When I posed that question to an audience of several hundred chief executives recently, one founder jumped from his seat and shouted the answer: "S-B-I-R!" The initials stand for Small Business Innovation Research, an underpublicized government program that was one of the real success stories of the 1980s.

Under the original SBIR program, set up in 1982, federal agencies with research budgets of $100 million or more had to target 1.25% of that research money for projects in companies with fewer than 500 employees. At the time, the agencies affected by the plan were unanimous in opposing it. "Money down the sewer," was the comment of Ronald Reagan's science adviser. Ten years later almost everyone involved would agree that SBIR has proved to be as effective an attempt to leverage tax dollars as we've ever seen. In a study published by the General Accounting Office in January 1989, federal contract officers reported across the board that their SBIR projects were superior in quality to those with large corporations or universities and were more likely to lead to technical innovation and commercialization of existing technology.

Given that extraordinary success, it came as no shock that George Bush was quick to sign the legislation extending and expanding the program, which arrived on his desk shortly before the election. The new, improved SBIR program will raise the set-aside provisions from 1.25% to 2.5% over the next five years. That has set off what some SBIR experts call a "feeding frenzy" among company owners. "My phone rang continually for several days," says Ann Eskesen, founder of the Innovation Development Institute. "I finally took the phone off the hook and went to bed, only to be awakened by someone pounding on my door at 6 a.m. There was a man on my front porch. 'Good morning,' he said. 'I own a small company and would like some information about how to apply for an SBIR award.' He said he'd been trying to reach me by phone for two days. Desperate, he'd hitched a ride from Texas to Boston on a cargo plane and tracked me down at home." Eskesen prefers that other would-be SBIR applicants contact her at her office during waking hours. Her telephone number is 617-595-2920.

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