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FOR IMMEDIATE RELEASE
Physical Sciences, Inc. lauds GAO review of leading recipients of SBIR awards

ANDOVER, Mass., April 1, 2024 — Physical Sciences, Inc., a leading technology company, commends the Government Accountability Office for a thorough and carefully considered assessment of recipients of multiple awards under the Small Business Innovation Research and Small Business technology Transfer (SBIR/STTR) programs.

The oversight report, Small Business Research Programs: Increased Performance Standards
Likely Affect Few Businesses Receiving Multiple Awards, was mandated by the SBIR and
STTR Extension Act of 2022. It evaluated the performance of recipients that received 50 or more Phase II awards to develop prototypes or demonstrate other advancements between fiscal years 2011 and 2020.

PSI was among 10 companies interviewed by GAO. The report’s main conclusions reflect the company’s long experience executing SBIR awards for the Departments of Defense, Energy, Homeland Security, and other participating federal agencies. They also correspond with PSI’s recent public observations, in Defense News, National Defense, and in a public briefing for congressional staff hosted by Rep. Seth Moulton (D-MA).

“We are very pleased that the report captured the ‘combinatorial innovation’ approaches used by companies like ours that integrate SBIR technologies to address multiple applications and serve as the system innovators to the larger system integrators,” PSI President and CEO Bill Marinelli stated.

Among GAO’s findings:
– SBIR-derived technologies for mission-oriented agencies such as the Department of Defense have a lower adoption rate due to their specialty applications, longer timelines for development, and the changing needs of sponsoring agencies.

– The higher rates of competitive SBIR awards to multi-award winners at DoD are in large measure due to their dedicated testing, training, contracting, IT, and business processes, which spread the cost of the investments over multiple programs.

– Multi-award winners are regularly selected to research and develop technologies that meet specific agency or warfighter needs without wider applications, which limits their potential to be commercialized and attract private investment compared to other awardees.

– The number of patents and commercialization rates by multi-award winners often do not present a comprehensive view of outcomes, due to the acquisition of their innovations by larger businesses, the transition of knowledge to other programs, and principal investigators who often apply their SBIR discoveries to other businesses or industries.

– There are no specific barriers to entry in the SBIR/STTR programs for other small businesses, which GAO found to have similar Phase II award rates as multi-award winners, and
multi-award winners do not crowd out other businesses by any accepted measure of market concentration.

– The ability of most multi-award winners to meet the enhanced participation metrics included in the recent legislation that reauthorized SBIR/STTR programs indicates the intent of the program is being met.

Overall, the GAO review emphasizes the critical role played by small innovators that the federal government has repeatedly turned to for help in solving difficult technological challenges. And it underscores that multi-award winners are not crowding out other applicants.

Marinelli concluded: “The report’s findings regarding the lack of program barriers to small business entry is supported by other publicly available data that show that companies in underserved states submit far fewer proposals, even while having higher award rates. We hope this report ends the debate about multi-award winners and that the program can be permanently authorized so companies like ours can invest in these important technologies for the future.”

Physical Sciences, Inc., develops electro-optical/infrared sensing systems and other technologies for the defense, homeland security, medical and energy sectors.