Submitted to the

Subcommittee on Workforce, Empowerment and Government Programs
Committee on Small Business
United States House of Representatives

November 8, 2005

Madam Chairman and Members of the Subcommittee: Thank you for inviting me to speak today about the Small Business Innovation Research (SBIR) program at the Department of Energy (DOE).

The Office of Science manages the SBIR program for the Department and has done so since the SBIR program was formed in 1982. In addition to the Office of Science (SC), six other DOE programs participate in the SBIR program: Fossil Energy, Energy Efficiency and Renewable Energy, Nuclear Energy, Environmental Management, Defense Nuclear Nonproliferation, and Electricity Delivery and Energy Reliability. Some areas of the Department are exempt by law and do not contribute to SBIR, including the Naval Reactors and national security programs.

The statutory SBIR program has several purposes: (a) to stimulate technological innovation; (b) to use small businesses to meet Federal research and development (R&D) needs; (c) to foster and encourage participation by socially and economically disadvantaged small businesses; and (d) to increase private sector commercialization of innovations derived from Federal research and development.

The Department’s SBIR goals include: 1) funding high quality projects with relevance to the Department’s mission needs; 2) increasing private sector commercialization of technology developed through DOE SBIR-supported R&D; 3) stimulating technological innovation in the private sector; and 4) improving the return on investment from federally-funded research for economic and social benefits to the nation.

In accordance with the U.S. Small Business Administration’s (SBA) SBIR Policy Directive, the SBIR program is administered in three phases. Phase I is to evaluate the scientific or technical merit and feasibility of ideas that appear to have commercial potential. Phase II builds on Phase I work and encompasses the core of the research and development effort. Phase III refers to work that derives from, extends, or logically concludes efforts performed under SBIR funding agreements, but is not itself funded by the SBIR program. Phase III work is typically oriented towards commercialization of the SBIR research or technology. That is, the SBIR funding pays for research or R&D meeting DOE objectives identified by the DOE (Phases I and II); non-SBIR capital provides follow-on developmental funding to meet commercial objectives (Phase III).

The Office of Science also manages the Small Business Technology Transfer (STTR) program, which was established in 1992. The major difference between the SBIR and STTR programs is that STTR grants must involve substantial cooperative research collaboration between the small business and a research institution. At least 40% of the research or analytical effort must be allocated to the small business, and at least 30% of the effort must be allocated to a single research institution. The budget for DOE STTR program is also much smaller than SBIR. In FY05, the STTR program was funded at $12 million, while the SBIR program was funded at $101.4 million.

SBIR PARTICIPATION

Over the twenty-three years of its existence, the SBIR program has matured and evolved significantly. We have issued twenty-four Phase I solicitations, reviewed approximately 30,410 proposals, and selected for funding 4,123 Phase I projects and 1,677 Phase II projects. Each year we have issued the solicitation on schedule, met the deadline for the selection of both Phase I and Phase II awards, and published abstracts of our Phase I and Phase II projects.

The SBIR budget for Fiscal Year 2005 was $101.4 million. The Department received 1,490 Phase I grant applications from 823 companies of which 1,037 were sent out for external peer review. We selected 259 applications for Phase I awards resulting in grants to 179 small businesses in 35 states. Eighty-five of the 259 grantees were first time winners with DOE. Twenty-six of the applicants selected for funding were from socially and economically disadvantaged small businesses and seven were from small businesses located in a HUBZone (historically underutilized business zone).

Below are additional statistics from prior years:

PROGRAM EFFECTIVENESS

Performance of the SBIR program compares favorably to other research programs that fund basic and applied research. The DOE SBIR program has supported excellent research, resulting in spin-off companies and technologies, and is a model with respect to the commercialization assistance program. According to the SBA, DOE was the first agency to offer commercialization assistance to awardees beginning in 1990.

Several comprehensive reviews of the SBIR program by the Government Accountability Office (GAO) have found it to be successful in enhancing the role of small businesses in Federal R&D, stimulating commercialization of research results, and supporting the participation of small businesses (Testimony Before the Subcommittee on Environment, Technology, and Standards, Committee on Science, House of Representatives, Federal Research: Observations on the Small Business Innovation Research Program, June, 28 2005, GAO-05-861T, and references therein). Awards from the SBIR program help small businesses attract investment by affirming that the companies have excellent technical capability, thus reducing some of the uncertainty involved in early-stage investment.

PROGRAM MANAGEMENT OVERVIEW

Following the establishment of the SBIR program in 1982, an Action Memorandum to the Secretary of Energy from the Director of the Office of Small and Disadvantaged Business Utilization (OSDBU) considered several options for the organizational placement of the SBIR office. The decision was to place the program in the Office of Energy Research (OER), now the Office of Science, “since OER: 1) is the focal point in the Department for R&D strategies, plans, policy, and technology programs in all energy disciplines covered by Public Law 97-219; 2) controls almost one-half of the entire departmental R&D budget; and 3) represents the Department in Federal R&D coordination activities, including the President’s Council for Science, Engineering and Technology.”

The Memorandum noted, “Public Law 97-219 mandates a federally supported, high technology program for small business concerns, under which implementation and placement can best be accomplished by a technology-based outlay office with crosscutting R&D responsibilities.”

The SBIR program complements the Department’s other R&D funding mechanisms. SBIR is regarded within the Department like any other R&D program, namely, as a vehicle by which the Department accomplishes its R&D objectives. About 70 percent of the funds from the set-aside for the SBIR program come from the Office of Science (SC), which has vast experience in managing research programs. SC’s long history of using merit-based review of grant applications and its thorough understanding of scientific and technical research are key elements in our successful management of the SBIR program. The SBA SBIR Policy Directive encourages agencies to use their routine review processes for SBIR grant applications. In particular, the Policy Directive points out that peer reviews external to the agency are authorized. Therefore, as with other SC programs the scientific/technical evaluations of SBIR grant applications are performed by external researchers expert in the subject area. SC’s relationship with the scientific community, from which the peer reviewers are drawn, is extensive.

Cooperation throughout the Department in administering the SBIR program is achieved through a balance of centralized and decentralized management. The SBIR program is centralized in the setting of schedules, procedures, scoring guidance, final award selections, and all logistics relating to the processing of proposals. It is decentralized in that the technical program offices are responsible for developing specific research topics that support their mission goals, identifying peer reviewers, and providing a priority ranking of grant applications to be considered for funding.

Examples of current technical topic descriptions are as follows:

• Research to Support Proliferation Detection
• Electric Transmission and Distribution Technologies
• Decontamination and Decommissioning of Facilities in the DOE Complex
• Biological Solutions for Reducing Atmospheric Carbon Dioxide and for Producing Fuels
• Coal Gasification and Combustion Technologies
• Nanotechnology
• Neutron, Electron, and Photon Beam Instrumentation
• Advanced Technologies for Nuclear Energy
• Renewable Energy Sources
• Fusion Science and Technology
• Advanced Concepts and Technology for High Energy Accelerators
• High-Performance Computing
• Nuclear Particle Physics and Radiation Detection Systems, Instrumentation and Techniques

Within the SBIR office, an oversight review of the scoring of SBIR grant applications is conducted to assure that any proposal recommended for funding is supported by the set of peer reviews for that grant application. We believe that SC’s management practices, with its emphasis on quality science and technology, are critical to maintaining the integrity of this process.

METHODOLOGY FOR DETERMINING GRANT RECIPIENTS

The Department issues an annual combined solicitation for the SBIR and STTR programs. It typically contains approximately 50 research topics, and small businesses with strong research capabilities in science or engineering are encouraged to apply. The solicitation is advertised on Grants.gov, the Federal Government’s Web Portal for all federal grant applications and also the Department’s E-Center (http://e-center.doe.gov) for all Business and Financial Assistance opportunities available from the Energy Department. Applications are accepted electronically only.

Additionally, we use the internet, regional and national conferences, and trade journals to ensure the applicant community is well informed about SBIR and to encourage a high number of grant applications. The SBIR electronic mailing list consists of over 14,500 small businesses.

Phase I grant applications are judged on a competitive basis against other applicants within the same technical program area (e.g. Fossil Energy, Energy Efficiency, etc.) in several stages. First, all are screened initially by DOE technical managers to ensure that they (1) meet stated funding opportunity notice requirements; (2) are responsive to the topic and subtopic category; (3) contain sufficient information for a meaningful technical review; (4) are for research or for research and development; and (5) do not duplicate other previous or current work. Grant applications which fail to pass the initial screening are declined.

Second, grant applications that meet the conditions above are further evaluated by outside independent scientific and engineering experts who are selected by DOE technical program managers. The external reviewers evaluate each proposal in terms of the following criteria:

1. Strength of the Scientific/Technical Approach as evidenced by (1) the innovativeness of the idea and the approach; (2) the significance of the scientific or technical challenge; and (3) the thoroughness of the presentation.

2. Ability to Carry out the Project in a Cost Effective Manner as evidenced by (1) the qualifications of the Principal Investigator, other key staff, and consultants, if any, and the level of adequacy of equipment and facilities; (2) the soundness and level of adequacy of the work plan to show progress toward proving the feasibility of the concept; and (3) the degree to which the proposed project budget is justified by the research plan.

3. Impact as evidenced by (1) the significance of the technical and/or economic benefits of the proposed work, if successful; (2) the likelihood that the proposed work could lead to a marketable product or process; and (3) the likelihood that the project could attract further development funding after the SBIR project ends.

DOE makes selections for Phase I awards from those grant applications judged to have the highest overall merit within their technical program area, with approximately equal weight given to each of the criteria above. The DOE will not fund any grant application for which there is a reservation with respect to any of the three evaluation criteria, as determined by the review process. In addition, because the DOE has developed a process intended to support only high quality research and development, grant applications will be considered candidates for funding only if they receive strong endorsements with respect to at least two of the three criteria.

Third, from those grant applications considered candidates for funding following peer review, each of the participating DOE program areas make selections. Final decisions are made by the DOE SBIR/STTR Program Manager based on the recommendation of the technical managers and consideration of other factors such as budget and program balance. On average, about 1 out of every 6 grant applications is selected for funding.

The Phase II methodology is the same, except that a commercialization plan is also evaluated as part of the Impact criterion. As with Phase I, Phase II grant applications are sent out for external peer review by independent experts. Phase II applicants must be DOE Phase I recipients. About 1 out of every 2 Phase II grant applications is selected for funding.

The Department’s SBIR program does not provide funding for Phase III since it is statutorily prohibited; however, the program offers commercialization assistance to Phase I and II awardees, which is described later in the testimony.

DOE SBIR ADVISORY BOARD

Because the SBIR program impacts six DOE organizations in addition to the Office of Science, a Department-wide SBIR Advisory Board comprised of Deputy Assistant Secretary level representatives from each technical program that participates in SBIR was established in 1996. The purpose of the SBIR Advisory Board is to provide policy advice to the Director of the Office of Science on the conduct of the SBIR program.

All major policy decisions affecting the SBIR program receive the endorsement of the SBIR Advisory Board before being implemented. Over the years, the SBIR Advisory Board has expressed a high level of satisfaction with the management of the SBIR program within the Office of Science in cooperation with the program offices.

ALLOCATION OF FUNDING

The Department sets aside 2.5 percent of its extramural R&D budget (excluding naval reactors and weapons programs) to fund SBIR projects. Typically, about 25 percent of the funds are spent on Phase I grants, while 75 percent are used for Phase II, which is the major R&D effort. Each technical program area participating in SBIR is allotted its contribution of the set-aside to spend on projects pertaining to its particular research program, provided a sufficient number of high quality grant applications are available. The SBIR office oversight procedures assure that only high quality grant applications are awarded in each program area. The technical managers across the Department as well as the Advisory Board are very supportive of this funding allocation process.

COMMERCIALIZATION ASSISTANCE

A large majority of SBIR awardees have excellent skills in science and engineering research but lack experience in product development, financing business growth, raising venture capital, and marketing. In accordance with one of the statutory program purposes of increasing private sector commercialization of innovations derived from Federal R&D, the Department provides funding for commercialization assistance. The SBIR law allows each agency to use a portion of the SBIR set-aside funds for discretionary technical assistance like commercialization. So companies participate in DOE’s commercialization assistance services at no cost and the Department’s participating research programs benefit from early introduction of mission-related technology into the marketplace.

One of the services provided to Phase II awardees is the Commercialization Opportunity Forum Program, which has been provided for 15 years. This program is conducted by Dawnbreaker, a private organization from Rochester, New York, competitively selected by and under contract with DOE.

As a result of participation in the 2002-2003 Commercialization Opportunity Forum, the most recent program for which analysis by Dawnbreaker has been completed, 48 percent of the small companies that participated have already received over $47.5 million in either private sector investment (equity, licensing), non-SBIR Federal or state funding, or sales. We are unable to obtain from Dawnbreaker a further breakdown of this $47.5 million Phase III result into Federal vs. non-Federal funding at this time.

The program takes eight months to complete and includes:

1) Kickoff Meeting: Sixty to seventy SBIR/STTR awardees are invited to attend a kickoff meeting, led by Dawnbreaker.

2) Business Plan Development: For about four months, the SBIR participants work individually with one of Dawnbreaker’s staff members to develop a business plan. A series of interim reports are produced, culminating in a draft business plan. Finally, the DOE, in consultation with Dawnbreaker, selects about 30 participants to present at the Opportunity Forum.

3) Advanced Commercialization Workshop: These remaining participants meet for an intensive two-day weekend workshop which includes one-on-one sessions with Dawnbreaker’s staff. The output of the workshop includes improvements to the business plan and instructions for further refinements.

4) Business Plan Refinement and Preparation of Presentation Materials: For the next couple months, companies work individually with Dawnbreaker’s staff to refine business plans and prepare presentations for the Forum.

5) Opportunity Forum: The Commercialization Opportunity Forum, which takes place over two days in a Washington area hotel, is designed to facilitate interaction between technology entrepreneurs, potential strategic allies, and investors through a combination of formal presentations and informal networking opportunities. In preparation for the Forum, the SBIR/STTR participating companies identify prospective investors and allies. Using these leads and others, Dawnbreaker is responsible for assuring that a sufficient number of upper level decision makers from appropriate partnering and funding sources attend the Forum. Two days before the Forum, companies attend a Presentation Workshop in which Dawnbreaker’s staff work with them to polish their presentations and provide insight into the interests of the investors and strategic allies.

Other commercialization assistance is provided on a limited basis for those small businesses that are unable to devote a significant amount of time to participate in the Commercialization Opportunity Forum Program. These services are delivered through a competitively selected contract currently held by Foresight Science and Technology, Inc., located in Princeton, New Jersey and includes the following:

Trailblazer™ (Initiated early in Phase I to support Phase II application)

The Trailblazer™ develops market data and participation required for concurrent engineering-based product or service development. Both literature searches and interviews are conducted. The program runs six weeks and it helps businesses:

1) identify major market niches for commercialization;
2) determine key requirements and traits for market-viable products or services;
3) develop a value for the technology that gives it a competitive advantage; and
4) identify feasible vehicles for commercialization and map out a path into the market.

Virtual Deal Simulator™ (Initiated early in Phase II)

The Virtual Deal Simulator™ (VDS™) uses computer-based templates to explore commercialization deals by establishing a sequence of tasks for: 1) the completion of R&D; 2) transitioning the technology development into production; and 3) transitioning the technology product into the market. VDS™ also identifies critical path tasks and milestones for commercialization. The program helps to identify associated costs, required resources, outputs, and metrics for success, duration, and intellectual property concerns for each task, which can be used to track and evaluate post-deal progress. The VDS™ can also be used to identify potential technology, knowledge, and capability gaps in product development and in transitioning into the market and make suggestions for risk reduction. The duration of this program is six weeks.

Technology Niche Analysis™ (Initiated mid-Phase II to identify Phase III partners)

The Technology Niche Analysis™ (TNA™) assesses potential applications for a technology. Both literature searches and interviews are conducted. For each viable application, TNA™ identifies:

1) the needs and concerns of end-users which drive the competitive opening;
2) competing technology and products;
3) the competitive advantage of the technology and market drivers;
4) key standards, regulations, and certifications influencing buyer acceptance;
5) potential customers, licensees, investors, or other commercialization partners (targets as specified by participant preferences); and,
6) a commercialization strategy, together with tasking and a schedule for implementation of the strategy and design suggestions for the product.

Targets are contacted to ensure they are viable leads and to collect important information for follow-up deal-making. Points of contact are included. This program lasts for six weeks.

PROGRAM OUTCOMES

The quality of the research selected for awards has remained very high. I am very pleased that between 1986 and 2003 at least 25 of our projects (out of the 1384 Phase II projects funding during that period) have received R&D-100 Awards from Research and Development Magazine, which selects the 100 most significant technical products and innovations each year. Some examples include: "New Efficient Nanophase Materials for Blue and Deep Green Light-Emitting Diodes," Nomadics, Inc., Stillwater, OK (2004); "Optically Coupled High Power Inverter," Airak, Inc., Manassas, VA (2003); "The Development of A-SPECT," Photon Imaging, Inc., Northridge, CA (2001); “MOLYCAST Furnace," Micropyretics Heaters International, Cincinnati, OH (2001).

The DOE SBIR program conducts an annual survey of Phase II grantees, active and inactive. The survey requests companies to: (1) list all products and services derived from their DOE SBIR projects; (2) report on both sales and/or Phase III investment related to these products and services; and (3) identify which Phase II projects contributed to the development of the products and services. Approximately 90% of Phase II grantees respond to the annual surveys.

Survey data indicate that companies participating in the DOE SBIR program (23 years of awards, resulting in 1,191 projects) have received over $1.6 billion in sales ($0.24 billion from Federal and $1.4 billion from non-Federal sources) and over $1.3 billion in developmental funding ($0.46 billion from Federal and $0.88 billion from non-Federal sources) between 1986 and 2003. Companies have received approximately $3 billion in Phase III funding (from sales or further development investment), which is more than double the cost of DOE SBIR/STTR funding over the life of the program ($1.4 billion).

A relatively small percentage of these companies received a significant portion of the $3 billion in Phase III funding. For example, if we use the total DOE SBIR funding of $850,000 or more as the benchmark, 16% of the projects account for 73% of the Phase III funding. The survey data also indicate that only 61% of the businesses had received Phase III sales or further development investment. Similar to small start-up companies supported by non-Federal and venture capital funds, only a small percentage of the small businesses funded by the DOE SBIR program achieve large commercial successes.

Following are some examples of commercialization successes resulting from DOE SBIR grants.

Amonix, Inc. (Torrance, CA) received SBIR funding to develop a photovoltaic power system. Amonix’s solar cells and photovoltaic (PV) systems have demonstrated unprecedented performance for both space and terrestrial solar power applications. As early as the 1990s, Amonix had field-tested several integrated high-concentration photovoltaic (IHCPV) generating systems throughout the United States. Amonix has focused on utility-scale applications for solar generating systems. When deployed in bulk, the energy cost associated with IHCPV will be competitive with other generation options. The systems can be deployed as part of a centralized solar farm or can be used in distributed applications. Amonix currently has 650 kWs of power installed, including a farm installation at Arizona Public Service. Amonix has received equity financing of $5 million and $2.4 million in sales of their patented IHCPV systems.

AMAC International, Inc. (Newport News, VA) received SBIR funding to develop specialized high power radio frequency (RF) windows and corresponding input couplers. Both are hardware components that facilitate that transfer of radio frequency power from a source to the superconducting cavities of an accelerator. The reliability and cost effectiveness of high power RF windows and couplers are critical to the performance and future development of new accelerators in nuclear physics, high energy physics, and nuclear industries. Five input coupler prototypes have been fabricated and successfully tested and all designs meet DOE’s Spallation Neutron Source (SNS) project requirements, with the support and collaboration of Communications & Power Industries, Inc. (CPI) and the DOE Jefferson Laboratory. SNS is an accelerator-based neutron source that will be used to study the structure and property of materials, including polymers and biological materials.

AMAC’s success in the DOE SBIR project made it possible for the first time for an American company to win a high RF power window contract in an international competition. The AMAC hardware technologies have been licensed to CPI (the largest RF products manufacturer in the US), for their further marketing and development. The royalty from licensing is 8 percent. On a contract worth $3 million dollars, AMAC will earn $240,000.

Atlantia Offshore Limited (Houston, TX) received DOE SBIR funds to develop a tension leg platform concept for use in accessing deep water oil and gas reserves. The engineering firm developed the tension leg platform SeaStar as a result of the DOE SBIR funding. The SeaStar is designed to operate in water depths up to 10,000 feet with a payload up to 11,000 tons, thus allowing oil and gas development in new U. S. offshore fields in the Gulf of Mexico. Cumulative sales of Altantia’s first four platforms are more than $500 million. The company is now developing designs for even larger SeaStars, with payloads in excess of 25,000 tons. Currently, Atlantia is working with a major oil company to apply its SeaStar technology for offshore work in West Africa. The four SeaStar platforms already built by Atlantia provide the federal government with production and royalty payments estimated at $100 million per year.

Deep Web Technologies (Los Alamos, NM) received SBIR funding to research and develop a web-based search tool with relevance-ranking of search results from multiple internet databases. This new technology sorts through selected databases and rapidly returns information in an order likely to meet the users’ needs. Soon after its development, this technology was embraced by the U.S. government’s interagency Science.gov Alliance and applied to the interagency portal Science.gov, which makes available to the public reliable information resources selected by the respective agencies as their best science information. Science.gov was developed by an interagency working group of 14 scientific and technical information organizations from 10 major science agencies. Together these agencies make up the Science.gov Alliance. The Alliance and Science.gov were formed to improve and enhance access to information stemming from government R&D programs.

The version of the government’s portal, which first introduced Deep Web Technologies’ relevance ranking for multiple databases, was named Science.gov 2.0. Officially launched on May 11, 2004, Science.gov 2.0 introduced relevancy-ranking to the vast stores of government R&D results and searches the 47 million pages of government R&D results and presents the results to the users in relevancy-ranked order.

Diversified Technologies, Inc. (DTI) (Bedford, MA), founded in 1987 by graduates of the Massachusetts Institute of Technology, received SBIR funding to develop power modulators for linear colliders, a power supply for plasma heating, and high power switches for accelerators. DTI’s core expertise lies within the application of solid-state devices, such as high power, high voltage opening and closing switches. DTI is the developer and marketer of the very successful PowerModTM line of products, which was selected twice by R&D Magazine as one of the most significant products of the year. The PowerModTM technology is widely recognized as a true breakthrough in high-voltage electronic design. DTI’s PowerModTM technologies replace older components in sophisticated high voltage, high-power systems such as radar transmitters and particle accelerators and are emerging as essential components in power conversion. DTI has reported over $10 million in sales for DOE SBIR-related projects.

NexTech Materials, Ltd. (Lewis Center, OH) received the DOE SBIR program to develop solid oxide fuel cell materials and manufacturing processes. NexTech is one of the only organizations in the world that is focused specifically on the development of this technology. NexTech Materials has been able to obtain over $7 million in funding from various sources including state, federal, and private development, and has increased its workforce by more than one-third. NexTech has over 100 customers in more than 25 countries, and numerous development partners throughout the world. NexTech ultimately will position itself for strategic alliances with fuel cell power system manufacturers and/or raw materials suppliers in order to meet the volumes demands of expanding commercialization.

Examples of R&D Accomplishments Resulting from DOE SBIR Grants

POTENTIAL AREAS FOR IMPROVEMENT

While we have demonstrated that the current set-aside level is more than adequate to meet the needs of our program, we are interested in two small changes to how the available set-aside funds are allocated. (1) DOE SBIR Phase II recipients have indicated in qualitative surveys that the commercialization assistance programs and services offered by the DOE’s SBIR program are valuable to their product development and commercialization efforts. Also, quantitative data from DOE’s SBIR Opportunity Forum indicate that more than 50 percent of their graduates received follow-on investment within 18 months. If there is to be a growing emphasis on commercialization success in the SBIR program, then it seems reasonable to consider whether the provisions for discretionary technical assistance provided by the SBIR reauthorization legislation are sufficient. (2) Also worth examining is whether to allow a small fraction of the set-aside to be used for administration expenses for SBIR staffs to improve Phase III follow-up and provide better commercialization assistance to the small businesses. More robust data collection would enable us to better assess the results of the program, and to adjust our management practices as appropriate.

I believe the National Academies is evaluating these and other issues in their current study of the whole SBIR program, Capitalization on Science, Technology, and Innovation: An Assessment of the Small Business Innovation Research Program, and I look forward to the Academies’ Report.

The Small Business Administration is currently coordinating with the Office of Management and Budget on an assessment of the effectiveness, management, and performance measures of the SBIR/STTR programs at DOD, NIH, NSF, NASA, and DOE. We expect to use the findings of the assessment to address any shortcomings in our program, and primarily to develop robust program performance measures.

CONCLUSION

The DOE SBIR and STTR programs currently provide over $100 million each year to small businesses to help entrepreneurs take their ideas from conception to reality. The Department has, since the program’s inception, made 4,123 Phase I awards and 1,677 Phase II awards with a total value of about $1.4 billion. Of the Phase I awards, about 12 percent are made annually to socially and economically disadvantaged small businesses and about one-third are first time awardees with DOE. In return, these companies have earned more than $3 billion in sales and additional development funding, created jobs, and helped the nation capitalize on its substantial investment in R&D. Approximately 53 percent of the Phase II projects have contributed to the $3 billion in sales and follow-on investments.

The Department has also benefited from small business participation due to their contribution to the Department’s mission in two ways: 1) the technologies the small businesses have developed and 2) the research and new knowledge gained from that research that contributes to the Department’s R&D activities. Successful collaborations between small businesses and the DOE R&D complex have provided new insights and innovative technologies that have advanced the Department’s missions to improve the Nation’s energy, economic, and national security. Small businesses are usually agile, tend to produce quickly with low overhead, and have demonstrated success in developing niche technologies, which often support the Department’s larger projects. High-technology small business grantees, many of whom started in business as a result of SBIR awards, have become a valuable resource for solving high risk, high technology problems. Solving these high technology problems will continue to be essential to meeting the Nation’s current and future energy challenges.