Economic Impact Analysis 2015 Moderator Ray Friesenhahn TechLink Speakers James A Sweeney III Air Force SBIRSTTR Program Dr Will Swearingen TechLink Brian Lewandowski U of Colorado Boulder ID: 691022
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Air Force SBIR/STTR ProgramEconomic Impact Analysis, 2015
ModeratorRay Friesenhahn, TechLinkSpeakersJames A. Sweeney III, Air Force SBIR/STTR ProgramDr. Will Swearingen, TechLinkBrian Lewandowski, U. of Colorado Boulder
National SBIR/STTR Conference, June 17, 2015Slide2
VIDEOSlide3
Purpose of StudyExamine economic outcomes and impacts from all Air Force SBIR/STTR Phase II awards completed during 2000-2013$4 billion, 4,524 contracts, 1,750 companiesQuantify the Program’s overall
contribution to the national economy and defense missionIdentify and highlight success storiesSlide4
Significance of StudyFirst-ever study of the comprehensive economic impacts of a federal SBIR/STTR programEnables Air Force SBIR/STTR Program to understand its impacts On national economy
On defense missionPolicy implications for other SBIR/STTR programsSlide5
Timeline of Study
Phases
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 ReportSlide6
Data GatheringTeam of 4 market researchers contacted all AF SBIR Ph. II recipients with contracts completed 2000-2013Basic 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)Slide7
Data-Gathering, cont.High response rate: 96% of awardsReasons:
Purpose and value of study clearly communicatedOfficial letter from Air Force SBIR/STTR ProgramPledged confidentialityConcise surveyPersistent researchers!Slide8
Commercialization Results58% 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) Slide9
Sales by CategorySales from Air Force SBIR/STTR Ph. II Contracts = $14.7 BillionSlide10
Sales Figures UnderstatedSales 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 2000Slide11
Other Economic ImpactsIndependent 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 = 447Based primarily on Air Force SBIR innovations Slide12
Other Economic Impacts, cont.Alternative modes of commercialization:Technologies licensed to other companies = 180Spin-off companies launched
= 125Technologies commercialized by spinouts = 147 Slide13
Commercialization success inversely related to # of awards (Tiers reflect all SBIR/STTR awards, any agency) No. of Awards and Commercialization SuccessSlide14
Top TierTier 1 Companies (1-4 total SBIR/STTR awards, any agency)4 of the “Top 5” companies in terms of sales10 of the 23 companies with more than $100M in salesSlide15
SBA “Underserved States” most SuccessfulSBA “underserved states” had better track record of commercialization successSBA States: $4.1 M sales per award (28% better)Other States: $3.2 M sales per awardSlide16
Underserved States, cont.5 SBA underserved states among “Top 6” performers in Air Force SBIR/STTR Program (based on average revenues per award)Slide17
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 awardsSimilarly, these states would have received 4X as many Air Force Phase II awards
Changes needed in SBIR outreach and awarding?Slide18
VIDEOSlide19
Economic-Impact AnalysisBusiness Research Division, Leeds School of Business, University of Colorado BoulderAnalyzed data using national IMPLAN modelExamined both $4B in R&D activity and $14.7 B in salesDetermined multiplier effects on national economyTotal economic output, employment, labor income, value addedSlide20
About IMPLANWell-established input-output model for studying changes in an economyBased on Nobel Prize-winning economic researchWidely used by governments and academia to study economic impactsEnables highly detailed analysisDistinguishes between 536 industry sectors based on company NAICS codesEach sector has distinct multipliers, based on industry patterns
IMPLAN updated annually with data from US governmentSlide21
Key Terms DefinedEconomic OutputThe 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 IncomeTotal 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 costsSlide22
Key Terms Defined, cont.Direct EffectInitial economic activity (e.g., expenditures, sales) by a company or industryIndirect EffectThe economic activity created by inter-industry purchases of materials and components in its specific supply chain
Induced EffectEconomic activity derived from workers spending their earnings on goods and services in the economySlide23
Economic Impacts IEconomic Impact of AF SBIR/STTR Ph. II R&D Activity, 2000-2013
Impact TypeEmploymentEmploymentLabor IncomeLabor IncomeValue AddedOutput
(Job Years)
(Av. Per Year)
(In Billions)
Per Job
(In Billions)
(In Billions)
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
$3.67Total Effect59,7154,265$3.85$64,486$5.88$10.51Slide24
Economic Impacts IIEconomic Impact of Subsequent Company Sales, 2000-2013
Impact TypeEmploymentEmploymentLabor IncomeLabor IncomeValue AddedOutput
(Job Years)
(Av.
Per Year)
(In Billions)
Per Job
(In Billions)
(In Billions)
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$11.07Total Effect174,79512,485$11.6$66,474$18.85$37.36Slide25
Total Economic ImpactsImpact Type
EmploymentEmploymentLabor IncomeLabor IncomeValue AddedOutput(Job Years)
(Av. Per Year)
(In Billions)
Per Job
(In Billions)
(In Billions)
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 Effect234,51116,751$15.47$65,968$24.73$47.87Total Economic Impact of AF SBIR/STTR Ph. II R&D Activity and Subsequent Company Sales, 2000-2013Slide26
VIDEOSlide27
ConclusionsAir Force SBIR/STTR Program has a significant national impact$12 economic impact for every SBIR/STTR Phase II contract $1Has helped stimulate the US economy, created jobsHas resulted in innovative technologies widely used in
US defense missionTechnology generated has saved tens of thousands of lives and improved everyday life for the US publicTotal impacts continue to grow exponentially