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Report to Congressional Requesters: 

United States Government Accountability Office:
GAO: 

November 2010: 

Space Acquisitions: 

Challenges in Commercializing Technologies Developed under the Small 
Business Innovation Research Program: 

GAO-11-21: 

GAO Highlights: 

Highlights of GAO-11-21, a report to congressional requesters. 

Why GAO Did This Study: 

To be competitive in the global economy, the United States relies 
heavily on innovation through research and development (R&D). The 
Small Business Innovation Development Act of 1982 established the 
Small Business Innovation Research (SBIR) Program to stimulate 
technological innovation among small businesses. SBIR offers one 
avenue for introducing technological innovation in the Department of 
Defense (DOD) space sector. GAO was asked to assess (1) the extent to 
which DOD is utilizing the SBIR program to develop and transition 
space-related technologies; and (2) whether small businesses face 
challenges to participating in the space industrial base. To do this, 
GAO analyzed program documentation and DOD data on the SBIR program 
and interviewed key officials. 

What GAO Found: 

DOD is working to commercialize space-related technologies under its 
SBIR program by transitioning these technologies into acquisition 
programs or the commercial sector, but has limited insight into the 
program’s effectiveness. DOD has invested about 11 percent of its 
fiscal years 2005–2009 R&D funds through its SBIR program to address 
space-related technology needs. Also, DOD is soliciting more space-
related research proposals from small businesses. For example, the 
number of space-related research requests submitted by the military 
services and DOD components has increased from less than 8 percent in 
2005 to nearly 14 percent in 2009. Further, DOD has implemented a 
variety of programs and initiatives to increase the commercialization 
of SBIR technologies and has identified instances where it has 
transitioned space-related technologies into acquisition programs or 
the commercial sector. For example, a small business developed an 
aluminum ring that enables multiple payloads to attach to a single 
launch vehicle. However, DOD lacks complete commercialization data to 
determine the effectiveness of the program in transitioning space-
related technologies into acquisition programs or the commercial 
sector. Of the nearly 500 space-related contracts awarded in fiscal 
years 2005 through 2009, DOD officials could not, for various reasons, 
identify the total number of technologies that transitioned into 
acquisition programs or the commercial sector. For example, there are 
inconsistencies in recording and defining commercialization. Further, 
there are challenges to executing the SBIR program that DOD officials 
acknowledge and are planning to address, such as the lack of 
overarching guidance for managing the DOD SBIR Program. 

Most stakeholders GAO spoke with in the space industrial base—DOD, 
prime contractors, and small-business officials—generally agreed that 
small businesses participating in the DOD SBIR program face 
difficulties transitioning their space-related technologies into 
acquisition programs or the commercial sector. Although GAO did not 
assess the validity of the concerns cited, stakeholders GAO spoke with 
identified challenges inherent to developing space technologies, 
challenges because of the SBIR program’s administration, timing, and 
funding issues and other challenges related to participating in the 
DOD space acquisitions environment. For example, some small-business 
officials said that working in the space community is challenging 
because the technologies often require more expensive materials and 
testing than other technologies. They also mentioned that delayed 
contract awards and slow contract disbursements have caused financial 
hardships. Additionally, several small businesses cited concerns with 
safeguarding their intellectual property. 

What GAO Recommends: 

GAO recommends that DOD consider collecting data on all SBIR 
technologies that transition into DOD acquisitions or the commercial 
sector and ensure these data are defined and recorded consistently; 
complete efforts to develop and issue SBIR program guidance; and 
review the challenges identified by stakeholders in this report to 
assess the extent to which there are improvements that could be made 
to address them. DOD partially concurred to collect data, and 
concurred to develop and issue guidance. DOD did not agree to review 
the challenges identified by stakeholders. GAO believes this 
recommendation remains valid. 

View [hyperlink, http://www.gao.gov/products/GAO-11-21] or key 
components. For more information, contact Cristina Chaplain, (202) 512-
4841, chaplainc@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

DOD Is Commercializing Space-Related SBIR Technologies but Lacks 
Complete Data on These Efforts: 

DOD Is Using Its SBIR Program to Respond to Space Technology Needs: 

DOD Has Implemented Efforts to Increase Commercialization: 

DOD Has Successfully Commercialized Some Space Technologies: 

DOD Lacks Complete Data on Commercialization Efforts: 

DOD Faces Challenges in Implementing the SBIR Program: 

Stakeholders Perceive That Small Businesses Face Challenges to 
Participating in the Space Industrial Base: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Scope and Methodology: 

Appendix II: Comments from the Department of Defense: 

Appendix III: Comments from the U.S. Small Business Administration: 

Appendix IV: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: The SBIR Program Framework: 

Table 2: Value of DOD SBIR Phase I and II Awards for Fiscal Years 2005-
2009: 

Table 3: Numbers of SBIR Phase I and II Awards for Fiscal Years 2005- 
2009: 

Figures: 

Figure 1: DOD SBIR Budget Allocation for Fiscal Year 2009: 

Figure 2: Percentage of Space-Related DOD Phase I SBIR Topics for 
Fiscal Years 2005-2009: 

Abbreviations: 

AFRL: Air Force Research Laboratory: 

AT&L: Acquisition, Technology and Logistics: 

CBD: Chemical and Biological Defense: 

CCR: Company Commercialization Report: 

DARPA: Defense Advanced Research Projects Agency: 

DDR&E: Director, Defense Research and Engineering: 

DLA: Defense Logistics Agency: 

DMEA: Defense Microelectronics Activity: 

DOD: Department of Defense: 

DTRA: Defense Threat Reduction Agency: 

EELV: Evolved Expendable Launch Vehicle: 

ESPA: Evolved Expendable Launch Vehicle Secondary Payload Adapter: 

FPDS-NG: Federal Procurement Data System-Next Generation: 

IRT: integrated review team: 

MDA: Missile Defense Agency: 

NGA: National Geospatial-Intelligence Agency: 

OSBP: Office of Small Business Programs: 

OSD: Office of the Secretary of Defense: 

R&D: research and development: 

RDT&E: research, develop, test, and evaluate: 

SBA: U.S. Small Business Administration: 

SBIR: Small Business Innovation Research: 

SMC: Space and Missile Systems Center: 

SOCOM: Special Operations Command: 

SST: Standard Space Trainer: 

[End of section] 

November 10, 2010: 

The Honorable Ben Nelson: 
Chairman: 
The Honorable David Vitter: 
Ranking Member: 
Subcommittee on Strategic Forces: 
Committee on Armed Services: 
United States Senate: 

The Honorable Bill Nelson: 
United States Senate: 

To be competitive in the global economy, the United States relies 
heavily on innovation through research and development (R&D). 
Recognizing the potential of small businesses to be a source of 
significant innovation, Congress enacted the Small Business Innovation 
Development Act of 1982.[Footnote 1] The act established the Small 
Business Innovation Research (SBIR) Program to stimulate technological 
innovation, use small businesses to meet federal R&D needs, foster and 
encourage participation by minority and disadvantaged persons in 
technological innovation, and increase private-sector 
commercialization of innovations derived from federal R&D. The act 
provided for a three-phased program: Phase I to determine the 
feasibility and scientific and technical merit of a proposed research 
idea; Phase II to further develop the idea; and Phase III to continue 
research and development, or commercialize the resulting product or 
process with no further SBIR funding. Commercialization occurs when a 
Phase II product or process transitions into a federal acquisition 
program or a commercial-sector product or service. Federal agencies 
that have budgets of at least $100 million for research conducted by 
others, called extramural research, are required to use 2.5 percent of 
these budgets to establish and operate an SBIR program. 

The Department of Defense's (DOD) current space systems play an 
increasingly important role in military operations; however, military 
space acquisition programs over the past two decades have experienced 
problems that have significantly increased costs and delayed 
schedules. Moreover, the supplier base for space programs has 
consolidated to a point where there are just a few prime contractors 
that compete for new efforts. SBIR offers one avenue for introducing 
new ideas and technological innovation in the DOD space sector. Other 
solutions that have been proposed to help revitalize space acquisition 
include programs such as DOD's Operationally Responsive Space 
initiative, which focuses on developing and launching smaller 
satellites in order to deliver capability quicker, reduce technology 
challenges, and widen the field of potential suppliers, as well as 
efforts focused on stabilizing requirements, introducing incremental 
technology advancements to satellite constellations, improving cost 
estimates, and strengthening program management. There are also other 
types of programs within DOD that are designed to increase small-
business participation in major acquisitions. 

DOD is seeking to stimulate ideas and innovation and gain access to 
cutting-edge technology by offering opportunities to small businesses 
to develop technological innovations. For space, this may be 
particularly necessary since government space programs tend to 
introduce technological advancements well before commercial space 
programs. Additionally, DOD--in mission areas such as missile warning 
and space surveillance--has requirements that do not exist in the 
commercial sector. In these areas, DOD funds technology development 
and acquires specific capabilities because they are not commercially 
available. 

In this context, you requested that we determine (1) the extent to 
which DOD is utilizing the SBIR program to develop and transition 
space-related technologies to DOD acquisition programs or a commercial-
sector product or service; and (2) whether small businesses face 
challenges to participating in the space industrial base. 

To do this, we interviewed DOD officials from the Office of Small 
Business Programs (OSBP) and military services and components, and 
analyzed DOD data. We also interviewed 28 small businesses to obtain 
their perspectives on whether challenges to participating in the space 
industrial base exist. We identified the small businesses primarily 
through DOD's SBIR program Web site, a network of small aerospace 
companies in the Los Angeles, California, area, and additional 
referrals by existing SBIR companies. We did not verify the validity 
of the concerns or recommendations cited by these officials and are 
not generalizing this information to the entire space acquisition 
community or the DOD SBIR program. We conducted this performance audit 
from August 2009 to October 2010 in accordance with generally accepted 
government auditing standards. Those standards require that we plan 
and perform the audits to obtain sufficient appropriate evidence to 
provide a reasonable basis for our findings and conclusions based on 
our audit objectives. We believe that the evidence obtained provides a 
reasonable basis for our findings and conclusions based on our audit 
objectives. Additional details on our objectives, scope and 
methodology are provided in appendix I. 

Background: 

DOD received approximately $2.6 billion in funding for fiscal year 
2009 to research, develop, test, and evaluate (RDT&E) space 
systems.[Footnote 2] The Air Force conducts the majority of the DOD 
space-related technology development. DOD's current portfolio of space 
systems comprises satellites, ground-based systems, and associated 
terminals and receivers. All of these systems are expected to play an 
increasingly important role in military operations. 

The bulk of major space system acquisitions in DOD's space portfolio, 
however, have experienced problems during the past two decades that 
have delayed deployment and driven up cost. In our past work, we found 
that satellite programs cost more than expected and took longer to 
develop and launch than planned. We recently reported that estimated 
costs for major space acquisition programs increased from initial 
estimates of $11.4 billion to $22.4 billion for fiscal years 2008 
through 2013, and programs are facing potential capability gaps in 
areas such as positioning, navigation, and timing; missile warning; 
communications; and weather monitoring.[Footnote 3] Cost and schedule 
problems like these are commonly tied to unstable requirements, weak 
investment practices, poorly executed acquisition strategies, and 
immature technologies. 

Our past work and studies on the defense industrial base indicate 
space system acquisitions could benefit from a greater diversity of 
suppliers. A 2008 report for DOD states that over the past few 
decades, the space industrial base has consolidated from over 50 
suppliers in the early 1990s to four prime contractors who now manage 
thousands of subcontractors for DOD systems.[Footnote 4] According to 
a 2007 DOD study, the U.S. space industry has had to adjust to 
declining demands in the areas of satellites and launch, which has led 
to consolidation.[Footnote 5] We reported in 2008 that the 
consolidation of numerous firms over two decades to a small number of 
major space contractors has made it difficult for new suppliers to 
enter the market.[Footnote 6] 

Federal agencies with an annual extramural R&D budget of at least $100 
million are required to establish and operate an SBIR program. The 
SBIR program budget is computed as 2.5 percent of an individual 
agency's extramural R&D budget. Within DOD, each military service and 
DOD component uses this percentage to determine its own SBIR budget. 
The U.S. Small Business Administration (SBA) communicates federal SBIR 
guidance through the SBIR Policy Directive and reports on the 
implementation and operation of the SBIR program at 11 federal 
agencies.[Footnote 7] DOD is the largest agency participating in the 
SBIR program, and DOD's fiscal year 2009 SBIR program budget was over 
$1.22 billion--more than half of the entire fiscal year 2009 
governmentwide SBIR program budget of over $2 billion.[Footnote 8] 

DOD's Office of Small Business Programs (OSBP) oversees the DOD SBIR 
program, develops DOD SBIR policy, annually collects reporting data 
from each of the services and components, and oversees the topic- 
generation and solicitation process. DOD generally relies on its 
military and defense components to implement its SBIR program. The DOD 
SBIR program comprises 12 services and components, of which the Air 
Force, Army, Navy, Missile Defense Agency (MDA), and Defense Advanced 
Research Projects Agency (DARPA) are the major services and components 
contributing to the program (see figure 1). The DOD SBIR program is 
currently authorized through January 31, 2011.[Footnote 9] 

Figure 1: DOD SBIR Budget Allocation for Fiscal Year 2009: 

[Refer to PDF for image: pie-chart] 

Navy: 27.22%; 
Air Force: 21.72%; 
Army: 21.72%; 
MDA: 9.11%; 
DARPA: 5.76%; 
Other: 9.05%. 

Source: GAO analysis of DOD information. 

Note: "Other" includes Chemical and Biological Defense (CBD), Defense 
Logistics Agency (DLA), Defense Microelectronics Activity (DMEA), 
Defense Threat Reduction Agency (DTRA), National Geospatial- 
Intelligence Agency (NGA), Director, Defense Research and Engineering 
(DDR&E), and Special Operations Command (SOCOM). 

[End of figure] 

The Small Business Innovation Development Act of 1982 required the 
SBA, after consultation with certain agencies, to establish a policy 
directive for the three-phase structure (see table 1) to include, 
among other things, timing for receipt and review of proposals and 
funding guidelines.[Footnote 10] 

Table 1: The SBIR Program Framework: 

Phases of SBIR competitive process: Phase I: Determination of project 
feasibility; 
Time and funding thresholds: Usually 6 to 9 months, up to $150,000; 
Potential sources of funding: SBIR program funding. 

Phases of SBIR competitive process: Phase II: Project development to 
prototype; 
Time and funding thresholds: 2 years, up to $1,000,000; 
Potential sources of funding: SBIR program funding, can include 
external funding. 

Phases of SBIR competitive process: Phase III: Continued project 
development or transitioning a technology into a commercial product or 
process for sale to government or private-sector customers; 
Time and funding thresholds: Unlimited; 
Potential sources of funding: Non-SBIR government or private-sector 
funding. 

Source: DOD. 

[End of table] 

The SBA recently raised the award limits for Phase I and Phase II 
contracts,[Footnote 11] and the first DOD solicitation using the 
increased funding limits for its SBIR program had a closing date for 
receipt of proposals of June 2010. The SBA's SBIR Policy Directive 
provides agencies the discretion to make awards in amounts higher than 
the limits set forth in the guidelines, and they must provide written 
explanation to the SBA for these instances at the end of the year. 
Awards can be made to successful applicants in the form of grants, 
contracts, or cooperative agreements. DOD uses contracts to make 
awards. 

Before Phase I of the award process, DOD develops research topics to 
solicit R&D ideas that address critical technology needs of a DOD 
program.[Footnote 12] Research topics are generated by DOD service and 
component representatives--typically scientists and engineers--based 
on DOD technology needs and are approved in a departmentwide review 
process. The Director of Defense Research and Engineering, and a 
multiagency integrated review team (IRT), review and approve the SBIR 
topics. DOD announces SBIR project opportunities through three annual 
solicitations for which small businesses can submit Phase I SBIR 
proposals to address the research topics. Small businesses submit 
proposals electronically through the DOD SBIR Electronic Submission 
Web site. DOD published 109 space-related topics throughout the 2009 
fiscal year solicitation cycles. After the solicitation's closing 
date, proposals are evaluated, and source-selection and contract-award 
decisions are made. DOD invites small businesses with promising 
technologies that have completed Phase I to submit proposals for a 
Phase II contract. The Phase II award decision considers, among other 
things, a proposal's commercial potential. Contracting officials and 
technical monitors are involved in the evaluation and selection of 
SBIR proposals. 

In Phase III, the SBIR technology is expected to transition into a DOD 
acquisition program or into a commercial-sector product or service. We 
have previously reported technologies in this phase of development 
typically need to have customer "pull" into commercialization or entry 
onto an acquisition program. However, SBIR technologies that 
demonstrate significant potential for advancing capability or reducing 
cost can be picked up by the commercial or government sector for 
further development or use in an acquisition program in Phase II or 
III. In Phase III, small businesses must find non-SBIR funding from 
acquisition programs or private investors, or both, to produce or 
continue developing their technology. 

DOD Is Commercializing Space-Related SBIR Technologies but Lacks 
Complete Data on These Efforts: 

DOD is working to commercialize technologies under its space-related 
SBIR program to deliver warfighter capabilities, but lacks complete 
data on its commercialization efforts and therefore has limited 
insight into the program's effectiveness. DOD invests about 11 percent 
of its SBIR budget in R&D and is soliciting more space-related 
research proposals from small businesses. DOD has taken steps 
departmentwide and within individual services and components to 
encourage the use of SBIR technologies and to enhance activities and 
efforts that can increase the transition of those technologies. DOD 
can document the results of its efforts with various examples of space-
related technologies it has transitioned for use by major space-system 
acquisition programs. However, DOD currently lacks complete data on 
the number of technologies commercialized and therefore cannot 
determine the return on its space-related SBIR investment. Further, 
there are challenges to executing the SBIR program that DOD officials 
acknowledge the agency needs to address, such as the lack of 
overarching guidance for the management of the DOD SBIR Program. 

DOD Is Using Its SBIR Program to Respond to Space Technology Needs: 

DOD is investing in R&D through its SBIR program to meet space-related 
technology needs. Specifically, from 2005 through 2009, DOD invested 
approximately 11 percent of its total SBIR budget on space-related 
[Footnote 13] Phase I and II SBIR contract awards (see table 2). 

Table 2: Value of DOD SBIR Phase I and II Awards for Fiscal Years 2005-
2009: 

Phase I; 
Total DOD SBIR awards: $951.4 million; 
Space-related DOD SBIR awards: $111.1 million; 
Percent: 12%. 

Phase II; 
Total DOD SBIR awards: $4,035.9 million; 
Space-related DOD SBIR awards: 440.4 million; 
Percent: 11%. 

Total; 
Total DOD SBIR awards: $4,987.3 million; 
Space-related DOD SBIR awards: $551.5 million; 
Percent: 11%. 

Source: GAO analysis of DOD information. 

[End of table] 

DOD awarded 1,122 space-related Phase I SBIR awards and 501 space- 
related Phase II awards for fiscal years 2005-2009; both represent 
around 11 percent of total DOD Phase I and II SBIR awards for the same 
time period. Of the roughly 500 Phase II space-related contracts, Air 
Force officials could not identify how many received space-related 
Phase III contracts. Table 3 identifies the number of Phase I and II 
contracts awarded by DOD and those that were space-related for fiscal 
years 2005 through 2009. 

Table 3: Numbers of SBIR Phase I and II Awards for Fiscal Years 2005- 
2009: 

Awards: Phase I; 
All DOD SBIR awards: 10,023; 
Space-related DOD SBIR awards: 1,122; 
Percent: 11%. 

Awards: Phase II; 
All DOD SBIR awards: 5,031; 
Space-related DOD SBIR awards: 501; 
Percent: 10%. 

Source: GAO analysis of DOD information. 

[End of table] 

The number of space-related Phase I research topics submitted by DOD 
services and components has increased from less than 8 percent in 2005 
to nearly 14 percent in 2009 (see figure 2). Topics are generated 
based on user needs to fill technology gaps in DOD acquisition 
programs. According to OSBP officials, DOD requires that at least 50 
percent of SBIR topics are endorsed by acquisition programs to 
increase the likelihood of transitioning a technology into an 
acquisition program. Officials from the Air Force's Space and Missile 
Systems Center, which itself represents the majority of DOD's space-
related technology development, said that almost all of their topics 
are based on technology needs of space program offices. DOD officials 
said the agency takes steps to clearly define program needs throughout 
the topic-generation process so SBIR technologies are more likely to 
align with DOD acquisition needs. We previously reported that 
technologies are more apt to be successful in technology transition if 
they are relevant, marketable, and gain product-line support from the 
acquisition community.[Footnote 14] 

Figure 2: Percentage of Space-Related DOD Phase I SBIR Topics for 
Fiscal Years 2005-2009: 

[Refer to PDF for image: line graph] 

Fiscal year: 2005; 
Space-related Phase I topics: 7.7%. 

Fiscal year: 2006; 
Space-related Phase I topics: 8.4%. 

Fiscal year: 2007; 
Space-related Phase I topics: 8.2%. 

Fiscal year: 2008; 
Space-related Phase I topics: 13.4%. 

Fiscal year: 2009; 
Space-related Phase I topics: 13.7%. 

Source: GAO analysis of DOD information. 

[End of figure] 

DOD Has Implemented Efforts to Increase Commercialization: 

There are a variety of programs and initiatives within DOD designed to 
increase the commercialization of SBIR technologies. Several are 
unique to individual military services and agencies. Although these 
efforts are not specific to space technology development, they are 
intended to accelerate the commercialization of technologies through 
their transition into DOD acquisition programs or commercial-sector 
products or services. DOD officials described the following 
initiatives; however, we did not assess their effectiveness. 

* Commercialization Pilot Program: The National Defense Authorization 
Act for Fiscal Year 2006 authorized this program in 2006 under the 
Secretary of Defense and the Secretary of each Military Department. 
The Act authorized the program to increase commercialization and 
accelerate the fielding of capabilities by identifying and selecting 
projects that meet high-priority requirements, and by formalizing 
collaboration among small businesses, prime contractors, and DOD 
science and technology acquisition communities. But, according to DOD 
officials, it is too soon to determine the results. DOD has provided 
support for the annual conference on commercialization and issued 
memorandums to encourage services and components to identify 
technologies with the greatest potential, link science and technology 
with acquisition programs, and leverage all available technology-
development and transition tools and mechanisms. The military services 
and DOD components have implemented varying approaches to the program. 
The Air Force's version of the program emphasizes the involvement of 
DOD, prime contractors, and small businesses and uses SBIR technology-
transition plans to ensure all parties sign an agreement to transition 
a technology. Air Force officials believe their efforts under this 
program will increase technology transition. 

* Missile Defense Agency (MDA) Technology Applications Program: MDA 
implemented this program in 1986, which attempts to accelerate the 
maturation and commercialization of small-business technologies by 
leveraging the expertise of technology professionals and business 
experts. This program is available to all SBIR contract awardees on a 
voluntary basis, and assists small businesses in technology maturation 
and transition for the life cycle of the technology. MDA uses non-SBIR 
funds to administer this program. 

* Navy Transition Assistance Program: The Navy started this program 
about 10 years ago to help small businesses understand and facilitate 
the transition of their SBIR technologies. Under this program, 
consulting services are offered to all small businesses with a Phase 
II award, free of charge, by Dawnbreaker, an outside contractor that 
specializes in acquisition support; market assessments and studies; 
and technology-readiness management. Dawnbreaker can provide 
consulting services with small businesses for a 10-month period and 
provides information and tools on technology transition, and helps 
small businesses develop marketing tools. About 250 Phase II small 
businesses participate in this program, of the 400 Phase II contracts 
awarded by the Navy annually. 

* Defense Advanced Research Projects Agency (DARPA) Transition Support 
Pilot Program: DARPA developed a program to transition innovative 
technologies to the most critical U.S. military end users as well as 
within DARPA, civilian agencies, and in the private sector. DARPA 
developed the program in collaboration with The Foundation for 
Enterprise Development, a nonprofit organization that creates and 
engages in research and education programs to inspire innovation and 
entrepreneurship for solving problems of national and global 
importance. DARPA offers the program to all small businesses with an 
active DARPA SBIR Phase II contract. Small businesses that participate 
in the program receive guidance and assistance from the Foundation for 
Enterprise Development, in identifying and facilitating introductions 
to potential collaborators, funding sources, and end users to expedite 
the transition of promising technologies. 

* Army Technical Assistance Advocates: The Army initiated a network to 
coordinate small businesses, research laboratories, and prime 
contractors to increase Army SBIR technology transition and 
commercialization success. The advocates provide technical assistance 
to small businesses engaged in SBIR projects through a network of 
scientists and engineers engaged in a wide range of technologies. 

* Air Force Commercialization Pilot Program Initiatives: These 
initiatives include interactive technology interchange workshops, such 
as "Industry Days," that bring small businesses, prime contractors, 
and DOD representatives together to discuss technology needs and 
partnering opportunities. The partnering efforts are solidified by the 
signing of SBIR technology-transition plans, or agreements between all 
of the interested parties that state the terms for commercialization 
of a particular technology. The Air Force also assigns transition 
agents to facilitate collaboration and assist in technology 
transition. In our previous report, we found that technology-
transition agreements and product-line relationship managers, with 
responsibilities similar to transition agents, reflect best practices 
and are tools used by leading commercial companies to aid in the 
transition of technologies to product development.[Footnote 15] 

* Other Initiatives: DOD established the Fast Track Program in fiscal 
year 1996 and the Phase II Enhancement Program in fiscal year 2000 to 
leverage funds from outside investors and address funding gaps among 
SBIR phases. Both programs are designed to encourage rapid transition 
of SBIR R&D into commercialization and DOD acquisition programs. A 
small business can apply to participate in the Fast Track Program 
during Phase I, and the Enhancement Program in Phase II. Under the 
Fast Track program, small businesses can potentially receive interim 
funding of $30,000 to $50,000 in matching funds from non-SBIR sources 
to alleviate a funding gap between Phase I and Phase II. Under the 
Enhancement Program, a military service or DOD component can provide 
additional Phase II funding that matches the investment funds the 
small business obtains from non-SBIR sources. The Enhancement Program 
can extend an existing Phase II contract for up to 1 year and match up 
to $500,000 of non-SBIR funds. DOD military services and DOD 
components can tailor the implementation of these two programs to meet 
their own needs. 

DOD Has Successfully Commercialized Some Space Technologies: 

DOD efforts have resulted in successful transitions that services and 
components describe on a Web site that highlights successful 
transitions to promote the SBIR program. Air Force officials described 
the commercialization of some space-related technologies that range 
from software training solutions to hardware that supports multiple 
payloads aboard a single launch vehicle, and various DOD officials 
highlighted the potential value of developing space-related 
technologies through the SBIR program. The following examples are 
considered commercialization success stories for technology transition. 

* Evolved Expendable Launch Vehicle Secondary Payload Adapter (ESPA): 
The Air Force had a need for a low-cost launch capability to launch 
smaller secondary satellites. To address this need, a small business, 
through an SBIR contract, developed a standard adaptor to accommodate 
several small satellites for the Evolved Expendable Launch Vehicles 
(EELV) that will allow low-cost access to space for the small-
satellite community. The ESPA is an aluminum ring that attaches to a 
rocket and has the capability to mount one primary satellite and up to 
six small satellites, resulting in increased access to space by the 
small- satellite community and decreased launch costs. The ESPA was 
successfully demonstrated on Space Test Program-1 in March 2007. The 
Secretary of the Air Force issued a policy in 2008 to make ESPA-hosted 
satellite launches a routine operation starting no later than fiscal 
year 2012. 

* Standard Space Trainer (SST): DOD awarded a Phase III contract for 
the SST in August 2008. The Air Force had a significant need for an 
integrated simulation-based operator training and rehearsal capability 
for satellite-system ground control, because future generations of 
military satellites will be expected to use one common ground system 
to operate multiple satellite constellations. The SST is a satellite- 
operator instructional simulation that supports multiple satellite 
systems through the use of a system similar to a video game console, 
increasing efficiencies and potentially reducing training costs. The 
SST can be used to support various types of training--independent 
qualification training, unit qualification training, and crew 
training--and it supports instructional simulations that mimic the 
behavior of common military satellites, subsystems, space flight, 
orbital mechanics, and satellite operations. Advantages of using the 
SST include flexible instructor control features, increased instructor 
and student productivity, quick setup, and lower training costs. For 
example, with this SBIR technology, an instructor can monitor up to 
six students, provide targeted instruction to any student, and alter 
the events during a scenario. In addition, according to officials from 
the 533rd Training Squadron, the squadron that evaluated the SST, 
required instructor manpower has been reduced significantly and 
student evaluation productivity has increased dramatically as a result 
of the SST. 

* Low Shock Separation System (Lightband system): According to the Air 
Force, vibration during the launch and satellite separation from the 
rocket has caused government satellites to malfunction. Small 
satellites are particularly susceptible to launch-and separation- 
related vibrations because of the close proximity of sensors and 
instruments to the shock source, necessitating a low-shock separation 
system. A small company developed the Lightband system under SBIR 
contracts to provide a capability that would reduce on-orbit failures. 
The Lightband system is the first payload-separation system that 
generates significantly less vibration during payload separation from 
the launch vehicle. According to the Air Force, the Lightband system 
is 25 percent lighter, 50 percent smaller, 40 percent cheaper, and 
generates less than 5 percent of the vibration of existing 
conventional separation systems, and it is estimated that this SBIR 
technology could save spacecraft programs several million dollars in 
life-cycle costs per spacecraft. 

DOD Lacks Complete Data on Commercialization Efforts: 

According to DOD officials, DOD collects and maintains data on Phase I 
and II of the SBIR contract process, but it does not have complete and 
consistent data on Phase III. Various DOD officials stated that data 
are hard to track and there are inconsistencies in recording and 
defining commercialization. Further, DOD does not require the services 
and components to track and report these data. As a result, DOD does 
not have a complete picture of contract awards and does not know how 
effectively it is commercializing SBIR technologies by transitioning 
them into a DOD acquisition program or a commercial-sector product or 
service. Although a 2006 RAND study and a 2009 National Research 
Council study found that DOD is to some extent achieving SBIR program 
goals, as stated in the SBIR Policy Directive, the studies noted that 
DOD can not understand how well the SBIR program is performing or if 
improvements are necessary without complete commercialization data. 
Furthermore, we have previously reported that complete, accurate, and 
timely government contracting information is essential for tracking 
how public funds are being spent governmentwide.[Footnote 16] 

Of the roughly 500 Phase II space-related contracts awarded in fiscal 
year 2005 through 2009, DOD officials could not determine or specify 
the total number of space-related Phase III contract awards. According 
to OSBP officials, DOD does not require the services and components to 
track and report Phase III award data, and DOD officials we spoke with 
explained that it is hard to track the data because the two databases 
available for tracking SBIR contract award data are limited in 
capturing all commercialization activity. The databases were designed 
to track only government and not commercial transactions. For example, 
the Federal Procurement Data System-Next Generation database is used 
departmentwide by contracting officials to track all DOD contract 
actions. According to DOD officials, if a small business secures 
commercial-sector funding for its Phase III SBIR project, that 
contract may not be captured in this database because it only captures 
federal contract awards. Subcontracts to prime contracts are not 
captured. Additionally, when small businesses merge, change names, or 
are bought out by large businesses, DOD contracting officials, who are 
responsible for entering contract results in this database, lose sight 
of the transition of technologies and are unable to input accurate 
information concerning the outcome of SBIR projects. The Company 
Commercialization Report (CCR) database, which is maintained by OSBP, 
contains historical contract information for small business 
participating in the DOD SBIR program.[Footnote 17] According to DOD 
officials, OSBP uses the commercialization database to reconcile with 
data from the Federal Procurement Data System-Next Generation database 
to prepare an annual report required by the SBA, but the reporting of 
Phase III contract data by small businesses through the 
commercialization database is voluntary and may not include all 
commercialization actions. According to OSBP officials, DOD services 
and components may be using different methods or approaches to 
quantify their commercialization efforts. 

In addition to the limitations with DOD databases and tracking 
capabilities, we heard from several key DOD officials that the Phase 
III data entered into the Federal Procurement Data System-Next 
Generation database is not always entered consistently, and some 
services and components have different definitions for Phase III. For 
example, some SBIR contracting officials do not consistently include 
the SBIR contract-phase determination when they enter information into 
the database. We previously reported that the definition of Phase III 
awards is not clearly defined by the authorizing legislation and--as 
acknowledged by DOD officials and a 2009 National Research Council 
study--agencies sometimes differed on the meaning of 
"commercialization."[Footnote 18] Also, as previously noted, 
interpretation of SBIR policy can vary across DOD services and 
components. 

In our previous reports, while not specific to the SBIR program, we 
highlighted long-standing data-collection and evaluation issues 
related to the Federal Procurement Data System-Next Generation 
database. For example, we previously reported on concerns regarding 
the timeliness, accuracy, and ease of use of this federal database. 
[Footnote 19] Furthermore, although we reported in 2009 that moving to 
electronic data submission improved the accuracy and timeliness of 
data, we also reported that data in this federal database remained 
inaccurate and that officials do not always input required information 
into the database.[Footnote 20] 

DOD Faces Challenges in Implementing the SBIR Program: 

DOD SBIR program officials acknowledge challenges in executing their 
SBIR programs, including ongoing revisions to SBIR guidance and 
limited resources. For example, DOD has issued SBIR program management 
guidance to its services and components through more than 40 
memorandums, including some supplemental e-mail guidance, over 17 
years, rather than a comprehensive SBIR program manual or instruction 
that encompasses all required policy and procedures. One Air Force 
official said his office relied on a binder compiled with guidance his 
office received over the years from DOD and did not know if it was 
complete. To address this issue, OSBP recently established a working 
group to draft an overarching DOD Directive that will delineate policy 
as well as responsibilities and authorities under the SBIR program. 
[Footnote 21] The group will work with contracting officials and 
program managers to determine the best way to balance the need for 
standardization while maintaining flexibility in executing the 
program. However, because the officials we spoke with believe that any 
changes to the SBIR program, which is currently authorized through 
January 31, 2011, could affect the content of the DOD Directive, DOD 
officials suspended this effort until Congress reauthorizes the 
program. 

Military service and DOD component officials we interviewed stated 
they have limited resources to manage the program because the SBIR 
Policy Directive prohibits using SBIR funds to administer the program. 
For example, Air Force officials noted that some systems engineers had 
to split their time between SBIR responsibilities, including technical 
oversight and other assigned responsibilities. Additionally, Army 
officials said the Army's Director of SBIR oversees over 600 SBIR 
contracts at any given time, and they stated that SBIR resources--both 
funding and personnel--are inadequate to manage the program. According 
to DOD, OSBP are investigating methods to improve overall 
commercialization results within the department, including the 
consideration of a policy for more consistent resource allocations 
throughout the department. 

To address these and other issues with managing the SBIR program, DOD 
OSBP officials said they established an SBIR Improvement Working Group 
in December 2008. The group drafted a report in December 2009 that 
identified the top eight initiatives for the DOD SBIR program. 
According to the DOD OSBP officials we interviewed, three of the eight 
initiatives have already been accomplished: DOD has pursued 
legislative proposals to allow a portion of SBIR funding for program 
management, reauthorized the Commercialization Pilot Program so the 
services can continue to utilize SBIR funds to implement the program, 
and clarified/improved discretionary technical assistance rules. 
According to DOD officials, the following initiatives are still in 
progress: 

* Develop and issue an overall DOD Directive for SBIR. 

* Establish a steering committee to work on improvements including 
standardization of best practices. 

* Coordinate SBIR integration into acquisition strategies. 

* Evaluate quality of information in SBIR database. 

* Update the SBIR topic criteria and improve the review process. 

Stakeholders Perceive That Small Businesses Face Challenges to 
Participating in the Space Industrial Base: 

Most stakeholders in the space industrial base that we spoke with--
DOD, prime contractors, and small businesses--generally agreed that 
small businesses participating in the DOD SBIR program face 
difficulties transitioning their space-related technologies into a DOD 
acquisition program. Stakeholders we spoke with told us there are 
difficulties inherent to the development of space technologies, 
challenges due to SBIR program timing and funding parameters, and 
other challenges related to participation in the DOD space 
acquisitions environment. All three groups we interviewed offered 
suggestions for improving DOD's SBIR program. We did not verify 
validity of the concerns or recommendations cited by these officials 
and are not generalizing this information to the entire space 
acquisitions community or the DOD SBIR program; rather we present 
common opinions and observations of only those individuals interviewed. 

Difficulties Inherent in Developing Space Technologies: 

Stakeholders we spoke with in the space industrial base--DOD, prime 
contractors, and small businesses--agreed that small businesses face 
inherent challenges in developing space technologies. They agreed that 
some small businesses have fewer in-house resources, limited DOD 
contacts, and they find working in the space community unique and 
challenging. Some of the difficulties they cited follow. 

* Harsh space environment: To meet DOD's requirements to be flight- 
ready for the harsh space environment, technologies need more 
expensive materials and testing in specialized facilities. For 
example, flight-ready hardware for the space environment requires 
electronic components that can withstand radiation from space-derived 
particles or nuclear detonations. All three groups interviewed noted 
that small businesses typically do not own the appropriate testing 
facilities, such as thermal vacuum chambers, that are used for testing 
spacecraft or parts under a simulated space environment and instead 
must rely on government, university, or large-contractor testing 
facilities, which can be costly. However, an official from one prime 
contractor said it offers a discount on using its testing facilities 
to small businesses that subcontract with it during Phase II of the 
SBIR program. 

* Sustaining operations through delays and cancellations: According to 
a small-business official, DOD space and weapons acquisitions program 
delays and cancellations can affect small businesses' ability to stay 
in business. Air Force officials agree that small companies can be at 
a greater disadvantage than larger companies when space acquisition 
programs are delayed or system development goals are far off into the 
future, because some small companies that rely on a specific 
government contract may not be able to stay in business if they have 
to wait too long to receive the contract award. For example, Air Force 
officials stated that nine SBIR contracts may have been canceled as a 
result of the cancellation of the Transformational Satellite 
Communications System in fiscal year 2010. 

* Obtaining security clearances: Small business, DOD, and prime 
contractor officials said small businesses' participation in DOD space 
acquisition programs may be inhibited by their lack of security 
clearances. One small business said some small businesses are unable 
to learn enough about potential projects that are deemed classified to 
submit a proposal, because DOD provides limited information regarding 
project requirements to those companies without security clearances. 
However, several small businesses noted that because security 
clearances are costly, many are unable to invest in security 
clearances without an assured contract award. Moreover, one told us 
that the development time frames for SBIR contracts are too short to 
apply for and receive top-secret clearances. In addition, two of the 
three prime contractors we spoke with said that the lack of a security 
clearance represents a major barrier for any small business that 
aspires to participate in DOD space acquisition programs. 

* Forging relationships: Small businesses struggle to break through 
the insular culture of space system acquisitions to develop working 
relationships with DOD officials and prime contractors, according to 
all three groups interviewed. 

- With DOD: According to small businesses we interviewed, it is 
difficult to identify appropriate points of contact within DOD, and 
one small business said that DOD consistently awards contracts to 
those companies with whom it has previously worked, making it 
difficult for new, small companies to develop similar relationships. 
Two small-business owners said access to the space acquisition 
community is difficult because it is a cohesive network of space 
system developers. Specifically, one of the small businesses noted 
that the domination of the space industrial base by a few prime 
contractors prevents small- business participation because the prime 
contractors usually serve as the lead integrators for space programs. 
Prime-contractor officials acknowledged they have some of their own 
preferred suppliers. One DOD official agreed that it is difficult for 
small businesses to forge new relationships within the DOD space 
system acquisitions community because it is difficult for DOD's SBIR 
program officials to convince program managers to consider SBIR 
technologies as potential solutions for technology gaps as the 
solutions may not be the same as those advocated by the prime 
contractors. In addition, he noted that large prime contractors 
partner with many of the program managers and advise them about 
acquisitions concerning new technologies--and these prime contractors 
may see the SBIR program as a source of competition. 

- With prime contractors: Officials from all the prime contractors we 
spoke with generally agreed that small businesses face challenges in 
working with prime contractors for several reasons. First, DOD does 
not require prime contractors to work with small businesses to 
commercialize their technologies. Two prime contractors suggested that 
DOD could facilitate these working relationships by providing 
incentives for larger contractors to work with SBIR companies. Second, 
two of the three prime contractors interviewed indicated that they 
would prefer to buy a small business with a promising technology, 
rather than partner with the business in question, to maintain 
exclusive rights to the technologies developed. Third, one prime 
contractor noted that it prefers to use established subcontractors 
that have a history of being reliable, are expected to be around in 
the future, and are able to manufacture the volume of units requested. 
Despite the challenges noted, all the prime contractors we spoke with 
have developed initiatives for working with small businesses. For 
example, one prime contractor established the position of a full-time 
SBIR program manager in 2005 to provide information and guidance 
regarding the government's SBIR program to the entire small business 
community, work with those leaders associated with research and 
technology and technology integration regarding SBIR activities, and 
release a bimonthly SBIR activity report. 

* Risk-averse space community: All three groups we interviewed said 
that small businesses find it difficult to break into the DOD space 
system acquisitions environment because the space community is risk 
averse--DOD officials see unproven companies as risky for expensive 
space programs because any delays, problems with technologies, or 
other issues have significant consequences. Various small businesses 
we spoke with believe that program managers prefer to award space-
related contracts to large contractors, in whose quality, practices, 
and longevity they have confidence. Air Force officials we spoke with 
agreed that most program managers are risk averse to integrating 
technologies developed by small businesses before they have been 
demonstrated for a space environment because they are trying to meet 
cost, schedule, and performance goals. In addition, an official 
claimed the ingrained belief that only large businesses can handle the 
complexities of building major space systems, such as satellites, 
constituted the largest obstacle faced by those officials attempting 
to implement the SBIR program. Two prime contractors agreed that the 
DOD space community is highly risk averse and consider small business 
technologies risky investments--specifically, one noted that 
technologies are perceived to be risky because of the uncertainty 
associated with small businesses' ability to remain in business over 
the long development cycle of a space system. 

Aspects of SBIR Program Administration, Timing, and Funding Impede 
Small Business Efforts: 

The three groups we interviewed--small businesses, DOD officials, and 
prime contractors--described how SBIR program administration, timing, 
and funding impede the efforts of small businesses developing space- 
related technologies to transition their technologies. The following 
reflects the opinions of most of the interviewees. 

* Inexperienced contracting staff: Small-businesses and Air Force 
officials we interviewed believe issues regarding SBIR contract awards 
result from, in part, inexperienced contracting staff managing SBIR 
contracts in DOD. Air Force officials we spoke with acknowledged that 
the SBIR program is often used as a training ground for inexperienced 
contracting staff because contract award size is relatively small and 
the DOD's SBIR program has a structured contract process in place. One 
official noted that this practice can create problems for small 
companies, because some of these inexperienced contracting officials 
may not understand the intricacies of the SBIR program. Two small 
businesses we spoke with indicated that they had experienced contract 
issuance delays because inexperienced contracting staff managed their 
SBIR contracts. Small businesses we spoke with said they experienced 
financial hardship because they needed to retain employees or project 
teams while waiting for contract awards. For example, one small 
business we spoke with noted that it encountered a 9-month delay in 
the awarding of a contract after receiving a notice of selection for a 
Phase II SBIR contract, and the delay was almost devastating. Two 
small businesses suggested that DOD expedite the contract-award 
process to limit the need for small businesses to retain expensive 
technical staff prior to the start of any contract work. 

* Low funding limits: According to some small businesses and DOD 
officials, low SBIR funding limits may hinder space technology 
development because SBIR funding limits are not adequate to fulfill 
the stringent level of testing required to qualify materials for space 
technology development or to mature technologies to the degree 
required by DOD. Prior to March 2010, when the SBA increased SBIR 
funding limits for Phase I from $100,000 to $150,000 and for Phase II 
from $750,000 to $1,000,000, funding limits had remained stagnant 
since 1992. For example, one small-business official noted it was 
unrealistic to mature a technology to the extent some space programs 
require within the SBIR funding limits. Another small business said it 
had the opportunity to transition its technology if it could 
effectively demonstrate the subsystem, but to do so, it needed an 
advanced microcircuit that cost $750,000--as much as it would receive 
for a typical Phase II contract award. DOD officials said a small 
business typically needs additional funding to supplement its SBIR 
Phase I and II contracts to be in a position to insert its technology 
into a major space acquisition program. According to the SBA, DOD can 
award SBIR contracts in amounts that are larger than the prescribed 
limits to small businesses to help bridge the funding gap and mature 
their technologies further, but DOD is required to report annually to 
the SBA when it exceeds the funding limits. In addition, DOD 
implemented several initiatives to stimulate additional investment in 
promising SBIR technologies. For example, the Fast Track Program and 
Phase II Enhancement funding utilizes matching funds from outside the 
SBIR budget to help small businesses between phases of the SBIR 
program. One DOD official suggested that DOD provide stable funding 
for space-related SBIR technologies, because it is difficult to 
establish an effective development plan for space acquisition programs 
when funding for space-related SBIR projects is unstable. 

* Contract award disbursement amount and timing: Two small-business 
officials said they experience financial hardships when contract award 
disbursements are misaligned with initial costs incurred to develop 
their technology. According to the small businesses we interviewed, if 
disbursements do not adequately match the development needs of the 
small business, the small business may need to use its own money for 
hiring or delay development of the product until it receives the 
remainder of the contract award. Further, they said the contract award 
disbursement schedule and amounts vary across and within the DOD 
military services and may not coincide with the development progress 
and test plans of the small business. One small businesses we spoke 
with noted that a larger contract award distribution allotment is 
particularly important at the beginning of a contract, because it 
needs the funding to hire new staff and begin development of the 
technology. Two small businesses suggested DOD distribute SBIR funding 
up front, instead of in equal increments throughout the contract 
period. 

* Synchronizing with the DOD acquisition timeline: According to small 
businesses and DOD officials we interviewed, opportunities to 
transition technologies are missed because the SBIR program timeline 
is not aligned with the DOD acquisition timeline. DOD officials noted 
that opportunities for the insertion of new technologies by means of 
on- ramps typically occur when there is a new system acquisition or a 
system upgrade, but it may take too long to develop an SBIR technology 
to address needs. Furthermore, these opportunities are generally 
limited. Additionally, inserting a technology at the right time can be 
difficult due to technology freeze dates--the point at which no new 
technologies can be added--and any SBIR technology in development 
would have to wait for the next program upgrade. 

Small Businesses Identified Other Challenges to Participating in the 
DOD Space System Acquisitions Environment: 

Small businesses participating in the SBIR program identified other 
challenges they believe inhibit their ability to participate in DOD 
space system and weapon acquisitions, such as the potential for the 
loss of intellectual property and a lack of technology "pull" from DOD 
acquisition programs. Some of these identified challenges follow. 

* Loss of proprietary information: Ten small businesses we interviewed 
are reluctant to enter into partnerships with prime contractors out of 
concern that they could lose their proprietary information through 
either an infringement from prime contractors or a mishandling of 
proprietary information by DOD program officials. The three prime 
contractors we spoke with said they take intellectual property rights 
of small businesses seriously, and they noted that specific procedures 
are in place to safeguard intellectual property rights of small 
businesses, such as the signing of nondisclosure agreements. A DOD 
official said that the fear of losing proprietary information is a 
misperception on the part of small businesses, because DOD services 
and components take steps to work with and protect the small 
businesses' intellectual property rights. Additionally, the SBIR 
Policy Directive requires agencies to ensure SBIR businesses' 
proprietary information is protected. However, according to five small 
businesses we interviewed, incidents have occurred in which DOD 
officials appear to have shared proprietary information with prime 
contractors. For example: 

- One small business we interviewed disclosed that DOD hired it to 
teach several prime contractors how to recreate a specific infrared 
technology it had developed so that the prime contractors could 
evaluate the technology. Although the prime contractors signed 
nondisclosure agreements that permitted them to use the technology for 
evaluation but did not give them the right to sell the technology, the 
small business said a DOD military service is currently procuring 
systems from the prime contractors that incorporated the technology 
they developed. The small business attempted to seek recourse against 
the prime contractors but could not sustain the legal fees. 

- Another small business developed a system to enhance data, and 
within 4 months of the successful use of the system in military 
operations, the Air Force turned to a prime contractor to assess and 
then expand upon the system to enable more users to access the 
technology. The small business claims that the prime contractor would 
not have been able to do this, however, without access to the small 
business' proprietary information; thus the small business believes 
that the Air Force might have allowed the prime contractor to review 
documents containing proprietary information during the prime 
contractor's initial assessment of the technology. 

* Limited technology "pull" from acquisition programs: The small 
businesses we interviewed cited three reasons for the limited "pull"-- 
identified need and support--for SBIR technologies: DOD segments may 
solicit topics for SBIR technologies for which they have no validated 
requirements, short tenure among DOD officials, and a lack of SBIR 
knowledge and training for program managers. 

- According to three small businesses we interviewed, the research 
ideas or SBIR topics are not created with a specific end-user or 
acquisitions customer in mind, which can limit the likelihood of 
insertion into DOD acquisition programs. One small business claimed 
that the DOD research laboratories use SBIR as a "sandbox" to research 
interesting ideas, reducing the benefits of the program to the 
warfighter. DOD officials told us, however, that at least 50 percent 
of SBIR topic solicitations must be endorsed by acquisition programs. 

- Four small businesses we spoke with noted that short tenures among 
DOD officials involved in developing SBIR technologies inhibits the 
ability of small businesses to transition their technology because 
those with decision-making authority may leave--and the interest in a 
technology with them. For example, one small business told us that a 
DOD service agreed to sponsor its technology for Fast Track funding 
but did not follow through because of a turnover in staff and a change 
in priorities. Another small business claimed that an official 
interested in its technology transferred, leaving it without a 
sponsor. According to DOD officials we spoke with, the network for 
sharing SBIR information is fractured and informal, and the short 
tenure of program managers can affect the effectiveness of informal 
sharing networks, making it is less likely small businesses will have 
the contacts needed to keep apprised of SBIR topics and technologies 
worked on by other DOD services and components. DOD officials 
suggested that DOD increase coordination efforts across services and 
components to share information on small-business technology 
development efforts. DOD officials we spoke with agreed that short 
tenure for program office officials affects small businesses trying to 
transition technologies into programs of interest, but one DOD 
official noted that small businesses also have a responsibility to 
market their product to various program offices and should not depend 
solely on technology "pull" by a program office or official. Several 
GAO reports have indicated that short program-manager tenure has 
hampered technology system acquisitions, and some of the reports noted 
the need to extend program-manager tenure as a way of increasing 
stability and accountability on acquisition programs.[Footnote 22] 

- Two small businesses we interviewed said that program managers, who 
are charged with planning and developing future and current 
acquisitions, do not understand the value of using an SBIR technology 
and therefore are less likely to consider it for insertion into an 
acquisition program. A DOD official we spoke with who is involved with 
the SBIR program agreed that some program officials lack a thorough 
understanding of the SBIR program, but he noted that DOD is currently 
developing training modules to address this concern. Two small 
businesses suggested that DOD increase program manager attention to 
SBIR technologies and improve their knowledge of SBIR policies and 
contract award process. 

Conclusions: 

DOD is using the SBIR program to provide opportunities for small 
businesses to participate in the space industrial base. Its investment 
should be matched with efforts to get the most return. However, data 
needed to track commercialization success are limited. DOD is taking 
steps to increase the transition of SBIR technologies into DOD 
acquisition programs or commercial-sector products or services, and is 
addressing management challenges through the development of an 
overarching DOD SBIR directive and standardizing best practices. 
Despite these efforts, challenges remain as DOD strives to improve the 
program. Moreover, there are perceived challenges for small 
businesses, rooted in the costs associated with spacecraft 
development, the administration of the SBIR program, as well as 
reluctance on the part of prime contractors and program managers to 
work with new, unproven companies. While there are steps DOD can take 
that would offer improvements in the short run, additional 
improvements may require more insight and longer-term solutions. 

Recommendations for Executive Action: 

We recommend the Secretary of Defense take the following three actions: 

* In the near term, consider collecting data on all SBIR technologies 
that transition into DOD acquisitions or commercial-sector products or 
services, as well as ensuring that these data are defined and recorded 
consistently. By collecting and analyzing these data, DOD would have a 
better understanding of its return on investment for space-related and 
other technologies developed under the SBIR program, and how public 
funds are being spent. 

* Complete efforts to develop and issue SBIR program guidance to 
ensure DOD military service and component-level SBIR officials are 
managing the program in a manner intended to meet the full intent of 
the SBIR Policy Directive. 

* In the long term, examine the challenges offered by small 
businesses, government officials, and prime-contractor officials in 
this report and assess the extent to which there are cost-effective 
improvements that could be made to address them. In doing so, DOD may 
want to compare and contrast SBIR efforts among all the military 
services. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to the Secretary of Defense and the 
office of the Administrator of the Small Business Administration 
(SBA). Written comments from DOD and SBA are included in this report 
as appendixes II and III, respectively. 

DOD partially concurred with our recommendation that DOD, in the near 
term, should consider collecting data on all SBIR technologies that 
transition into DOD acquisitions or commercial-sector products or 
services, as well as ensure that these data are defined and recorded 
consistently. DOD agreed that collecting commercialization data on 
SBIR technologies is beneficial and that it has systems to collect 
these data; however, DOD also noted it would not be cost-effective to 
collect data on government and commercial/private awards at the prime 
and lower tier levels because DOD does not have the resources nor the 
responsibility to capture all public and private data for the DOD 
program. 

For DOD to have a better understanding of its return on investment for 
commercializing space-related and other technologies, it must 
strengthen its evaluation of the SBIR program. To do this, DOD needs 
more complete data as well as data that are consistently defined and 
recorded, as we recommended. While DOD noted that it collects 
commercialization data in two ways--by requiring that proposing firms 
report prior SBIR commercialization and through the Federal 
Procurement Data System--the data being reported are not always 
recorded consistently. Improving data collection efforts in these 
areas would substantially improve DOD's insight into the SBIR 
program's effectiveness. Regarding the collection of commercialization 
data for firms no longer participating in the DOD SBIR program, we 
recommended that DOD consider collecting this information. This 
consideration would involve identifying the cost to capture these data 
and identifying the benefit gained from better understanding the 
investment. If DOD determines that the collection of this information 
is cost prohibitive, DOD should not be expected to collect it. 
However, it would still behoove DOD to assess the extent to which 
collecting this data would be cost prohibitive against the potential 
value the data could bring to increasing small business participation 
in space. 

In its comments, SBA noted that it is developing a commercialization 
data collection system that will capture public and private 
commercialization results for firms re-applying for awards under the 
SBIR program. We believe that SBA's efforts to improve data collection 
and management of SBIR data should ease the burden on DOD resources 
and costs to collect comprehensive data. While the SBA's new data 
system will provide programwide data, SBA stated that it encourages 
agencies to explore agency-specific approaches to collecting and 
measuring commercialization results. DOD did not address how it will 
ensure that commercialization data are defined and recorded 
consistently within the department. We continue to believe that 
inconsistencies in recording and defining Phase III data among the 
military services and components will not give DOD a good sense of 
what benefits industry and government are deriving from the SBIR 
program. Improvements in data collection would provide DOD with 
substantive data for evaluating its SBIR investment. 

DOD agreed with our recommendation that the department complete 
efforts to develop and issue SBIR program guidance to ensure military 
service and component-level SBIR officials are managing the program in 
a manner intended to meet the full intent of the SBIR Policy 
Directive. In response, DOD stated that it suspended efforts on 
finalizing a DOD SBIR Directive because of multiple delays in SBIR 
program reauthorization and that draft legislation being proposed will 
create major changes to the program that will significantly affect the 
content of the DOD SBIR Directive. We acknowledge that the SBIR 
Directive may be significantly changed. DOD commented that it intends 
to finalize the DOD Directive within 180 days of issuance of the 
updated SBIR Policy Directive. 

DOD did not concur with our recommendation that DOD should, in the 
long term, examine the challenges offered by small businesses, 
government officials, and prime contractor officials in this report 
and assess the extent to which there are cost-effective improvements 
that could be made to address them. DOD noted that it does not concur 
that the individual challenges in our report should be assessed on an 
individual basis and that many of the cited challenges are issues 
facing the entire small-business community. DOD further noted that it 
addresses the challenges faced by SBIR program participants through an 
SBIR steering committee, working groups, conferences, and training 
workshops. We do not believe that our report focuses on individual 
concerns or challenges but rather examines broader challenges that DOD 
may want to address in the future. We acknowledge DOD's broad-scale 
efforts to address issues facing the entire small-business community. 
However, given the fact that most stakeholders in the space industrial 
base that we spoke with--DOD, prime contractors, and small businesses--
generally agreed that small businesses participating in the DOD SBIR 
program face difficulties transitioning their space-related 
technologies into DOD acquisition programs, it would still be in DOD's 
best interest to assess the extent to which there are cost-effective 
improvements that could be made to address these difficulties. While 
we acknowledge that some of the transition challenges may be faced by 
the entire SBIR community, others, like the high cost of testing 
technologies so they are flight-ready for the harsh space environment 
and the high cost of obtaining security clearances that enable small 
businesses to submit classified proposals, may be more prominent to 
SBIR companies working in the space sector. To assist DOD with 
addressing the difficulties that SBIR companies state they are having 
in transitioning their space-related technologies, we continue to 
believe that DOD could look to the individual military services for 
ways to overcome these difficulties. 

The SBA commented that it is interested in following up on the 
concerns expressed by small businesses regarding the safety of 
intellectual property when working with the SBIR or DOD acquisition 
programs. The SBA stated that it is currently working to clarify SBIR 
data rights in its SBIR Policy Directive. The SBA is also working with 
the various SBIR agencies on ways to provide further guidance to 
contracting officers who are new to the program and to prevent lengthy 
delays between selection of the awardees and funding agreement awards. 

DOD also provided technical comments that have been incorporated where 
appropriate. 

We are sending copies of this report to the appropriate congressional 
committees, the Secretary of Defense, and other interested parties. 
The report also is available at no charge on the GAO Web site at 
[hyperlink, http://www.gao.gov]. 

If you have any questions about this report, please contact me at 
(202) 512-4841 or chaplainc@gao.gov. Contact points for our Offices of 
Congressional Relations and Public Affairs may be found on the last 
page of this report. Key contributors to this report are provided in 
appendix IV. 

Signed by: 

Cristina T. Chaplain: 
Director: Acquisition and Sourcing Management: 

[End of section] 

Appendix I: Scope and Methodology: 

To determine the extent to which the Department of Defense (DOD) is 
utilizing the Small Business Innovation Research (SBIR) Program to 
develop and transition space-related technologies, we reviewed DOD 
acquisition policies, memorandums, and other guidance concerning the 
SBIR Program. We analyzed data and interviewed officials from the 
Office of the Under Secretary of Defense for Acquisition, Technology, 
and Logistics (AT&L)--specifically the Office of Small Business 
Programs (OSBP), Small Business Administration (SBA), Army, Navy, Air 
Force, Space and Missile Systems Center (SMC), Air Force Research Lab 
(AFRL), Defense Advanced Research Projects Agency (DARPA), and the 
Missile Defense Agency (MDA). We reviewed SBA policies, and SBIR 
success stories. We also assessed the extent to which DOD is 
delivering space-related warfighter capabilities through the SBIR 
Program, by analyzing data and interviewing officials from the Army, 
Navy, and Air Force, and we attended conferences to identify small-
business development opportunities and determine steps DOD is taking 
to involve small businesses. 

We analyzed data from OSBP for fiscal years 2000 through 2009 to 
determine the investment DOD makes in space-related SBIR Phase I and 
II awards each year. To identify the space-related portion of total 
SBIR investment, OSBP officials provided data from the Federal 
Procurement Data System-Next Generation (FPDS-NG). FPDS-NG contains 
detailed information on contract actions and identifies, among other 
data, the contract types used by federal agencies in procuring goods 
and services. 

Though we have previously reported that governmentwide FPDS-NG data 
are incomplete and lack internal controls, FPDS-NG is the official 
federal contracting database, and is therefore one of the systems DOD 
uses to track its SBIR contracts; the second system is the Company 
Commercialization Report (CCR) database, a system in which the 
reporting of Phase III contracts by small businesses is voluntary. 
DOD's OSBP reconciles the CCR database with the FPDS-NG for its own 
annual reporting requirement to the SBA. An OSBP official pulled space-
related SBIR contract information from the FPDS-NG database after we 
asked for the data for our review. However, a DOD OSBP official told 
us that the FPDS-NG database was not designed to extract space-related 
contract data from its database. Using a keyword search query, OSBP 
officials separated out all DOD SBIR efforts containing reference to 
"space platforms," for fiscal years 2005 through 2009, which they 
explained were the best data available for identifying DOD's space- 
related SBIR contracts. These are the data we used to determine DOD's 
space-related topics, proposals, and investments for fiscal years 2005 
through 2009. We did not test the reliability of these data. 

To identify challenges small companies face to participating in the 
space industrial base, we interviewed 28 small businesses to obtain 
their perspectives on existing challenges. We identified the small 
businesses primarily through DOD's SBIR program Web site, a network of 
small aerospace companies in the Los Angeles, California, area, and 
additional referrals by existing SBIR companies. Half of the SBIR 
companies represented in our sample are located in California, which 
is where most DOD space work takes place, while the remaining SBIR 
companies in our sample are located in Colorado, New Mexico, Ohio, 
Virginia, Connecticut, Massachusetts, and Washington, D.C. We 
contacted companies across all three Phases of the SBIR award process. 
Our findings, conclusions, and recommendations are limited by the 
evidence we have cited. We were unable to make generalizable 
statements about the target population because we conducted a 
nonprobability sample of interviews. We also interviewed various space 
and other program managers at the Army, Navy, Air Force, DARPA, and 
MDA to determine their views on existing challenges. Further, we 
interviewed representatives from three prime contractors currently 
working on DOD space acquisition programs to identify the challenges 
they believe exist to small businesses in participating in DOD space 
and weapon acquisitions. We attempted to assess the commercialization 
success of space-related technologies through the SBIR Program at DOD, 
but DOD does not have complete and consistent commercialization data. 
We also reviewed studies and reports on the overall SBIR Program, 
DOD's SBIR Program, and the defense space industrial base. 

We conducted our work from August 2009 to October 2010 in accordance 
with generally accepted government accounting standards. Those 
standards require that we plan and perform the audits to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: Comments from the Department of Defense: 

Office Of The Under Secretary Of Defense: 
Acquisition, Technology	And Logistics: 
3000 Defense Pentagon: 
Washington, DC 20301-3000: 

October 26, 2010: 
		
Ms. Christina Chaplain: 
Director, Acquisition and Sourcing Management: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Ms. Chaplain: 

This is the Department of Defense response to the GAO draft report, 
GAO-11-21, "Space Acquisitions: Challenges in Commercializing 
Technologies Developed Under the Small Business Innovation Research 
(SBIR) Program," dated September 23, 2010 (GAO Code 120848). 

The Department appreciates the opportunity to respond to your draft 
report and looks forward to working with you as we continue to ensure 
a strong and capable Defense Space Acquisition Community. 

Sincerely, 

Signed by: 

Joseph E. Misanin: 
Deputy Director, Program Operations: 
Office of Small Business Programs: 

Enclosure: As stated: 

[End of letter] 

GAO Draft Report: Dated September 23, 2010: 
GAO Code 120848/GAO-11-21: 

"Space Acquisitions: Challenges in Commercializing Technologies 
Developed
Under the Small Business Innovation Research (SBIR) Program" 

Department Of Defense Comments To The Recommendations: 

Recommendation 1: The Government Accountability Office (GAO) 
recommends that in the near term, consider collecting data on all SBIR 
technologies that transition into the Department of Defense (DoD) 
acquisition or commercial sector products or services, as well as 
ensuring that these data are defined and recorded consistently. By 
collecting and analyzing this data, DoD would have a better 
understanding of its return on investment for space-related and other 
technologies developed under the SBIR program, and how public funds 
are being spent. 

DOD Response: Partially Concur. The Department concurs that collecting 
commercialization data on SBIR technologies is beneficial and has 
established systems to collect this data; however, it would not be 
cost effective to collect all commercialization data resulting from 
the SBIR program. The U.S. Small Business Administration (SBA) SBIR 
Policy Directive defines commercialization as, "The process of 
developing marketable products or services and producing and 
delivering products or services for sale (whether by the originating 
party or by others) to Government or commercial markets." All 
commercialization would have to include both Government and 
commercial/private awards at the prime and lower tier levels. The 
Department does not have the resources nor the responsibility to 
capture all public and private data for the DoD program. 

The Department currently collects commercialization data in two ways. 
First, we require that proposing firms report SBIR Phase III activity 
(commercialization), derived from prior SBIR awards, in a DoD 
commercialization database. Participating firms are the only 
comprehensive source of commercialization information because only 
they know the extent and character of their phase III activity. 
Commercialization data for firms no longer participating in the DoD 
SBIR program is not captured. 

The second way DoD collects commercialization data is through the 
Federal Procurement Data System — Next Generation (FPDS-NG). This 
system collects only Federal prime contract activity and therefore is 
a subset of all commercialization. 

Section k, subparagraph (2) of 15 USC 638 requires the Small Business 
Administration (SBA) to, "...develop and maintain a database to be 
used exclusively for SBIR and STTR program evaluation. The evaluation 
shall include revenue from the sale of new products or services 
resulting from the research conducted under the [SBIR] award." The 
Department supports SBA efforts to develop and maintain a 
comprehensive database to capture commercialization data. 

Recommendation 2: The GAO recommends that the Department complete 
efforts to develop and issue SBIR program guidance to ensure its 
military service and DOD component-level SBIR officials are managing 
the program in a manner intended to meet the full intent of the SBIR 
Policy Directive. 

DOD Response: Concur. The Department concurs that the development and 
issuance of SBIR program guidance will ensure implementation of the 
DoD SBIR program consistent with the SBA SBIR Policy Directive. The 
Department suspended efforts on finalizing a DoD SBIR Directive due to 
multiple delays in program reauthorization. Draft legislation 
currently being proposed by the House and the Senate will create major 
changes to the program that will significantly impact the content of 
the DoD SBIR Directive. Once reauthorization is signed by the 
President, the SBA has 180 days to update the SBIR Policy Directive. 
After issuance of the SBIR Policy Directive, the OSBP will finalize 
the DoD Directive within 180 days. 

Recommendation 3: The GAO recommends that the Department, in the long 
term, examine the challenges offered by small businesses, government 
officials, and prime contractor officials in this report and assess 
the extent to which there are cost-effective improvements that could 
be made to address them. In doing so, DOD may want to compare and 
contrast SBIR efforts among all the military services. 

DOD Response: Nonconcur. The Department does not concur that the 
individual challenges offered by the small businesses, government 
officials, and prime contractor officials in this report should be 
assessed on an individual basis. Many of the cited challenges are 
broad small business and/or space related issues facing the entire 
small business community. The Department addresses the challenges 
faced by the SBIR program participants through an SBIR steering 
committee, working groups, conferences and training workshops. The DoD 
SBIR Program Managers meet regularly as members of an SBIR steering 
committee to identify, prioritize, and address DoD wide challenges. To 
address Federal-wide SBIR challenges, the Department participates in 
the SBA SBIR working groups and improvement initiatives. Collectively, 
Federal-wide initiatives and challenges are presented at the 
Department's annual Beyond Phase II Conference, an event that brings 
together small businesses, government officials and prime contractors 
to facilitate the transition of SBIR-funded technologies. DoD-wide 
challenges are further reviewed for potential solutions at the annual 
DoD Training Workshop for government SBIR personnel. 

[End of section] 

Appendix III: Comments from the U.S. Small Business Administration: 

U.S. Small Business Administration: 
Washington, DC 20416: 

October 25, 2010: 

Ms. Cristina Chaplain: 
Director, Acquisition and Sourcing Management: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Re: "Challenges in Commercializing Technologies Developed Under the 
Small Business Innovation Research Program" (GAO-11-21): 

Dear Ms. Chaplain: 

Thank you for the opportunity to comment on your recent report, 
"Challenges in Commercializing Technologies Developed Under the Small 
Business Innovation Research Program" (GAO-11-21). In this report, GAO 
examines the extent to which the U.S. Department of Defense (DoD) 
utilizes the SBIR program in developing and transitioning space-
related technologies. The report recommends that DoD collect data on 
all SBIR technologies that transition into DOD acquisitions or 
commercial products or services, complete its efforts to issue SBIR 
program guidance consistent with the SBIR Policy Directive, and 
further examine the small business challenges identified in the report. 

SBA welcomes the analysis provided by the report and will support 
appropriate actions that DoD takes to address the recommendations. SBA 
is currently undertaking a comprehensive upgrade to the Tech-Net 
database. This effort aims to improve data collection and management 
program wide, and will address a number of concerns raised in the 
report. For example, GAO found that DoD is unable to track the number 
of space-related Phase III awards. Phase III award information will be 
collected from all SBIR agencies and integrated into the SBA SBIR/STTR 
database, along with an array of confidential data on 
commercialization results. This will enable new analysis of the 
technologies and projects transitioned to DoD space programs and other 
areas. 

SBA is also developing a commercialization data collection system that 
will capture public and private commercialization results for firms re-
applying for awards under the SBIR program. The new data system will 
provide program-wide data, but the SBA will continue to encourage 
agencies to explore agency-specific approaches to collecting and 
measuring commercialization results. SBA has recently retained a 
contractor that has initiated work on the improvement of the Tech-Net 
system. The improved Tech-Net system should be able to begin compiling 
improved data collection and commercialization information in the next 
nine to twelve months. 

In addition, SBA is interested in following up on the concerns 
expressed by small businesses regarding the safety of intellectual 
property when working with the SBIR or DoD acquisition programs. SBA 
is currently working to clarify SBIR data rights in its SBIR Policy 
Directive. The SBA is also working with the various SBIR agencies on 
ways to provide further guidance to contracting officers that are new 
to the program, and to prevent lengthy delays between selection of the 
awardees and funding agreement award. 

Again, thank you for the opportunity to provide comments on this draft 
report. If you have any additional questions, please feel free to 
contact Alfonso Lopez, Assistant Administrator, Office of 
Congressional and Legislative Affairs (202) 205-6700. 

Sincerely: 

Signed by: 

Eric Zarnikow: 
Associate Administrator: 
Office of Capital Access: 

[End of section] 

Appendix IV: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Cristina T. Chaplain, (202) 512-4841 or chaplainc@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, key contributors to this 
report were Art Gallegos, Assistant Director; Maria Durant; Claire 
Buck; Amanda Jones; Morgan Delaney-Ramaker; Arturo Holguin; Sylvia 
Schatz; and Nathan Pope. 

[End of section] 

Footnotes: 

[1] Pub. L. No. 97-219. 

[2] This RDT&E total was calculated by adding the RDT&E appropriations 
for Fiscal Year 2009 for all seven space-based systems listed in the 
DOD Fiscal Year 2010 Budget Request (May 2009). 

[3] GAO, Defense Acquisitions: Challenges in Aligning Space System 
Components, [hyperlink, http://www.gao.gov/products/GAO-10-55] 
(Washington, D.C.: Oct. 20, 2009). 

[4] Institute for Defense Analyses, Leadership, Management, and 
Organization for National Security Space (Washington, D.C.: July 2008). 

[5] Department of Defense, Defense Industrial Base Assessment: U.S. 
Space Industry (August 2007). 

[6] GAO, Space Acquisitions: DOD Is Making Progress to Rapidly Deliver 
Low Cost Space Capabilities, but Challenges Remain, [hyperlink, 
http://www.gao.gov/products/GAO-08-516] (Washington, D.C.: Apr. 25, 
2008) 

[7] The 11 federal agencies participating in the SBIR Program are the 
Departments of Agriculture, Commerce, Defense, Education, Energy, 
Health and Human Services, Homeland Security, Transportation, the 
Environmental Protection Agency, the National Aeronautics and Space 
Administration, and the National Science Foundation. 

[8] Fiscal year 2009 SBIR data are based on preliminary SBA estimates, 
but are consistent with fiscal year 2008 SBIR data. 

[9] Pub. L. No. 111-251, § 1 (2010). 

[10] Pub. L. No. 97-219, § 4 (1982). 

[11] Notice of Final Amendments to Policy Directive, 75 Fed. Reg. 
15,756 (Mar. 30, 2010). 

[12] R&D is a systematic application of knowledge toward the 
production of useful materials, devices, and systems or methods, 
including design, development, and improvement of prototypes and new 
processes to meet specific requirements. 

[13] In this report, "space-related" refers to the technologies in the 
Defense Technology Area Plan that are categorized for use within 
"space platforms," and does not reflect space-related technologies 
that may be categorized in other technology areas. 

[14] GAO, Best Practices: Stronger Practices Needed to Improve DOD 
Technology Transition Processes, [hyperlink, 
http://www.gao.gov/products/GAO-06-883] (Washington, D.C.: Sept. 14, 
2006). 

[15] [hyperlink, http://www.gao.gov/products/GAO-06-883]. 

[16] GAO, Federal Contracting: Observations on the Government's 
Contracting Data Systems, [hyperlink, 
http://www.gao.gov/products/GAO-09-1032T] (Washington, D.C.: Sept. 29, 
2009). 

[17] According to OSBP officials, when submitting a Phase I and II 
proposal, an SBIR small business is required to electronically prepare 
the CCR report, and companies with more than four Phase II contracts 
must provide information that is used by DOD to calculate a 
Commercialization Achievement Index (CAI) value. The CAI value is used 
by DOD as an evaluation criterion to measure a firm's 
commercialization potential. 

[18] GAO, Small Business Innovation Research: Agencies Need to 
Strengthen Efforts to Improve the Completeness, Consistency, and 
Accuracy of Awards Data, [hyperlink, 
http://www.gao.gov/products/GAO-07-38] (Washington, D.C.: Oct. 19, 
2006). 

[19] GAO, Improvements Needed to the Federal Procurement Data System- 
Next Generation [hyperlink, http://www.gao.gov/products/GAO-05-960R] 
(Washington, D.C.: Sept. 27, 2005). 

[20] [hyperlink, http://www.gao.gov/products/GAO-09-1032T]. 

[21] Based on recommendations by the Inspector General of DOD, "DOD 
Small Business Innovation Research Program" (Jan. 30, 2009). 

[22] GAO, Defense Acquisitions: Assessments of Selected Weapon 
Programs, [hyperlink, http://www.gao.gov/products/GAO-08-467SP] 
(Washington, D.C.: Mar. 31, 2008); Best Practices: Better Support of 
Weapon System Program Managers Needed to Improve Outcomes, [hyperlink, 
http://www.gao.gov/products/GAO-06-110] (Washington, D.C.: Nov. 30, 
2005); Global Positioning System: Significant Challenges in Sustaining 
and Upgrading Widely Used Capabilities, [hyperlink, 
http://www.gao.gov/products/GAO-09-670T] (Washington, D.C.: May 7, 
2009). 

[End of section] 

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