The Commercialization Assistance Pilot Program (CAPP): Challenges and Limited Implementation
The Small Business Innovation Research (SBIR) program, established in 1982, has been a crucial tool for small businesses to develop and commercialize innovative technologies with federal funding. However, many of these businesses struggle to transition from research and development (R&D) to successful commercialization. To bridge this gap, the Commercialization Assistance Pilot Program (CAPP) was enacted in 2018 as part of the SBIR framework. CAPP allows small businesses that have already received two Phase II SBIR awards to apply for additional funding, helping them to continue R&D efforts and move closer to commercializing their technologies. Despite the potential benefits of CAPP, a recent report from the Government Accountability Office (GAO) highlights significant challenges in the program's implementation, with most federal agencies failing to utilize it.
One of the key takeaways from the report is that only the Department of Energy’s (DOE) Office of Science has implemented CAPP since its inception. Between 2019 and 2024, the DOE made a total of seven CAPP awards, with a focus on technologies such as nanomaterials and semiconductors. This small number of awards is concerning, considering the vast scope of the SBIR program across multiple agencies. In fiscal year 2023 alone, federal agencies made over 5,000 SBIR awards valued at nearly $4 billion, yet CAPP—a program specifically designed to help small businesses commercialize their innovations—has been largely overlooked.
The GAO report identifies several reasons why most SBIR-participating agencies have not implemented CAPP. A significant factor is that many agencies did not have small businesses in their SBIR programs that were eligible for a CAPP award. In addition, some agencies, such as the Department of Health and Human Services and NASA, already had similar programs in place, which allowed them to request exceptions from implementing CAPP. However, other agencies that could have implemented CAPP failed to do so, citing challenges such as small SBIR budgets and insufficient numbers of eligible applicants.
The report also notes that the Small Business Administration (SBA), which oversees the SBIR program, has provided limited oversight and reporting on the implementation of CAPP. While the SBA initially provided guidance to agencies on the program’s requirements, it did not consistently monitor or report on the program after 2020. This lack of oversight has contributed to the low adoption rate of CAPP across agencies. The GAO recommends that if the program is reauthorized, the SBA should actively collect and report information on CAPP implementation to ensure greater transparency and accountability.
CAPP’s purpose is to extend the funding and support for small businesses that are developing complex, high-tech products, which often require longer R&D timelines to reach commercialization. In interviews conducted by the GAO, several CAPP award recipients expressed that the program had been instrumental in helping them make initial sales and attract further investment. In some cases, the additional funding enabled businesses to scale up production and hire new employees. For example, one company credited CAPP with helping them to increase production to a level where they could sustain their operations without federal funding.
Despite these positive outcomes, the full impact of CAPP remains uncertain due to the limited number of awards and the relatively short time since the program’s launch. Many businesses that received CAPP awards are still in the process of commercializing their technologies, and the GAO emphasizes that it may take several years to see the full results of the program. Furthermore, the data on commercialization outcomes is incomplete, as only a few of the CAPP awardees have reported their results to the SBA.
For businesses that applied for, but did not receive, CAPP awards, the consequences have been mixed. Some unsuccessful applicants were able to continue their commercialization efforts through other means, such as private investment or additional federal funding. However, others reported that the lack of a CAPP award had delayed their progress. Several businesses noted that they would have been able to advance more quickly with the additional funding and that the absence of CAPP had stalled key R&D activities.
The GAO report also highlights some of the challenges that small businesses face in applying for CAPP awards. One of the most significant barriers is the requirement to secure matching funds from a third-party investor. While some businesses have found that this requirement helps them to attract new investment and demonstrate the commercial potential of their technology, others have struggled to meet this condition. Small businesses working on niche technologies or those with long development timelines may have difficulty finding investors willing to provide matching funds, making it harder for them to apply for CAPP.
Another challenge identified in the report is the timing of CAPP applications. Businesses must apply for CAPP funding before their second Phase II award is complete, which can be difficult for companies that are still working on R&D goals from their previous awards. Some businesses reported that they were unable to fully demonstrate the commercial potential of their technology because their R&D was still ongoing at the time of application.
In light of these challenges, the GAO makes several recommendations for improving CAPP. The most important of these is that Congress should clarify which agencies are required to implement the program if it is reauthorized. Currently, many agencies do not offer second Phase II awards, which limits the pool of eligible applicants for CAPP. By clarifying the requirements and ensuring that all eligible agencies implement the program, Congress could help to expand the reach of CAPP and increase its effectiveness.
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