U.S. GAO – Smaller Business Innovation Research: A few Businesses Designed Awards to Businesses Vast majority-Owned by Investment Providers and Money

What GAO Observed

Below the Compact Small business Innovation Research (SBIR) method, taking part companies can make awards to smaller corporations majority-owned by numerous venture money working organizations, hedge funds, or non-public equity corporations (expenditure firms and funds). In fiscal a long time 2019 and 2020, four of the 11 agencies collaborating in the plan acquired proposals from little enterprises bulk-owned by expenditure organizations and resources (i.e., certified tiny firms), and a few of the four designed awards to this kind of little enterprises. Precisely, the Office of Overall health and Human Services’ Countrywide Institutes of Well being (NIH), the Department of the Navy inside the Section of Defense (DOD), and the Office of Schooling made a merged 45 awards value $31.6 million to qualified little businesses in the course of this time period. As in past a long time, NIH made the most awards and awarded the most funds to qualified modest businesses in fiscal many years 2019 and 2020. The Section of Energy’s Sophisticated Analysis Initiatives Agency-Energy opened its SBIR awards to experienced little corporations, but did not situation any awards to them in the course of fiscal several years 2019 and 2020.

Given that 2011, when capable little businesses turned suitable for SBIR awards, participating SBIR companies have deemed regardless of whether to allow experienced smaller businesses to participate in the system. Constant with what GAO identified in December 2018, in fiscal several years 2019 and 2020, agencies cited various explanations for not enabling qualified tiny corporations to take part in their SBIR method. For example, officers at the Countrywide Aeronautics and Space Administration and the Department of Homeland Stability stated that they did not pursue the choice due to the fact experienced compact companies have not expressed a great deal curiosity in their SBIR packages. In distinction, two part agencies in DOD—the Departments of the Navy and the Air Force—decided to allow experienced smaller organizations to receive awards and the Division of the Army in just DOD was contemplating doing so. For illustration, Air Power program officers instructed us they identified that supplying SBIR funding to skilled compact corporations would increase the Air Force’s expense in slicing-edge technologies with both equally professional and armed forces employs. NIH—the company that has created the the greater part of awards to competent little businesses—has ongoing to make awards to certified smaller enterprises in its SBIR application, as these companies are issue to the similar typical reporting prerequisites as all other SBIR award recipients. NIH officials also famous that SBIR recipients offer facts on specific job impacts, this sort of as know-how transfer and commercialization things to do, and NIH cited advancement of a long-launch capsule for medicine as an instance of a productive outcome from an award to a certified modest business.

Why GAO Did This Examine

The SBIR plan enables federal businesses to guidance exploration and advancement (R&D) initiatives carried out by tiny corporations. Taking part agencies are required to commit a certain percentage of their extramural R&D obligations on their SBIR application each individual yr. Eleven federal businesses participate in the SBIR plan. To qualify for SBIR awards, a small business enterprise must meet up with selected ownership and other eligibility conditions. The Compact Business enterprise Act, as amended, authorizes companies to permit participation in their SBIR plans by skilled tiny firms. Upon offering a created resolve to the Administrator of the Smaller Enterprise Administration (SBA)—the company that oversees the SBIR program—and specified congressional committees, companies may possibly make SBIR awards to capable small organizations.

The Tiny Enterprise Act, as amended, contains a provision for GAO to perform a review of the affect of prerequisites relating to the involvement of investment organizations and funds in the SBIR software and submit a report to Congress about the study each individual 3 years. GAO’s initial evaluate lined fiscal many years 2013 and 2014, and in December 2018, GAO issued its next report on this difficulty, for fiscal decades 2015 through 2018. This third report addresses (1) SBIR collaborating agencies’ awards to little organizations that are the greater part-owned by a number of expense corporations and money in fiscal decades 2019 and 2020 and (2) explanations taking part agencies cited for allowing or not making it possible for the participation of competent tiny companies in the SBIR plan. GAO reviewed agencies’ info on the participation of qualified little enterprises and executed interviews with or attained created solutions from method professionals from the 11 participating organizations and SBA.

For additional information and facts, make contact with Candice N. Wright at (202) 512-6888 or [email protected].