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, and legislation enacted in 2016 extended the programs for fiscal years 2018 through 2022. 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 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. 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. 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 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. In response to 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. 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 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. 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). 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. 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 they planned to meet the spending requirements in the future. 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).