DOD received approximately $2.6 billion in funding for fiscal year 2009 to research, develop, test, and evaluate (RDT&E) space systems. The Air Force conducts the majority of the DOD space-related technology development. DOD’s current portfolio of space systems comprises satellites, ground-based systems, and associated terminals and receivers. All of these systems are expected to play an increasingly important role in military operations. The bulk of major space system acquisitions in DOD’s space portfolio, however, have experienced problems during the past two decades that have delayed deployment and driven up cost. In our past work, we found that satellite programs cost more than expected and took longer to develop and launch than planned. We recently reported that estimated costs for major space acquisition programs increased from initial estimates of $11.4 billion to $22.4 billion for fiscal years 2008 through 2013, and programs are facing potential capability gaps in areas such as positioning, navigation, and timing; missile warning; communications; and weather monitoring. Cost and schedule problems like these are commonly tied to unstable requirements, weak investment practices, poorly executed acquisition strategies, and immature technologies. Our past work and studies on the defense industrial base indicate space system acquisitions could benefit from a greater diversity of suppliers. A 2008 report for DOD states that over the past few decades, the space industrial base has consolidated from over 50 suppliers in the early 1990s to four prime contractors who now manage thousands of subcontractors for DOD systems. According to a 2007 DOD study, the U.S. space industry has had to adjust to declining demands in the areas of satellites and launch, which has led to consolidation. We reported in 2008 that the consolidation of numerous firms over two decades to a small number of major space contractors has made it difficult for new suppliers to enter the market. Federal agencies with an annual extramural R&D budget of at least $100 million are required to establish and operate an SBIR program. The SBIR program budget is computed as 2.5 percent of an individual agency’s extramural R&D budget. Within DOD, each military service and DOD component uses this percentage to determine its own SBIR budget. The U.S. Small Business Administration (SBA) communicates federal SBIR guidance through the SBIR Policy Directive and reports on the implementation and operation of the SBIR program at 11 federal agencies. DOD is the largest agency participating in the SBIR program, and DOD’s fiscal year 2009 SBIR program budget was over $1.22 billion—more than half of the entire fiscal year 2009 governmentwide SBIR program budget of over $2 billion. DOD’s Office of Small Business Programs (OSBP) oversees the DOD SBIR program, develops DOD SBIR policy, annually collects reporting data from each of the services and components, and oversees the topic-generation and solicitation process. DOD generally relies on its military and defense components to implement its SBIR program. The DOD SBIR program comprises 12 services and components, of which the Air Force, Army, Navy, Missile Defense Agency (MDA), and Defense Advanced Research Projects Agency (DARPA) are the major services and components contributing to the program (see fig. 1). The DOD SBIR program is currently authorized through January 31, 2011. The Small Business Innovation Development Act of 1982 required the SBA, after consultation with certain agencies, to establish a policy directive for the three-phase structure (see table 1) to include, among other things, timing for receipt and review of proposals and funding guidelines. The SBA recently raised the award limits for Phase I and Phase II contracts, and the first DOD solicitation using the increased funding limits for its SBIR program had a closing date for receipt of proposals of June 2010. The SBA’s SBIR Policy Directive provides agencies the discretion to make awards in amounts higher than the limits set forth in the guidelines, and they must provide written explanation to the SBA for these instances at the end of the year. Awards can be made to successful applicants in the form of grants, contracts, or cooperative agreements. DOD uses contracts to make awards. Before Phase I of the award process, DOD develops research topics to solicit R&D ideas that address critical technology needs of a DOD program. Research topics are generated by DOD service and component representatives—typically scientists and engineers—based on DOD technology needs and are approved in a departmentwide review process. The Director of Defense Research and Engineering, and a multiagency integrated review team (IRT), review and approve the SBIR topics. DOD announces SBIR project opportunities through three annual solicitations for which small businesses can submit Phase I SBIR proposals to address the research topics. Small businesses submit proposals electronically through the DOD SBIR Electronic Submission Web site. DOD published 109 space-related topics throughout the 2009 fiscal year solicitation cycles. After the solicitation’s closing date, proposals are evaluated, and source- selection and contract-award decisions are made. DOD invites small businesses with promising technologies that have completed Phase I to submit proposals for a Phase II contract. The Phase II award decision considers, among other things, a proposal’s commercial potential. Contracting officials and technical monitors are involved in the evaluation and selection of SBIR proposals. In Phase III, the SBIR technology is expected to transition into a DOD acquisition program or into a commercial-sector product or service. We have previously reported technologies in this phase of development typically need to have customer “pull” into commercialization or entry onto an acquisition program. However, SBIR technologies that demonstrate significant potential for advancing capability or reducing cost can be picked up by the commercial or government sector for further development or use in an acquisition program in Phase II or III. In Phase III, small businesses must find non-SBIR funding from acquisition programs or private investors, or both, to produce or continue developing their technology. DOD is working to commercialize technologies under its space-related SBIR program to deliver warfighter capabilities, but lacks complete data on its commercialization efforts and therefore has limited insight into the program’s effectiveness. DOD invests about 11 percent of its SBIR budget in R&D and is soliciting more space-related research proposals from small businesses. DOD has taken steps departmentwide and within individual services and components to encourage the use of SBIR technologies and to enhance activities and efforts that can increase the transition of those technologies. DOD can document the results of its efforts with various examples of space-related technologies it has transitioned for use by major space-system acquisition programs. However, DOD currently lacks complete data on the number of technologies commercialized and therefore cannot determine the return on its space-related SBIR investment. Further, there are challenges to executing the SBIR program that DOD officials acknowledge the agency needs to address, such as the lack of overarching guidance for the management of the DOD SBIR Program. DOD is investing in R&D through its SBIR program to meet space-related technology needs. Specifically, from 2005 through 2009, DOD invested approximately 11 percent of its total SBIR budget on space-related Phase I and II SBIR contract awards (see table 2). DOD awarded 1,122 space-related Phase I SBIR awards and 501 space- related Phase II awards for fiscal years 2005-2009; both represent around 11 percent of total DOD Phase I and II SBIR awards for the same time period. Of the roughly 500 Phase II space-related contracts, Air Force officials could not identify how many received space-related Phase III contracts. Table 3 identifies the number of Phase I and II contracts awarded by DOD and those that were space-related for fiscal years 2005 through 2009. The number of space-related Phase I research topics submitted by DOD services and components has increased from less than 8 percent in 2005 to nearly 14 percent in 2009 (see fig. 2). Topics are generated based on user needs to fill technology gaps in DOD acquisition programs. According to OSBP officials, DOD requires that at least 50 percent of SBIR topics are endorsed by acquisition programs to increase the likelihood of transitioning a technology into an acquisition program. Officials from the Air Force’s Space and Missile Systems Center, which itself represents the majority of DOD’s space-related technology development, said that almost all of their topics are based on technology needs of space program offices. DOD officials said the agency takes steps to clearly define program needs throughout the topic-generation process so SBIR technologies are more likely to align with DOD acquisition needs. We previously reported that technologies are more apt to be successful in technology transition if they are relevant, marketable, and gain product-line support from the acquisition community. There are a variety of programs and initiatives within DOD designed to increase the commercialization of SBIR technologies. Several are unique to individual military services and agencies. Although these efforts are not specific to space technology development, they are intended to accelerate the commercialization of technologies through their transition into DOD acquisition programs or commercial-sector products or services. DOD officials described the following initiatives; however, we did not assess their effectiveness. Commercialization Pilot Program: The National Defense Authorization Act for Fiscal Year 2006 authorized this program in 2006 under the Secretary of Defense and the Secretary of each Military Department. The Act authorized the program to increase commercialization and accelerate the fielding of capabilities by identifying and selecting projects that meet high-priority requirements, and by formalizing collaboration among small businesses, prime contractors, and DOD science and technology acquisition communities. But, according to DOD officials, it is too soon to determine the results.