In the USA there are 15 synchrotron and free-electron-laser facilities, funded primarily by the Department of Energy (DOE); and 52 similar facilities in other countries. Synchrotrons and free-electron lasers are extremely bright sources of x-ray and vacuum-ultraviolet (VUV) radiation. These intense beams are used to study the binding among atoms and many other topics that relate to the energy problem, human health and materials in general. The fundamental knowledge gained from these studies has a direct impact on the US economy. Currently, DOE facilities and others are inhibited in their research by the high cost and long delays in obtaining key components required by the bright x-ray and VUV experiments. These components are called diffraction gratings; they enable researchers to separate the beams according to wavelength, and to study in fine detail how materials, when they are irradiated, modify the wavelengths of radiation that impinges on them, giving clues to internal binding mechanisms. Diffraction gratings are made by lithographic techniques capable of sub-micron resolution. At present there are no US sources of such gratings. The objective of this SBIR Fast-Track proposal is to improve the precision of a relatively new form of lithography, invented in the USA, called Zone-Plate-Array Lithography (ZPAL), and to demonstrate that gratings and diffractive-focusing optics make by the ZPAL technique are superior in precision and performance to what is available today commercially from overseas. The ZPAL technology will significantly lower the cost of diffraction grating and shorten the delivery time from months to days. In Phase I, grating placement errors will be measured via phase-shifting interferometry and error sources such as stage rotation minimized. The effect of scan direction on microscopic errors in gratings will be studied as well as the effect of optical polarization on the lithography. In Phase II, corrections of phase errors in gratings will be made via hardware improvements and by correction in software for systematic, repeatable errors. Environmental effects that have a detrimental effect on grating fidelity will be studied and improvements made to the ZPAL instrument and the temperature control. In addition to so-called linear-phase gratings, variable-line-space (VLS) gratings will be fabricated and tested to evaluate the degree to which the improvements made to the ZPAL instrumentation have improved the quality of the gratings it produces. The instrument will be modified to handle the thick substrates that gratings for use in synchrotrons require. The improved grating technology that will result from this SBIR will significantly enhance basic research at DOE facilities and elsewhere, stimulate scientific innovation and aid the economy. The company submitting this proposal envisages that, as a result of this SBIR, it can capture the major share of a highly profitable international market.