Why It Matters
Federal agencies issued $4.4 billion in small-business research awards in fiscal 2024. However, incomplete data mean that agencies can’t fully assess whether these investments yield commercial results, according to a Government Accountability Office (GAO) report. Small businesses submitted required commercialization data for less than half of their previous awards, limiting lawmakers’ and agencies’ evaluations of the programs’ economic impact.
The Big Picture
The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs aim to stimulate economic growth by aiding small firms that struggle to secure funding for research and development. With 11 federal agencies participating and the Small Business Administration (SBA) overseeing, these programs awarded $4.4 billion in fiscal 2024. Funding is nearly evenly split between “open topics,” where agencies identify broad areas of interest, and “conventional topics,” where specific problems are outlined.
Open-topic funding has led to significant innovations, such as space vehicles designed to repair satellites. In fiscal 2023, Congress mandated the Department of Defense (DOD) to issue open-topic solicitations, and the SBIR and STTR Extension Act of 2022 required GAO to review these topics, making this report the fourth in that series.
Challenges in Reporting
Small businesses are required to report commercial activity resulting from past awards at specific milestones, with this information stored in a mandated database by the SBA. However, the GAO found inconsistent communication about reporting requirements among agencies, leading to incomplete data that hampers the SBA’s evaluation of commercialization outcomes.
The SBA noted that even with improved compliance, the commercialization data lacks reliability without validation. They suggested options to enhance reliability, including:
- Incorporating data from IRS revenue figures.
- Acquiring additional resources for submitting validation.
Changes to statutory requirements would be necessary to alter the data collected by the SBA. Reliable data could provide clearer insight into the economic returns on federal research and development investments.
Broader Context
The GAO assessed data from all participating agencies and the SBA, covering over 6,000 awards from fiscal 2024 and analyzing commercialization data from awards issued between fiscal 2019 and fiscal 2024. They provided 14 recommendations to participating agencies, all of which are open and agreed upon.
Most recommendations focus on enhancing communication regarding commercialization reporting requirements and ensuring adherence among applicants. Agencies like the Department of Education, Homeland Security, Transport, NASA, and the National Science Foundation each received specific recommendations, while the Health and Human Services Department, Environmental Protection Agency, and National Oceanic and Atmospheric Administration received one each.
The Bottom Line
The 14th recommendation tasks the SBA with submitting a legislative proposal to Congress or undertaking other actions to improve the reliability of commercialization data.
For tracking the status of these recommendations and related legislation, visit Legis1.com.
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