Congress reauthorizes small business R&D programs: What it means

Congress recently authorized the funding for two important programs that aid small businesses. The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs were renewed for the next six years. The funding bill was attached to a defense authorization bill that passed both houses of Congress. Until this new spending bill was authorized, the original program was temporarily funded 14 times from 2008 to 2011.

Here's a look at some facts and figures surrounding both small business programs.


Both programs were started in 1982 as a way for small businesses to compete with larger companies for government contracts. The point is to give incentives for business in research and development for technology and programs that are used in vital programs throughout the federal government. Through fiscal year 2009, over 112,500 grants have been awarded, totaling $26.9 billion. That averages out to just over $239,000 per award to small businesses.


There are 11 federal agencies that commit funding to SBIR and STTR. NASA, NOAA, the Department of Defense, and the EPA are included in the government departments that give out grants. Areas of government that receive more than $100 million in funding are required to participate in the programs. As much as 3.2 percent of the budget of each area is set aside for the small business grants over the next six years.


Phase I of the grant funds a project up to six months and $150,000. This is up from $100,000 previously. The initial phase is to determine the feasibility and marketability of the high-tech product being developed. For the project to continue to Phase II, there must be a successful implementation of the initial stage. Funding for Phase II is for up to two years and $1 million, up from $750,000 under previous authorizations. A third and final phase brings the technology to the private sector with a commercialization strategy. This part of the project is not funded through the programs.


Once you apply for a grant, response time is usually under 90 days. Small businesses can apply for an extension for up to 180 days of consideration. Applications are taken through each individual agency and timelines for applying differ depending upon the needs of each department.


In order to qualify for the government grants, certain minimum standards must be met. Small businesses must have 500 or fewer employees and must be privately owned. The company must be at least 51 percent owned by American citizens and be independently owned and operated, as well as have its principal place of business in the United States. The business itself must perform two-thirds of the original research and development in Phase I and half of the work in Phase II.

Award winners

Innovations that do really well in a given year can be nominated for an annual Tibbetts Award. Named for Roland Tibbetts, the founder of the SBIR program, three criteria form the basis of the award. Economic impact of the technological innovation, state and regional impact, as well as business achievement are all taken into account for the projects that are given a Tibbetts Award.

Wide-ranging effects

The Congressional Research Service states 700 government-run laboratories benefit from the research and development grants. An example of a product funded by SBIR grants was invented by John A. Gardner of Oregon State University. He created a tactile line of books and aids so people with visual impairments could have access to science and math learning materials.

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