Association for Public Policy Analysis & Management

In this paper, I present an analysis of how federal agencies’ budgets for the Small Business Innovation Research Program (SBIR) affect program metrics such as the number and type of awards made. My research question is, “How do changes in agencies’ budgets affect the performance of agencies to implement the SBIR program?” This question investigates an important and understudied aspect of SBIR policy implementation: the effect of federal agency compliance with the congressional set-aside requirement. This paper contributes to science and technology policy analysis because it studies the effects of resource allocation within different governmental departments on science, technology, innovation, and economic development.

The SBIR program is a competitive, federal research and development (R&D) subsidy that is awarded to small businesses to support them in developing new technologies. The program is well-regarded by scholars as accomplishing its goal of promoting small business innovation (Tingle, 2016; Link & Scott, 2010; Link & Ruhm, 2009; Cooper, 2003; Audretsch et al. 2002). However, the SBIR program’s success is limited by the size of agencies’ budgets for it. Congress requires agencies to set-aside a fixed percentage of their R&D budgets for the SBIR program, which should mean that budgets do not vary year over year. Yet, data from the period of 1990-2015 for the Department of Defense (DOD), Department of Energy (DOE), Department of Health and Human Services (HHS), National Aeronautics and Space Administration (NASA), and National Science Foundation (NSF) indicate that, on average, agencies fall short of their congressionally-mandated spending requirement. Since prevailing scholarship holds that federal agency budgets for the SBIR program limit its success, it is important to empirically investigate the effect of budget changes on program performance.

I developed a unique data set for studying the SBIR program because I joined disparate data sets. I collected my data from the Small Business Administration’s (SBA) API portal and its Annual Reports Dashboard. I collected information for each agency on the years from 1990-2015 consisting of the agency’s extramural research budget, program budget, awards granted, and the phase of the award granted. I collected the information about the congressional set-aside requirement by reviewing the legislation on the SBIR program and cross-referencing with the existing SBIR Annual reports.

I will conduct a quantitative analysis to estimate the relationship between changes in agencies’ budgets and the number and type of awards made by each agency. I also investigate the relationship between changes in agencies’ budgets and the geographic distribution of awards. I will report my results using statistical and spatial visualizations that make an engaging presentation. I will connect my findings to budgeting theory (Baumgartner, Jones, & Mortensen, 2018; Jones, Zalanyi, and Erdi, 2014) and make recommendations for scholars and practitioners.

This paper has implications for public policy scholars interested in science and technology policy because it analyzes the connection between federal budgeting and agency performance, which opens the door for future inquiry into the politics of science, technology, and innovation policy.