Chapter VII. Technology Transfer
Army Science and Technology Master Plan (ASTMP 1997)


1. Small Business Innovation Research (SBIR) Program

The SBIR Program allows the Army to access the innovative technologies of small, high-technology firms. Subject to the availability of SBIR funds, the Army supports small high-tech businesses in conducting high quality research, or research and development on innovative concepts. Of particular interest are R&D efforts leading to solutions of Army/Defense-related scientific or engineering problems while permitting the small businesses to commercialize their developed technologies in the private sector. A government-wide effort mandated by Public Law, the SBIR program is intended to (1) stimulate technological innovation; (2) strengthen the role of small businesses in meeting federal R&D needs; (3) foster and encourage participation by minority, disadvantages, and women-owned small businesses in technological innovation; and (4) increase the commercial application of innovations derived from federal R&D. Firms participating in SBIR must be "small businesses" according to the Small Business Administration's definition (under 500 employees), and must be U.S.-based, for-profit businesses.

By law, all federal agencies having an extramural R&D budget exceeding $1 billion must participate in the SBIR Program. SBIR funds are set aside according to a certain percentage of the participant's extramural R&D budget. In FY96 the percentage was 2.0 percent. For FY97 and thereafter, the set-aside percentage will be 2.5 percent. The planned Army SBIR budget for FY96 was $86 million and for FY97 it will be approximately $93 million.

Each year, in cooperation with other DoD agencies, the Army generates and publishes a set of high priority topics in the SBIR Solicitation and invites small businesses to submit proposals against these topics. The SBIR Solicitation lists the topic opportunities, defines proposal formats, and states the proposal evaluation and selection criteria.

The SBIR Program is a three-phase program as depicted in Figure VII-1. Phase I determines the scientific or technical merit and feasibility of proposed concepts and typically lasts 6 months. Approximately 1 in 5 submitted Phase I proposals are selected for award. Phase I results are carefully evaluated and those Phase I performers showing the best promise may be invited by the Army to submit Phase II proposals. Phase II is a 2-year effort covering the main R&D effort--approximately one-half of the invited Phase II proposals are selected for award. Expected out of Phase II are results in the form of well-defined products or processes which have relevance to the Army/DoD or the private sector.

Figure VII-1. Small Business Innovation Research (SBIR) Program: Flow Process

Phase III is the last step in the SBIR process. In Phase III the small business is expected to market and sell the products or processes developed during Phase I and Phase II outside the SBIR Program. No SBIR funding is provided in Phase III; however, the firm is free to pursue non-SBIR government follow-on contracts (sole-source or otherwise), or a leveraged combination of both non-SBIR government and private sector funding.

Since 1982, the Army SBIR Program has funded thousands of small businesses to provide innovative dual-use technologies. The program has been fully successful in meeting the Army's technology needs, while at the same time strengthening America's small businesses by accelerating their technologies into the marketplace. This process was greatly enhanced in FY96 by the Army's implementation of the SBIR 2-year pilot Fast Track Program, which is designed to accelerate the small firm's progress towards Phase III. Under the Fast Track Program, firms successfully identifying third-party matching funds for Phases I and II will receive interim gap funding (between Phases I and II) from the Army, as well as the Army's highest priority for selection and award of Phase II contracts.