cheaper way to paint the white lines down highways."

Thus far, over 9,000 proposals for phase I Contracts have been submitted to 10 of the 11 federal agencies participating in this first round to the government-wide SBIR programme. To date, the Department of Energy is the only agency that has announced which projects it intends to fund, having selected 105 of the 1,700 proposals it received for phase I awards. Overall, the SBA estimates between 700 to 800 phase I contracts will be let by federal agencies this year.

"Frankly, I secretly expected that half of the proposals received the first year would be chaff," admitted Templeman. "But the agencies are telling us this is not the case, maybe only 10% were obvious chaff when they came in, which is very good for even an established programme, much less one in its first year.

"As a result, I think we are being successful in reaching the right people, the scientist or engineer who has a streak of entrepreneurism. Someone not satisfied to work in a large environment, be it either corporate or govern ment, but believes enough in an idea to risk going into business so he can develop and sell it in the marketplace."

Evidently, there are more of these hi-tech entrepreneurs than even the SBA thought. Over the past year the SBA has been compiling a master list of individuals and firms who have expressed an interest in participating in the SBIR programme and receiving the so-called "presoliciation announcements" that detail which agencies will be accepting proposals in specific areas. The SBA originally estimated this master list would contain no more than 10,000 names. It now totals 40,000 names, and is still growing.

One way the SBA is trying to ensure SBIR attracts the "right people" is by limiting the size of the proposals that can be submitted, a unique practice almost unheard of in government contracting. According to Templeman: "We have restricted the length of an SBIR proposal for phase I funding to 25 pages which also includes any charts, background materials or appendixes the firm wants to include. We did this because the average small business we are trying to reach is not a proposal writing expert, nor does it have a lot of money to spend on preparing these proposals. I've learned after years in the federal government that if this type of thing is not controlled quickly, before you know it, it could cost a firm $50,000 to prepare a proposal for a $50,000 grant.

Just because a firm wins a phase I SBIR contract, does not mean it will be a commercial success. "My own hope when we started the NSF pilot in 1977 was that the best half of the phase I winners would get phase II awards; the best half of the phase IIs would receive the follow-on funding they needed from the private sector. Then the best half of these would eventually be successful in the marketplace. Thus far, we are meeting these goals," says Tibbets.

One thing the National Science Foundation has demonstrated is that once a firm receives a SBIR award its chances of attracting additional private funding are greatly enhanced. Over the past six years, NSF has made available $16 million in

grants to help develop SBIR firms. In turn, these same firms have attracted $60 million in venture capital.

It's possible that one, or more, of the small hi-tech firms participating in the SBIR program. me will create a whole new industry-be the next Xerox, for example. "It would be very nice if they all ended up becoming giant companies," admitted Templeman. However, "if we can help a number of very small companies become medium sized corporations then the SBIR programme will have made a big difference and more than paid for itself."

Helping mother nature

The world's largest sapphire, eight inches in diameter, was not mined from the ground, but, "growned" in a furnace by Crystal Systems, Inc, a small, hi-tech company which is expanding the frontiers of laser technology.

"In the late 1960s and early 70s I was working as a researcher for the US Army doing experiments on the properties of metals and ceramics when I came up for a technique for growing single crystals larger and more perfect than any other technology around at the time," says Fred Schmid, 47, founder and president of Crystal Systems.

"I had already finished the course work for a

PhD at the Massachusetts Institute of Technology, but rather than going into the academic world, started up Crystal Systems, instead. I felt I knew more about this particular technology than anyone else."

In 1979, Crystal Systems won a grant from the National Science Foundation's pilot SBIR programme to grow rubies earmarked for use in laser resarch. "The ruby is not a very good material for use in lasers, " notes Schmid. "What we were really trying to do was demonstrate that our process was for real. For example, the best laser quality cobalt crystal found in nature is 4 of an inch in diameter and costs up to $600,000. We can now grow such a crystal in two weeks which is three inches in diameter for one third to one half the cost.

"The most encouraging thing about the SBIR, and one of the main reasons we applied, is that you know your idea is going to be looked at seriously. Before, you could bring an idea to the attention of a government agency but, being a small business, the first reaction was often that you didn't have the resources to do what you said you could do. With the SBIR programme we were at least assured our proposal was not going to be automatically written off."

Bio-chips in the sky

"Once it is perfected, this technology will make
the silicon computer chip look like a vacuum
tube in comparison, "says James McAlear,
President of EMV Associates Inc, of Rockville,
Maryland, who is attempting to create a whole
new generation of computer technology based
on the principles of genetics engineering.

A Harvard PhD in biophysics, McAlear, 59, has received three phase I and one phase II SBIR grants. "What the SBIR programme did was give us creditability among our peers in the scientific community, "notes McAlear. "There have been some significant breakthroughs recently in the area of bio-electronics showing that this concept can actually work, where before it was only an idea. And our firm is the

only one who has proposed a generally accepted way to organise these devices.

"The bio-chip will be like a central nervous system, with enzymes replacing the analogs and switches used in conventional computer chips. Theoretically, a bio-chip could be one to ten thousand times smaller than those in use today. Or, looking at it another way, hold one billion times more information in the same amount of space as we presently can."

Observes McAlear: "Our company is still in its basic research phase and, to an extent, the bio-chip is "pie-in-the-sky" as it will be at least five years before we have a commercial product ready for the market. Even so, we were able to go public this year.

The billion dollar robots in California

"Five to 10 years ago, no one knew what role robots would play in factory production. Today, it is no longer a question. By the end of this decade the market for robots is going to be so big the numbers start to get a little silly. "I am talking about a market not in the hundreds of millions of dollars, but the hundreds of billions of dollars, worldwide," said Ron Murphy, vice president of finance for Machine Intelligence Corporation, one of the emerging leaders in the robotics field.

Located in Sunnyvale, California, the heart of the so-called Silicon Valley, Machine Intelligence had one employee when it applied to the National Science Foundation in 1979 for a SBIR grant to study the development of so-called artificial intelligence in robots. "We had put together a company geared to the use of robots for the high speed inspection of such things as bottle caps, printed circuit boards etc., as they came off the assembly line. But we saw the need for a third generation robot, one that could actually 'see', so we formed a joint partnership with a Japanese firm to develop a computer controlled intelligent robot which could be married with our own vision technology. "Murphy recounted. "Now, instead of having a robot that simply goes through its programmed functions by rote, you have a machine that actually sees the stage in front of it, automatically adjusting its movements to compensate for unscheduled changes in the production process.

"The advantage being you can now go from a costly, highly structured automated production system to a flexible system based on less expensive conveyer lines, for example, because the different parts of whatever 'widget' you are making don't have to appear in exactly the same order, in the same spot and at the same time they would, otherwise.

It took Machine Intelligence two and a half years to perfect its technology, aided by a $5.5 million private venture capital investment. The company estimates sales of $2 million this year, raising to $9 million in 1984.

"Its not unreasonable to say we would not be where we are today without the SBIR programme. Its possible someone might have put up the money we needed to do the basic research without the SBIR grant. But realistically our technology was still not proven at that stage. SBIR allowed us to finish the feasibility study, bring together a team, and then go to the venture capital community with an idea that had been "blessed". As a result, we can point to some major breakthroughs.

LETTER FROM THE PUBLISHER

The Big Business lobby in Britain is enormously powerful. Too powerful in many ways. Too often it exerts an undue influence on Whitehall and Westminster policy-making.

Almost always it is at the expense of the innovative, independent business sector where so many of this nation's inventive skills lie latent.

Margaret Thatcher has catalysed a new entrepreneurial spirit but rhetoric rather than action seems to rule in the big matter of encouraging small businesses.

The Business Expansion Scheme and the Loan Guarantee Scheme are helpful and so too are the other government aid schemes even though these now total more than 100. Yet still there is no structure or machinery for encouraging innovation on a large scale. Nor is there anything in prospect. Research and development programmes are the domain of the large companies that can afford them.

But as we point out elsewhere in this issue (America's Precious Project leads the World, page 28), smaller firms in the United States on average produce nearly three times as many innovations per million employees than large companies. Small firms implement those innovations faster than large companies. However, big business is nearly three times more likely than small companies to receive government aid for innovation.

Between 1955 and 1979 high technology industries accounted for 75% of the growth in jobs in the manufacturing sector in the US.

Recognising this and the fact that small hi-tech firms create most of the new ideas which will result in tomorrow's jobs the US Government introduced the Sinall Business Innovation Act last year.

Officials have been astounded by the success of the scheme which is designed to provide "seed" money for good ideas which would otherwise be lost.

It is probably the most imaginative scheme devised and introduced by any government to help those companies at the cutting edge of the economy. It is more adventurous than the proposed European Innovation loan scheme.

It is a model that the British Government cannot afford to ignore because it transcends the fragmentation which has hitherto marked Britain's attempts to liberate our inventive skills. Mrs Thatcher should ensure that Britain follows the American example.

Ray Спита