NIH's Small Business Programs Underserve Minorities, Women

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By John T. Aquino

Nov. 23 — NIH programs designed to spur small business innovation need to do more to encourage participation by women- and minority-owned companies, according to a National Research Council report issued Nov. 20 in pre-publication format.

The National Institutes of Health's programs nevertheless are meeting three of their four congressionally mandated objectives and therefore are having a positive overall impact, the congressionally mandated report said.

The three objectives that the report said the NIH has met are: stimulating technological innovation, using small businesses to meet federal research and development (R&D) needs and increasing private-sector commercialization of innovations derived from federal R&D.

But participation by black, Hispanic and Native Americans, which is the fourth objective, is low in the NIH's Small Business Innovation Research (SBIR) program and its companion Small Business Technology Transfer (STTR) program, the report said. It was prepared by the NRC's Committee on Capitalizing on Science, Technology, and Innovation.

Survey Results

The 2014 survey on which the report is based indicated that black-owned small businesses account for only 0.7 percent of all respondents; Hispanic-owned small businesses, about 1.7 percent; and there were no Native American respondents. The survey also found that only 10 percent of SBIR/STTR Phase I (feasibility study) awards were given to women-owned small businesses (WOSBs) while WOSB companies received only 12 percent of Phase II (more advanced research) awards.

The NRC committee didn't recommend quotas, but said the NIH should develop new benchmarks and metrics, create an outreach and education program focused on expanding participation by underserved populations and review its selection procedures with the goal of removing any identified biases in the selection process.

The report, titled “SBIR/STTR at the National Institutes of Health,” is being published by the National Academies Press. The NRC is part of the National Academies of Sciences, Engineering, and Medicine.

The SBIR program was created in 1982 by the Small Business Innovation Development Act and the STTR program in 1992 by the Small Business Research and Development Enhancement Act. The programs offer competitive awards to support the development and commercialization of innovative technologies by small private-sector businesses. At the same time, the programs provide government agencies with technical and scientific solutions that address their different missions.

Commercialization, Fostering Innovation

The report produced a number of findings.

In evaluating the commercialization record of SBIR/STTR projects at the NIH, the committee found that 49 percent of SBIR and STTR respondents reported some sales or licensing revenues at the time of the 2014 survey, and a further 25 percent expected sales in the future.

While acknowledging that this is a “substantial rate” of commercialization, the report found that there is room for improvement.

“The large number of companies with small-scale revenues suggests that while many companies reach the market, fewer can be described as successful in commercial terms. Despite the high percentage of SBIR/STTR projects with sales, the amount of sales was often small: of those with some sales, 39 percent had sales less than $100,000. Six percent had sales over $10 million,” the committee wrote.

The report also found that the NIH SBIR/STTR programs support the foundation of new innovative firms, which is a positive outcome for the programs. Many of the survey respondents said SBIR/STTR funding was instrumental in the founding of the company.

While the NIH SBIR/STTR programs are managed in a flexible way in terms of application topics, dates and funding, the NIH application review system can be improved.

“Case studies, survey responses, and discussions with agency managers all indicate that, although the system is highly regarded and has many positive characteristics, it isn't serving the SBIR/STTR community as well as it could. NIH Institutes and Centers are pioneering new models of program management (e.g., the National Cancer Institute and the National Heart, Lung, and Blood Institute),” the report said.

Key Recommendations

In addition to recommending that the NIH's SBIR/STTR programs improve the participation of underserved populations, the report recommended that the NIH:

• provide improved support for awardees in meeting the challenges in funding clinical trials;

• improve its application review system through convening a high-level task force to improve the consideration of commercial potential in the selection process for SBIR/STTR applications;

• improve data collection and organization by collecting outcomes data that address the entire range of congressionally mandated outcomes, not only commercialization;

• better utilize outcomes data by ensuring that they are systematically employed to guide program management; and

• take advantage of modern information management and data visualization tools for communication with companies about program activities and operations and to facilitate networking of program participants.


The report also recommended that the NIH prepare an SBIR/STTR annual report for the NIH director and Congress.

The committee wrote that the report doesn't assess the value of the SBIR/STTR programs as measured against other types of federal funding but only whether or not they are meeting their congressionally mandated objectives.

An NIH spokeswoman didn't immediately respond to Bloomberg BNA's phone and e-mail requests for comment.

To contact the reporter on this story: John T. Aquino in Washington at

To contact the editor responsible for this story: Randy Kubetin at

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