1. Air Force SBIR/STTR Program
Economic Impact Analysis, 2015
National SBIR/STTR Conference, June 17, 2015
Moderator
Ray Friesenhahn, TechLink
Speakers
James A. Sweeney III, Air Force SBIR/STTR Program
Dr. Will Swearingen, TechLink
Brian Lewandowski, U. of Colorado Boulder

2. VIDEO

3. Purpose of Study
Examine economic outcomes and impacts from all Air Force SBIR/STTR Phase II awards completed during
$4 billion, 4,524 contracts, 1,750 companies
Quantify the Program’s overall contribution to the national economy and defense mission
Identify and highlight success stories

4. Significance of Study
First-ever study of the comprehensive economic impacts of a federal SBIR/STTR program
Enables Air Force SBIR/STTR Program to understand its impacts
On national economy
On defense mission
Policy implications for other SBIR/STTR programs

5. Timeline of Study Phases Data Gathering Data Analysis Final Report
Apr ‘14
May ‘14
Jun ‘14
Jul ‘14
Aug ‘14
Sep ‘14
Oct ‘14
Nov ‘14
Dec ‘14
Jan ‘15
Feb ‘15
Mar ‘15
Data Gathering
Data Analysis
Final Report

6. Data Gathering
Team of 4 market researchers contacted all AF SBIR Ph. II recipients with contracts completed
Basic questions:
Total sales, new products and services (including R&D) related to AF SBIR/STTR-developed technology?
Total military sales?
Other sales? (Licensing income, sales by licensees or spin-outs)
Other economic impacts? (Outside investments in company, sale of company)
Sales included follow-on R&D contracts

7. Data-Gathering, cont. High response rate: 96% of awards Reasons:
Purpose and value of study clearly communicated
Official letter from Air Force SBIR/STTR Program
Pledged confidentiality
Concise survey
Persistent researchers!

8. Commercialization Results
58% of SBIR/STTR Phase II contracts resulted in sales or other revenue
38% did not (yet) result in commercialization
4% of awards: No information (companies refused, were non-responsive, or no longer exist)

9. Sales by Category
Sales from Air Force SBIR/STTR Ph. II Contracts = $14.7 Billion

10. Sales Figures Understated
Sales figures understate the economic impact:
Some companies wouldn’t respond, and some sales information unavailable: Company defunct, acquired, corporate memory lost, records no longer exist, etc.
Licensees and spin-out companies: Generally would not provide sales information
Inflation: Dollar in 2013 worth 35.3% less than a dollar in

11. Other Economic Impacts
Independent validation of value of Air Force SBIR/STTR-developed technology…
Outside investments in company = $1.9 B
217 companies received VC/Angel funding
Acquisitions of SBIR/STTR companies = 447
Based primarily on Air Force SBIR innovations

12. Other Economic Impacts, cont.
Alternative modes of commercialization:
Technologies licensed to other companies = 180
Spin-off companies launched = 125
Technologies commercialized by spinouts = 147

13. Commercialization Success
No. of Awards and
Commercialization Success
Commercialization success inversely related to # of awards (Tiers reflect all SBIR/STTR awards, any agency)
AWARD TOTALS ARE FOR ALL SBIR AWARDS, ALL AGENCIES, NOT JUST AIR FORCE

14. Top Tier Tier 1 Companies (1-4 total SBIR/STTR awards, any agency)
4 of the “Top 5” companies in terms of sales
10 of the 23 companies with more than $100M in sales

15. SBA “Underserved States”
most Successful
SBA “underserved states” had better track record of commercialization success
SBA States: $4.1 M sales per award (28% better)
Other States: $3.2 M sales per award

16. Underserved States, cont.
5 SBA underserved states among “Top 6” performers in Air Force SBIR/STTR Program (based on average revenues per award)

17. Underserved States, cont.
Despite commercialization success, companies from SBA underserved states won far fewer SBIR awards per capita
On an equall per capita basis, underserved states would have received 2.5X more total SBIR/STTR awards
Similarly, these states would have received 4X as many Air Force Phase II awards
Changes needed in SBIR outreach and awarding?

18. VIDEO

19. Economic-Impact Analysis
Business Research Division, Leeds School of Business, University of Colorado Boulder
Analyzed data using national IMPLAN model
Examined both $4B in R&D activity and $14.7 B in sales
Determined multiplier effects on national economy
Total economic output, employment, labor income, value added

20. About IMPLAN
Well-established input-output model for studying changes in an economy
Based on Nobel Prize-winning economic research
Widely used by governments and academia to study economic impacts
Enables highly detailed analysis
Distinguishes between 536 industry sectors based on company NAICS codes
Each sector has distinct multipliers, based on industry patterns
IMPLAN updated annually with data from US government

21. Key Terms Defined
Economic Output The total gross value of production. Unlike value added, gross output includes intermediate goods and services.
Employment (job years) Equates to one job in one year
Labor Income Total compensation of employees (wages and benefits) and sole proprietors (profits)
Value Added The contribution of an industry or region to total GDP; equals gross output minus intermediate input costs

22. Key Terms Defined, cont.
Direct Effect Initial economic activity (e.g., expenditures, sales) by a company or industry
Indirect Effect The economic activity created by inter-industry purchases of materials and components in its specific supply chain
Induced Effect Economic activity derived from workers spending their earnings on goods and services in the economy

23. Economic Impact of AF SBIR/STTR Ph. II R&D Activity, 2000-2013
Economic Impacts I
Economic Impact of AF SBIR/STTR Ph. II R&D Activity,
Impact Type
Employment
Labor Income
Value Added
Output
(Job Years)
(Av. Per Year)
(In Billions)
Per Job
Direct Effect
17,978
1,284
$1.64
$91,045
$2.07
$3.99
Indirect Effect
17,806
1,272
$1.06
$59,609
$1.78
$2.85
Induced Effect
23,931
1,709
$1.15
$48,163
$2.03
$3.67
Total Effect
59,715
4,265
$3.85
$64,486
$5.88
$10.51

24. Economic Impact of Subsequent Company Sales, 2000-2013
Economic Impacts II
Economic Impact of Subsequent Company Sales,
Impact Type
Employment
Labor Income
Value Added
Output
(Job Years)
(Av. Per Year)
(In Billions)
Per Job
Direct Effect
47,359
3,383
$4.6
$96,152
$6.79
$14.69
Indirect Effect
55,312
3,951
$3.6
$64,933
$5.95
$11.60
Induced Effect
72,124
5,152
$3.5
$48,169
$6.11
$11.07
Total Effect
174,795
12,485
$11.6
$66,474
$18.85
$37.36

25. Total Economic Impacts
Total Economic Impact of AF SBIR/STTR Ph. II R&D Activity and Subsequent Company Sales,
Impact Type
Employment
Labor Income
Value Added
Output
(Job Years)
(Av. Per Year)
(In Billions)
Per Job
Direct Effect
65,337
4,667
$6.19
$94,747
$8.86
$18.68
Indirect Effect
73,118
5,223
$4.65
$63,636
$7.72
$14.44
Induced Effect
96,056
6,861
$4.63
$48,167
$8.14
$14.74
Total Effect
234,511
16,751
$15.47
$65,968
$24.73
$47.87

26. VIDEO

27. Conclusions
Air Force SBIR/STTR Program has a significant national impact
$12 economic impact for every SBIR/STTR Phase II contract $1
Has helped stimulate the US economy, created jobs
Has resulted in innovative technologies widely used in US defense mission
Technology generated has saved tens of thousands of lives and improved everyday life for the US public
Total impacts continue to grow exponentially