SBA coordinates and oversees the efforts of the 11 agencies currently participating in the SBIR program. SBA coordinates the agencies’ schedules for issuing solicitations—announcements of opportunities for small businesses to apply for awards—and provides access to these solicitations through its Web site. As part of its oversight effort, SBA collects SBIR data from the participating agencies, aggregates the data, and uses the data to, among other things, monitor the program and report to Congress. SBA also provides guidance to participating agencies on the general conduct and operation of the program, which it periodically updates, for example, in response to changes in the program’s authorizing legislation. Under the legislation and SBA’s guidance, agencies have considerable flexibility to design their programs. For example, each agency determines, in consultation with SBA, such items as the number of solicitations to be issued during a fiscal year and the dates applications are due. Agencies also have discretion to determine what type of research to include in their solicitations, how to review applications for technical and scientific merit, which applications to fund, and the size of the award, among other things. The Small Business Innovation Development Act of 1982 provided for a competitive three-phased SBIR program. In phase I, participating agencies award up to $150,000 for a period of about 6 to 9 months to small businesses to conduct experimental or theoretical R&D. Small businesses whose phase I projects demonstrate scientific and technical merit, in addition to commercial potential, may compete for phase II awards of up to $1 million to continue the R&D for an additional period, normally not to exceed 2 years. Phase I and II award funds may be used for costs related to conducting the research, such as salaries, fringe benefits, equipment, and consulting services, as well as for profits and fees. To be eligible for a phase I or II SBIR award, a business must have 500 or fewer employees, be organized for profit with a place of business in the United States, and operate primarily in the United States or make a significant contribution to the U.S. economy. Generally, a business must also be at least 51 percent owned and controlled by one or more individuals who are U.S. citizens or permanent resident aliens. These eligibility requirements apply at the time that a phase I or II award is made. During phase III, businesses must secure non-SBIR funding to develop the commercial potential of the innovative technologies resulting from their SBIR projects; such funding may come from the private sector, federal agencies, or other sources. As the program has been reauthorized over the years, legislation has established a number of requirements related to the program’s purposes. For example, the Small Business Research and Development Enhancement Act of 1992 directed SBA to make more information available about the SBIR program, particularly about participation by small businesses owned by disadvantaged individuals and women, and required that agencies increase their outreach to such businesses. In addition, the Small Business Reauthorization Act of 2000 directed that applicants for phase II SBIR awards be required to submit commercialization plans, and it mandated that SBA develop, maintain, and make available to the public a database that contained SBIR award data. In addition, the act required SBA to develop and maintain, by June 2001, a restricted government-use database that would contain award- related data from the public database, as well as additional confidential data that would be accessible only to government agencies and other authorized users. The act stated that this database would be used exclusively for program evaluation—which, as we have noted in past work, involves the systematic collection and analysis of accurate, comparable, and complete data on program results. The act required the government-use database to contain, among other things, data that applicants for phase II awards would be required to supply on the commercialization success of any prior phase II awards, such as data on sales of or additional investment in the technologies funded under the awards. The act further specified that the government-use database would contain annual updates to these data, which phase II award recipients would be requested to voluntarily provide for 5 years after the period covered by the award. To accomplish this mandate, SBA envisioned expanding an electronic database, known as Tech-Net, which it had developed in the late 1990s, into two sections: a public-use portion and a government-use portion containing commercialization data. The public-use portion of the database has been available since 2000, according to SBA, and it contains such award-related data as the phase of the award, amount of the award, name and location of the business receiving the award, an abstract of the work to be conducted under the award, and whether the business is categorized as owned by disadvantaged individuals or women. In October 2006, however, we reported that some SBIR agencies did not consistently provide or correctly format the awards-related data for several fields in the public-use portion of the database. For example, two of the eight agencies we reviewed had not consistently provided data on whether the businesses receiving the awards were categorized as owned by disadvantaged individuals or women. At that time, we also reported that SBA had not implemented the government-use portion of the database, primarily, according to SBA officials, because of increased security requirements for the database, agency management changes, and budgetary constraints. Additionally, we reported that while five of the agencies we reviewed had systematically collected commercialization data, their data collection efforts differed in ways that made it challenging to evaluate the program across agencies. In August 2009, we testified before Congress that SBA said the database would no longer accept incorrectly formatted awards-related data from participating agencies. A committee of the National Academy of Sciences’ National Research Council has conducted a series of assessments of the SBIR program, both within and across agencies, as part of a legislatively mandated study. The results were summarized in a single report, in which the committee stated that SBIR is making significant progress in achieving congressional goals. The study concluded that the SBIR program is “sound in concept and effective in practice.” The study also recommended changes that could make the program more effective. Among other things, the study recommended that SBA and participating agencies improve the collection of data that track participation in the SBIR program by businesses owned by disadvantaged individuals and women, develop targeted outreach to such businesses that is based on an analysis of factors that affect their participation, and improve documentation of commercialization success. The National Research Council is now undertaking another round of assessments to provide a second snapshot of the program’s progress in achieving its legislative purposes. For fiscal years 2008 through 2011, the five participating agencies we reviewed addressed the SBIR purposes of using small business to meet federal R&D needs and stimulating technological innovation through their solicitations. Agencies also used solicitations, as well as technical assistance or matching funds programs, to address the SBIR purpose of increasing commercialization of innovations derived from federal R&D efforts. To address the remaining program purpose—encouraging participation in technological innovation by small businesses owned by disadvantaged individuals and women—agencies relied mainly on outreach activities aimed at a broader audience. All of the participating agencies that we reviewed designed the SBIR solicitations that they issued for fiscal years 2008 through 2011 to meet federal R&D or mission needs and stimulate technological innovation. All of these agencies selected research topics for their solicitations that were designed to meet their respective R&D or mission needs and specified that applications would be evaluated on the basis of responsiveness to those topics. The agencies that purchase SBIR-funded technologies for their own use—DOD, DOE, and NASA—tended to select solicitation topics that met specific agency needs for R&D. For example, in fiscal year 2011, DOD solicited applications to develop a fuel cell system capable of converting ethanol into electricity in an efficient, small, lightweight, portable power system. According to the solicitation, such advanced fuel cell systems could provide soldiers power to complement batteries and to charge rechargeable batteries, reducing the number of batteries required for extended time in the field. In contrast, NIH and NSF, which generally do not purchase SBIR-funded technologies, tended to issue solicitations for a broader spectrum of R&D to support their missions of advancing biomedical and other scientific and engineering disciplines. Among the agencies we reviewed, NIH and its components gave applicants the most leeway in addressing agency needs: rather than limiting applications to specific research topics identified in solicitations, NIH and its components usually listed suggested topics and encouraged applicants to propose innovative projects that fit the agency’s mission. Concerning innovation, each of the agencies included instructions in its SBIR solicitations about the type of information applicants had to provide about the innovativeness of the proposed work. For example, NASA informed phase I and II applicants that a competitive application would describe the proposed innovation relative to state-of-the-art knowledge in the field, among other things. In addition, these agencies explained to applicants how reviewers would consider evidence of the innovativeness of the applicants’ proposed research approaches. For example, in its fiscal year 2010 solicitation, NSF stated that applications would be evaluated, in part, on the basis of whether they reflected state-of-the-art knowledge in the major research activities proposed and whether the work was likely to advance state-of-the-art knowledge. The participating agencies we reviewed addressed the SBIR purpose of increasing commercialization of innovations through solicitations, as well as through technical assistance or matching funds programs. Solicitations. Of the five agencies we reviewed, all but NIH required in their solicitations for fiscal years 2008 through 2011 that applicants for phase I awards submit a commercialization strategy demonstrating that the applicants had taken steps such as identifying a market for their SBIR technologies, planning to secure financing, and estimating expected future sales. For phase II awards, all of the agencies we reviewed required that applicants submit a commercialization plan.