 5.6

Department of Transportation 349.8 11.2 10.1 1.0 3.2

Department of Commerce 316.2 9.1 9.2 (0.1) 2.9d

Department of Education 240.7 7.5 7.0 0.5 3.1

Environmental Protection Agencyc N/A 4.7 N/A N/A N/A

Totalc 42,810.2 2,253.4 1,241.5 50.3 3.0

Legend: N/A = not available

Source: GAO analysis of agencies’ data submitted to the Small Business Administration (SBA). | GAO-17-453

Appendix I: Agencies’ Spending and 

Spending Requirements for the Small 

Business Innovation Research Program for 

Fiscal Year 2015, According to Agency Data
Appendix I: Agencies’ Spending and Spending 

Requirements for the Small Business 

Innovation Research Program for Fiscal Year 

2015, According to Agency Data

Page 38 GAO-17-453 Small Business Research Programs

Notes: Calculations may be affected by rounding. Negative numbers are placed w ithin parentheses.

a

The amount spent is the agency’s obligations for SBIR that the agency reported to SBA.

b

We calculated the spending requirement as 2.9 percent of the agency’s extramural R&D obligations, 

as required by the Small Business Act.

c

Tw o participating agencies—the Department of Defense and the Environmental Protection Agency—

did not submit the required extramural R&D obligations data. Therefore, w e could not determine their 

compliance w ith SBIR spending requirements, and w e excluded their SBIR spending w hen 

calculating the total percentage of extramural R&D obligations spent on SBIR by participating 

agencies.

d

When determining w hether each agency had met its spending requirement for the SBIR program, we 

rounded the calculated percentage to the nearest tenth of a percent. The percentages for the National 

Science Foundation and the Department of Commerce rounded up to the spending requirement of 

2.9 percent.
Appendix II: Agencies’ Spending and Spending 

Requirements for the Small Business 

Technology Transfer Program for Fiscal Year 

2015, According to Agency Data

Page 39 GAO-17-453 Small Business Research Programs

Four of the five agencies participating in the STTR program submitted the 

extramural research or research and development (R&D) obligations data 

required to determine compliance with program spending requirements 

for fiscal year 2015. All four of these agencies met or exceeded their 

STTR spending requirements for fiscal year 2015, according to the 

agencies’ data. For the purposes of this report, we defined compliance as 

spending at least 0.40 percent of an agency’s reported extramural R&D 

obligations on the STTR program in fiscal year 2015, as required by the 

Small Business Act. This method is consistent with the Small Business 

Administration’s approach for calculating spending requirements in its 

reports to Congress on the program. We could not determine compliance 

with spending requirements for the Department of Defense because it did 

not submit the required extramural R&D obligations data. Table 6 shows 

agency STTR spending for all five participating agencies, and spending 

requirements for the four agencies that submitted the required obligations 

data.

Table 6: Agency Spending and Spending Requirements for the Small Business Technology Transfer (STTR) Program for 

Fiscal Year 2015, According to Agency Data

Dollars in millions

Agency

Extramural research

or research and 

development (R&D)

obligations (dollars)

Amount spent 

on STTRa

(dollars)

Calculated 

spending 

requirementb

(dollars)

Difference between 

amount spent

and spending 

requirement 

(dollars)

Percentage of 

extramural 

R&D 

obligations 

spent on STTR

Department of Defensec N/A 125.5 N/A N/A N/A

Department of Health and 

Human Services 24,244.5 100.3 97.0 3.3 0.41

Department of Energy 6,054.7 26.4 24.2 2.1 0.44

National Science Foundation 5,367.0 21.3 21.5 (0.2) 0.40d

National Aeronautics and Space 

Administration 4,960.3 22.1 19.8 2.3 0.45

Totalc 40,626.5 295.6 162.5 7.6 0.42

Legend: N/A = not available

Source: GAO analysis of agencies’ data submitted to the Small Business Administration (SBA). | GAO-17-453

Notes: Calculations may be affected by rounding. Negative numbers are placed w ithin parentheses.

a

The amount spent is the obligations for STTR that the agency reported to SBA.

b

We calculated the spending requirement as 0.40 percent of the agency’s extramural R&D 

obligations, as required by the Small Business Act.

c

Because the Department of Defense did not submit the required extramural R&D obligations data, 

w e could not determine its compliance w ith its STTR spending requirement, and w e excluded its 

STTR spending w hen calculating the total percentage of extramural R&D obligations spent on STTR 

by participating agencies.

Appendix II: Agencies’ Spending and 

Spending Requirements for the Small 

Business Technology Transfer Program for 

Fiscal Year 2015, According to Agency Data
Appendix II: Agencies’ Spending and Spending 

Requirements for the Small Business 

Technology Transfer Program for Fiscal Year 

2015, According to Agency Data

Page 40 GAO-17-453 Small Business Research Programs

d

When determining w hether each agency had met its spending requirement for the STTR program, 

w e rounded the calculated percentage to the nearest hundredth of a percent. The percentage for the 

National Science Foundation rounded up to the spending requirement of 0.40 percent.
Appendix III: Comments from the Department 

of Defense

 Page 41 GAO-17-453 Small Business Research Programs

Appendix III: Comments from the 

Department of Defense
Appendix III: Comments from the Department 

of Defense

 Page 42 GAO-17-453 Small Business Research Programs
Appendix IV: Comments from the 

Environmental Protection Agency

 Page 43 GAO-17-453 Small Business Research Programs

Appendix IV: Comments from the 

Environmental Protection Agency
Appendix IV: Comments from the 

Environmental Protection Agency

 Page 44 GAO-17-453 Small Business Research Programs
Appendix V: GAO Contacts and Staff 

Acknowledgments

Page 45 GAO-17-453 Small Business Research Programs

John Neumann, (202) 512-3841 or neumannj@gao.gov

In addition to the contact named above, Hilary Benedict (Assistant 

Director), John Barrett, Antoinette Capaccio, Ellen Fried, Cindy Gilbert, 

Terry Hanford, and Sara Sullivan made key contributions to this report.

Appendix V: GAO Contacts and Staff 

Acknowledgments

GAO Contacts

Staff 

Acknowledgments

(101004)
The Government Accountability Office, the audit, evaluation, and investigative 

arm of Congress, exists to support Congress in meeting its constitutional 

responsibilities and to help improve the performance and accountability of the 

federal government for the American people. GAO examines the use of public 

funds; evaluates federal programs and policies; and provides analyses, 

recommendations, and other assistance to help Congress make informed 

oversight, policy, and funding decisions. GAO’s commitment to good government 

is reflected in its core values of accountability, integrity, and reliability.

The fastest and easiest way to obtain copies of GAO documents at no cost is 

through GAO’s website (http://www.gao.gov). Each weekday afternoon, GAO 

posts on its website newly released reports, testimony, and correspondence. To 

have GAO e-mail you a list of newly posted products, go to http://www.gao.gov

and select “E-mail Updates.”

The price of each GAO publication reflects GAO’s actual cost of production and 

distribution and depends on the number of pages in the publication and whether 

the publication is printed in color or black and white. Pricing and ordering 

information is posted on GAO’s website, http://www.gao.gov/ordering.htm. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or 

TDD (202) 512-2537. 

Orders may be paid for using American Express, Discover Card, MasterCard, 

Visa, check, or money order. Call for additional information.

Connect with GAO on Facebook, Flickr, LinkedIn, Twitter, and YouTube. 

Subscribe to our RSS Feeds or E-mail Updates. Listen to our Podcasts. 

Visit GAO on the web at www.gao.gov and read The Watchblog. 

Contact: 

Website: http://www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470

Katherine Siggerud, Managing Director, siggerudk@gao.gov, (202) 512-4400, 

U.S. Government Accountability Office, 441 G Street NW, Room 7125, 

Washington, DC 20548

Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, DC 20548

James-Christian Blockwood, Managing Director, spel@gao.gov, (202) 512-4707

U.S. Government Accountability Office, 441 G Street NW, Room 7814, 

Washington, DC 20548

GAO’s Mission

Obtaining Copies of 

GAO Reports and 

Testimony

Order by Phone

Connect with GAO

To Report Fraud, 

Waste, and Abuse in 

Federal Programs

Congressional 

Relations

Public Affairs

Strategic Planning and 

External Liaison

Please Print on Recycled Paper.