SBIR at the Department of Defense (2014) / Chapter Skim
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3 Program Outcomes-Quantitative Assessment
3 Program Outcomes-Quantitative Assessment
Pages 57-93
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From page 57... ...
This chapter provides an update of the commercial outcomes of the DoD SBIR program, as well as outcome measures related to meeting agency mission, expanding the US science and engineering base, and increasing the participation of women and minorities. SOURCES OF DATA To develop an effective quantitative analysis of the outputs of the DoD SBIR program, we have drawn on data from the Department of Defense (DoD)
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From page 58... ...
COMPARISON ANALYSIS We sought to develop a useful comparison group for the data collected through the 2011 NRC Survey, but encountered substantial difficulties in finding matching firms -- similar in their demographics, market orientation, industry sector, age, size etc. -- that have not received SBIR funding. We then sought to develop a comparison group from among Phase I awardees that had not received a Phase II award from the three surveyed agencies (DoD, the National Science Foundation, and NASA)
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From page 59... ...
In and of itself, this is an important finding, because it shows that a substantial number of projects have been sufficiently successful to the point of generating sales revenues. A further 26 percent of Phase II respondents expected to generate sales in the future -- a percentage that 3 "Phase III" is in the context of DoD a technical term for contracts that are officially recognized as following from an SBIR or STTR Phase II award.
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From page 60... ...
About 30 percent of Phase II respondents with some sales reported sales of $1M or more; and 8 percent respondents reported sales of $5 million or more (see Table 3-2)
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, which restricts the export of defense-related articles and services. The fact that on average nearly 60 percent of Phase II projects with sales reported sales to DoD or DoD primes suggests that the program is meeting agency needs, particularly because this percentage does not capture sales to other (non-prime)
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From page 62... ...
These data also reveal a substantial increase from 2007, when respondents reported that 12 percent of Phase II projects were in use in federal systems. This increase may be due to enhanced efforts to connect the SBIR program and acquisitions programs (see Chapter 5)
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. Thirty-six percent of Phase II respondents reported receipt of non-SBIR funding of $1 million or more, while about 18 percent reported funding of less than $100,000.
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. It is worth highlighting a shift in funding sources since 2009, when only 20 percent reported using non-SBIR federal funding, , because it strongly suggests that connections between SBIR projects and other parts of DoD are becoming closer.11 TABLE 3-7 Additional Investments by Non-SBIR Federal Sources by Phase and Amount DoD SBIR Phase II (Percent)
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From page 65... ...
Respondents reported on a range of market-related activities involving agreements between their company and other organizations, which can again be taken as an indication of commercial activity. About half of all Phase II respondents reported completion of at least one R&D agreement with U.S.based companies or investors; slightly more than one-quarter reported customer alliances, and slightly less than one-quarter reported licensing agreements; 19 percent reported manufacturing agreements and 17 percent reported marketing and distribution agreements.
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From page 66... ...
Because multiple responses were received from some companies (those with more than one PI or with PIs who provide more than one responses, multiple responses from a single company were averaged to generate data by company. The table includes this averaged data.
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ADDITIONAL EVIDENCE FROM THE CCR DATABASE As part of its research for this study, the committee reviewed Company Commercialization Register (CCR) data provided by DoD on 18,450 awards.
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12 DoD CCR database contains self-reported data from SBIR recipients. All SBIR applicants with previous awards at DoD must update the record for each prior project before they can be awarded a contract.
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SOURCE: DoD CCR database, August 2013.
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13 According to Office of Small Business (OSB) staff, the database contains all DoD SBIR projects awarded since FY2002, and a large preponderance of awards from before that date.
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Figure 3-5 shows that median returns by component were quite similar, unlike average returns, and 7,000,000 6,000,000 Total Returns per Project (Dollars) 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 AF Army CBD DARPA DTRA MDA NAVY OSD SOCOM Average Median FIGURE 3-5 Average and median total returns for awards by component, FY 1992-2013.
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From page 72... ...
This shift may reflect the substantial efforts within DoD to more closely link the SBIR program with the acquisition programs that are the primary source of additional development funding. Clearly, Phase II SBIR funding is strongly correlated with positive market outcomes, and with links into the DoD acquisition programs either directly or through subcontracts with the DoD primes.
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From page 73... ...
: patents, trademarks, copyrights, and peer-reviewed papers.15 Patents Because patents at small companies often result from multiple contracts in multiple projects, it is important to capture patents related to the surveyed project surveyed and as well as patents more generally attributable to SBIRfunded research. Overall, about 60 percent of Phase II respondents who answered questions about patents claimed to have been awarded at least one patent related to any SBIR-funded technology, and 10 percent reported at least 10 SBIRrelated patents (see Table 3-13)
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= 374 N (unique respondents) = 643 NOTE: Because multiple responses were received from some companies (those with more than one PI or with PIs who provide more than one responses, multiple responses from a single company were averaged to generate data by company.
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Data from the survey indicate that SBIR projects often develop close university ties. For example, in response to questions about the use of university staff and facilities on the surveyed project, Just over one-third of respondents reported a university connection of some kind.
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It is perhaps likely that respondents with no project related patents or related peer reviewed articles may have skipped this section, so responses should be analyzed bearing in mind this possibility. SOURCE: 2011 NRC Survey, Question 39.4.2.
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From page 77... ...
About 60 percent of Phase II respondents who answered the question about patents reported that their company had received at least one patent based on its work under SBIR contracts, while about one-third reported at least one patent related to the surveyed project alone. SBIR companies participate at a high level in the standard form of technical knowledge dissemination: publishing in peer-reviewed journals.
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From page 78... ...
Finally, some SBIR companies are closely connected to the universities. About one-third of Phase II respondents reported a university connection on the surveyed project, and 19 universities were specifically mentioned as playing a role in at least 10 reported projects.
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From page 79... ...
.21 These data highlight interesting wider implications for the debate about early-stage funding: they suggest a weakness in the "crowding out" hypothesis, because it would appear that awardees -- presumably those with the closest knowledge of funding prospects for the project -- overwhelmingly believed it unlikely that funding alternatives to SBIR could be found.22 Project Scope Absent SBIR Funding SBIR funding may also have affected project scope: additional funding through the SBIR program may have led to an expansion of project scope. However, because DoD awards SBIR funding to proposals that closely meet agency criteria for a specific topic (which can be very tightly drawn)
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From page 80... ...
This question addresses the balance between delays imposed by the need to seek alternative funding and delays inherent in the SBIR program. A majority of respondents who were certain that the project would have proceeded absent SBIR funding agreed that the absence of SBIR funding would have delayed the project (see Table 3-20)
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From page 81... ...
Long-Term Impacts on the Recipient Company Although SBIR awards have direct effects on specific projects, they can also have a powerful longer-term effect on the trajectory of company development, creating capacity and, in some cases, providing a critical input that transforms long-term outcomes. The survey asked respondents about this issue directly.
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From page 82... ...
Key Aspects of SBIR-Driven Transformation It is not easy to summarize the numerous ways in which DoD SBIR awards helped to transform recipient companies. The key aspects of SBIRdriven transformation are explored in more detail in Chapter 5, which draws extensively on the numerous open-ended comments received in response to this question.
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From page 83... ...
COMPANY AND PROJECT CHARACTERISTICS: INDEPENDENT VARIABLES The outcomes section above strongly suggests that, overall, Phase II SBIR funding at DoD correlates with commercial success. However, a variety of other factors may play a role, which the survey sought to identify.
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From page 84... ...
. TABLE 3-24 Number of Previous Companies Started by Founders DoD SBIR Phase II (Percent)
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Previous studies from the NRC have asserted that for at least some companies, SBIR funding provided opportunities that led directly to company formation. Here, more than one-third of respondents indicated that the surveyed award contributed to some degree to the formation of the company (see Table 328)
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TABLE 3-27 Prior Employment of Founders DoD SBIR Phase II (Percent) Other private company 73.1 College or university 27.6 Government 9.2 Other 4.8 N (unique companies)
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For Phase II respondents, 28 percent reported products or processes in use, while about 30 percent reported projects had been discontinued and 27 percent reported projects still in development.25 About one-fifth of the Phase II projects with outputs in use recorded sales to customers not expected at the time of the award. This reflects the flexible path often necessary for technology-based commercialization in this sector.
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From page 88... ...
88 SBIR AT THE DEPARTMENT OF DEFENSE TABLE 3-29 Distribution of Responses by Sector Technology Sector DoD SBIR Phase II (Percent) Aerospace 46.3 Defense-specific products and services 71.6 Energy and the environment 10.7 - Sustainable energy production (solar, wind, geothermal, 2.2 bio-energy, wave)
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TABLE 3-31 Primary Reason for Project Discontinuation DoD SBIR Phase II (Percent) Not enough funding 24.8 Project goal was achieved (e.g.
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.27 Company Activities and SBIR The case studies conducted for this assessment reveal that in many cases the role of SBIR's in the development of the small firm diminished over TABLE 3-32 Company Annual Revenues by Phase (Most recent fiscal year) DoD SBIR Phase II (Percent)
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From page 91... ...
DoD SBIR Phase II (Percent) 0% 17.3 1%-10% 14.5 11%-25% 15.9 26%-50% 19.5 51%-75% 17.6 76%-100% 15.2 100.0 N (unique companies)
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From page 92... ...
TABLE 3-34 Number of Prior SBIR or STTR Phase I Awards Related to the Surveyed Project DoD SBIR Phase II (Percent) 0 20.0 1 34.4 2 17.3 3 11.5 4 6.5 5 or more 10.2 percent Total 100.0 1 or more 80.0 N= 704 SOURCE: 2011 NRC Survey, Question 40.1.1.
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From page 93... ...
With regard to commercialization, projects funded by the SBIR program are reaching the market at - in the Committee's judgment - an appropriate rate, and are also attracting substantial amounts of follow-on investment, which is in many cases a necessary next step toward commercialization. The data also show that knowledge effects from the SBIR program are positive, as funded projects generate a large number of patents and peer-reviewed articles.
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