The Small Business Innovation Research (or SBIR) program is a United States Government program, coordinated by the Small Business Administration, in which 2.5% of the total extramural research budgets of all federal agencies with extramural research budgets in excess of $100 million are reserved for contracts or grants to small businesses. In 2010, that represented over $1Billion in research funds. Over half the awards are to firms with fewer than 25 people and a third to firms of fewer than 10. A fifth are minority or women-owned businesses. A quarter of the companies in FY10 were first-time winners.
The program was established with the passing of the Small Business Innovation Development Act in 1982, and must be periodically reauthorized by the United States Congress. Reauthorization is generally included in each new budget. The latest authorization extends the program by continuing resolution until May 31, 2011.
The SBIR program was created to support scientific excellence and technological innovation through the investment of federal research funds in critical American priorities to build a strong national economy … one business at a time. In the words of program founder Roland Tibbetts: “to provide funding for some of the best early-stage innovation ideas — ideas that, however promising, are still too high risk for private investors, including venture capital firms.”[citation needed] For the purposes of the SBIR program, the term “small business” is defined as a for-profit business with fewer than 500 employees, owned by one or more individuals who are citizens of, or permanent resident aliens in, the United States of America.
The SBIR program agencies award monetary grants in phases I and II of a three-phase program:
- Phase I, the startup phase, makes awards of “up to $100,000 for approximately 6 months support for exploration of the technical merit or feasibility of an idea or technology.”
- Phase II awards grants of “up to $750,000, for as many as 2 years,” in order to facilitate expansion of Phase I results. Research and development work is performed and the developer evaluates the potential for commercialization. Phase II grants are awarded exclusively to Phase I award winners.
- Phase III is intended to be the time when innovation moves from the laboratory into the marketplace. No additional SBIR funds are awarded for Phase III. “The small business must find funding in the private sector or other non-SBIR federal agency funding.”
SBA has proposed amendments to the SBIR Program to raise the SBIR Phase I award threshold amount from $100,000 to $150,000, and the Phase II award threshold amount from $750,000 to $1,000,000.
A similar program, the Small Business Technology Transfer Program (STTR), uses a similar approach to the SBIR program to expand public/private sector partnerships between small businesses and nonprofit U.S. research institutions, and is funded at present at .3% of the relevant agencies’ extramural research budgets. In FY10, that amounted to over $100 Million.
The Small Business Technology Council, a member council of the National Small Business Association, hands out the Tibbetts Award annually “to small firms, projects, organizations and individuals judged to exemplify the very best in SBIR achievement.”
Federal and State (FAST) is a program of State-based business mentoring and assistance to aid small businesses in the preparation of SBIR proposals and management of the contracts.[3] It is more active in some states than others.
As of September 2010, SBIR programs are in place at the following agencies:
- Department of Agriculture
- Department of Commerce(National Institute of Standards and Technology; and National Oceanic and Atmospheric Administration
- Department of Defense
- Department of Education
- Department of Energy
- Department of Health and Human Services (National Institutes of Health)
- Department of Homeland Security
- Department of Transportation
- Environmental Protection Agency
- National Aeronautics and Space Administration
- National Science Foundation