US Government Accountability Office (GAO) Issues Report on Impact of SBIR Program Eligibility Changes

November 2014

Why GAO Did This Study

The SBIR program provides grants and contracts to small businesses to develop and commercialize innovative technologies. The 2011 SBIR reauthorization included a provision that gave agencies the option to allow majority-owned portfolio companies to participate in SBIR. SBA issued a rule to implement the statutory provision, which became effective in January 2013. The reauthorization act requires agencies to submit a written determination to SBA and Congress, explaining how such awards will, among other things, significantly contribute to the agency’s mission, before making SBIR awards to majority-owned portfolio companies.

The reauthorization mandated GAO to review the impact of this provision every 3 years. This is the first report under the mandate, and it examines (1) the impact of allowing majority-owned portfolio companies to participate in agency SBIR programs and (2) the extent to which agencies have elected to expand their SBIR programs to include majority-owned portfolio companies. GAO reviewed agency rules, policies, and other documents; analyzed SBIR data; and interviewed program officials from SBA and the 11 participating agencies, industry associations, and majority-owned portfolio companies.

What GAO Found

(Exercpt) ……………..

Two of the 11 agencies participating in the Small Business Administration’s (SBA) Small Business Innovation Research (SBIR) program—the Department of Health and Human Services (HHS) and the Department of Energy (DOE)—opted to open part of their SBIR programs to small businesses that are majority-owned by multiple venture capital or similar firms (majority-owned portfolio companies), allowing such companies to apply for and receive SBIR awards. Specifically, HHS’s National Institutes of Health (NIH) and the Department of Energy’s Advanced Research Projects Agency-Energy (ARPA-E) opted to allow such companies to participate. For fiscal years 2013 and 2014, NIH and ARPA-E collectively received 20 applications from majority-owned portfolio companies and made 12 SBIR awards to them, totaling about $7.9 million. SBIR applications received and awards made to these companies comprise less than 1 percent of NIH and ARPA-E’s SBIR applications and awards. received and awards made to these companies comprise less than 1 percent of NIH and ARPA-E’s SBIR applications and awards………………….

Read the Full Report HERE