Tag Archives: SBIR

Air Force To Pump New Tech Startups With $10M Awards

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BREAKING DEFENSE

The service has been experimenting with ‘pitch days’ across the country over the last year, such as the Space Pitch Days held in San Francisco in November when the service handed out $22.5 million to 30 companies over two days. 

The first-of-its kind event in Austin, called the Air Force Pitch Bowl, will match Air Force investment with private venture capital funds on a one to two ratio

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“PENTAGON: The Air Force will roll out the final stage in its commercial startup investment strategy during the March 13-20 South By Southwest music festival, granting one or more contracts worth at least $10 million to startups with game-changing technologies, service acquisition chief Will Roper says.

So, if the Air Force investment fund, called Air Force Ventures, puts in $20 million, the private capital match would be $40 million.

AFWERX, the Air Force’s innovation unit, has one of its hubs in Austin.

“This has been a year in the making now, trying to make our investment arm, the Air Force Ventures, act like an investor, even if it’s a government entity,” Roper explained. “We don’t invest like a private investor — we don’t own equity — we’re just putting companies on contract. But for early stage companies, that contract acts a lot like an investor.”

The goal is to help steer private resources toward new technologies that will benefit both US consumers and national security to stay ahead of China’s rapid tech growth, Roper told reporters here Friday.

The Air Force wants to “catalyze the commercial market by bringing our military market to bear,” he said. “We’re going to be part of the global tech ecosystem.”

Figuring out how to harness the commercial marketplace is critical, Roper explained, because DoD dollars make up a dwindling percentage of the capital investment in US research and development. This is despite DoD’s 2021 budget request for research, development, test and evaluation (RDT&E) of $106.6 billion being “the largest in its history,” according to Pentagon budget rollout materials. The Air Force’s share is set at $37.3 billion, $10.3 billion of which is slated for Space Force programs. 

“We are 20 percent of the R&D is this country — that’s where the military is today,” Roper said. “So if we don’t start thinking of ourselves as part of a global ecosystem, looking to influence trends, investing in technologies that could be dual-use — well, 20 percent is not going to compete with China long-term, with a nationalized industrial base that can pick national winners.”

The process for interested startups to compete for funds has three steps, Roper explained, beginning with the Air Force “placing a thousand, $50K bets per year that are open.” That is, any company can put forward its ideas to the service in general instead of there being a certain program office in mind. “We’ll get you in the door,” Roper said, “we’ll provide the accelerator functions that connect you with a customer.

“Pitch days” are the second step, he said. Companies chosen to be groomed in the first round make a rapid-fire sales pitch to potential Air Force entities — such as Space and Missile Systems Center and Air Force Research Laboratory — that can provide funding, as well as to venture capitalists partnering with the Air Force.

As Breaking D broke in October, part of the new acquisition strategy is luring in private capital firms and individual investors to match Air Force funding in commercial startups as a way to to bridge the ‘valley of death’ and rapidly scale up capability.

Roper said he intends to make “maybe 300 of those awards per year,” with the research contracts ranging from $1 million to $3 million a piece and “where program dollars get matched by our investment dollars.”

The final piece of the strategy, Roper explained, is picking out the start-ups that can successfully field game-changing technologies.

“The thing that we’re working on now is the big bets, the 30 to 40 big ideas, disruptive ideas that can change our mission and hopefully change the world,” Roper said. “We’re looking for those types of companies.”

The Air Force on Oct. 16 issued its first call for firms to compete for these larger SBIR contracts under a new type of solicitation, called a “commercial solutions opening.” The call went to companies already holding Phase II Small Business Innovation Research (SBIR) awards. The winners will be announced in Austin.

If the strategy is successful, Roper said, the chosen firms will thrive and become profitable dual-use firms focused primarily on the commercial market.

“The, we’re starting to build a different kind of industry base,” Roper enthused. “So, we’ve gotta get the big bets right. Then most importantly, if you succeed in one of the big bets, then we need to put you on contract on the other side, or else the whole thing is bunk.”

2020 SBIR Road Tour

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U.S. SMALL BUSINESS ADMINISTRATION (SBA)

The SBIR Road Tour is a national outreach effort connecting entrepreneurs working on advanced technologies to the country’s largest source of early stage funding – the SBIR/STTR programs.

Also known as America’s Seed Fund, the SBIR/STTR programs provide over $3.7 billion in funding to small businesses each year in a wide variety of technology areas.

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“Each SBIR Road Tour stop, hosted by a local organization, will provide attendees with an opportunity to hear directly from the participating federal agency program managers that administer over 5,500 new awards annually and to meet one-on-one with program decision makers.”

Navy Emphasizing Fast And Productive Small Business Innovative Research

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FEDERAL NEWS NETWORK

The Navy’s small business numbers are trending upward, and it wants to keep it that way to increase the number of new ideas coming into the service. To do that it’s shortening its small business innovative research process, and is attempting to get more of those technologies into production. “

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“We’re really pushing hard on increasing the agility of our small business innovation research program (SBIR),” James Geurts, assistant Navy secretary for research, development and acquisition, told reporters Tuesday in National Harbor, Md. “We’ve reduced the requirement in terms of proposal length by 75% and we are looking at reducing the timeline to get to actual contract award by that amount.”

Geurts said to get those reductions the Navy looked at internal processes. The idea falls under the Navy’s broader NavalX initiative to make the acquisition process more agile.

“Many of our barriers are self-inflicted and culturally reinforced,” he said. “You’ve heard me talk about scraping the barnacles and really challenging ourselves to ensure any process time we have is adding value.”

The Navy’s work with SBIRs doesn’t stop at the initial contract though. SBIRs are grants for research and development, not for production, and the Navy wants results.

The service can award SBIRs, but they need a place to go to mature into an actual product sailors can use with an initial production contract. Geurts said the Navy is spending a lot of time identifying a need for a SBIR, and figuring out how to rapidly transfer a successful SBIR into a fielded program.

Obviously, not all SBIRs will make it big and some will die in the valley between research and development and actual production.

The Navy is thinking about what success means in terms of taking risk, while not wasting taxpayer funds on too many technologies that will never develop.

“Success to me looks like we are as efficient as we can be in generating ideas and evaluating ideas,” Geurts said. “It looks like getting our iteration speed up and our iteration costs down. I think we fail when we have cost imposing steps in the process that don’t add value.”

Geurts said it’s the Navy’s responsibility to sort out the parts of the process that protect the taxpayer and sailor and the parts that are duplicative and burdensome.

Geurts said failures in SBIR aren’t total failures, though.

“While the SBIR itself may or may not go forward, that doesn’t mean it didn’t add value,” he said. “It may have made a stink about a requirement in a different way. It may have challenged our way of thinking about an operational problem. SBIRs can be successful in a lot of ways, it can get a new startup familiar with how to work with the Defense Department.”

The Navy is trying to bring in more small business to shake up the status quo and bring in more ideas to the service. The Navy contends that in near-peer competition, the service will need novel technologies that give the United States the edge over China and Russia.

In 2019, the Navy beat its big goals for small business.

“Our small business rate was about 18.3% and that represents about $16 billion,” Geurts said. The Navy as a whole awarded $117 billion in contract obligations in 2019. “That’s above the goal. We had a goal of 14%. I think that’s important because we get some great innovation from our small business providers.”

DHS Needs Startups To Help With 11 Innovative Technologies

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“FEDSCOOP”

“The Department of Homeland Security’s Science and Technology Directorate is on the hunt for startups to address 11 core tech issues it is targeting in 2019.

The DHS S&T Directorate issued a request for proposals Wednesday, asking for industry solicitations to take part in its Small Business Innovation Research program for fiscal 2019.”

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“The DHS version of the SBIR program began in 2004 and offers three tiers of R&D funding for new technologies; the first two phases test scientific and technical merit and feasibility of research ideas, and provide additional R&D funding. The third tier focuses on helping bring viable solutions to market.

The solicitation calls on small business to help develop innovative solutions for DHS and its component agencies in nine key areas, as well as two others from the Countering Weapons of Mass Destruction (CWMD) SBIR Program:

  • Reach-Back Capability for Fielded Rapid DNA Systems
  • Identity, Credential, and Access Management (ICAM) On-the-Fly
  • On Body Power Module for First Responders
  • Modeling-based Design of Sensors for Chemical Detection in Complex Environment
  • Synthetic Training Data for Explosive Detection Machine Learning Algorithms
  • Cybersecurity Peer-to-Peer Knowledge/Lessons Learned Tool
  • Network Modeling for Risk Assessment
  • Blockchain Applications for Homeland Security Forensic Analytics
  • Medical Device Middleware
  • Detector Integration with Current and Emerging Networked Systems (CWMD)
  • Unmanned Aerial System Autonomous Search of Limited Area for Radiological Threats (CWMD)

Small businesses offering possible solutions in the target areas can apply for a Phase I SBIR contract, which focuses on establishing the “scientific, technical and commercial merit and feasibility of the proposed effort” as part of its research and development process.

Interested stakeholders have until Jan. 23 to submit Phase I proposals. Phase I awardees will receive $150,000 in funding over a six-month period of performance running from May to October 2019.

Any Phase I awardee is eligible to apply for Phase II contracts, which aim to produce a prototype for the solution proposed. The Phase II contract solicitation begins in November with an anticipated period of performance to start in March 2020. Phase II contracts are worth $1 million and run 24 months.”

https://www.fedscoop.com/dhs-issues-sbir-solicitation-11-new-technologies/

Air Force Innovative SBIR Approach Works For This Small Business

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Air Force - SBIR Innovationhttps://www.eastern-foundry.com

 

“FEDSCOOP”

“Federal Foundry, the digital arm of the Eastern Foundry coworking space for small federal contractors, won two Phase I Small Business Innovation Research (SBIR) grants from the Air Force.

Air Force decided to go about SBIR a little differently this time. Instead of having internal offices and commands submit their problems for outside companies to bid for work on, the service instead asked would-be grant recipients for both a problem and a potential solution.”


“The company took part in the most recent round of the government wide research and development funding program, which solicited projects earlier this summer. The Federal Foundry team will now spend the next three months validating that the Air Force indeed has a market for two products — Assembly and Hunting Party.

The requirements were simple: the solution needed to be an existing and validated technology that can meet an Air Force need with minimal or no change. It also couldn’t be something that has received an SBIR grant in the past.

“It was wide open,” [Geof] Orazem  [ co-founder of Eastern Foundry] said. So Federal Foundry decided to jump right in.

For the past year, Orazem explained, Federal Foundry has been working on two technology products for the benefit of Eastern Foundry members. One is Assembly, a teaming platform that helps member companies match contractor capacity with request for proposal requirements to create the best teams to win contracts. In the Air Force context, Orazem thinks the platform may also be able to aid in pilot retention.

“At its core, it’s about helping form the most effective team possible,” he said. Federal contractors aren’t the only ones who benefit from being part of a team that works well together.

The other product is Hunting Party — a modern way to find and evaluate agency requests for proposals (RFPs). In describing it, Orazem went straight for the analogy to one of the hallmark technologies of the modern era — the dating app.

“We all know the RFP search process is cumbersome and frankly, boring,” a blog post about the grant wins reads. “We asked ourselves ‘how can we make this more engaging?’ Tinder. Tinder was the answer. Take a highly addictive, mobile, social currency process, and apply that to RFP search, and what do you get? You’ve now gamified business development and made hunting for the best RFP a competition.”

Right now Hunting Party is an internal tool. But Federal Foundry wants to use the data it has gathered to “help the Air Force with their procurement process.” For example, Orazem said, the team thinks this product may be able to help the Air Force engage better with “nontraditional” contractors.

Over the next three months, Orazem said, the team will work on validating and improving its proposed products. It’ll also look for one or two “champions” within the Air Force who may be willing to run a free pilot of one or both of the technologies in Phase II.”

“It’s a wonderful accelerant to our plans,” Orazem said.”

https://www.fedscoop.com/eastern-foundry-team-wins-sbir-grants-boost-air-force-procurement/

 

 

 

 

 

 

GSA And SBA Partner to Offer Joint Small Business Innovative Research (SBIR) Acquisition Assistance

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“FEDERAL NEWS RADIO”

“The General Services Administration’s new pilot to use its Assisted Acquisition Services in the Federal Acquisition Service aims to connect companies with federal agency buyers.

13 agencies participate in the SBIR program and many lack a dedicated contracting shop so having AAS [will] support SBIR contracts with a dedicated area.”


“Pallabi Saboois the CEO of Harmonia Holdings Group, a small women-owned business, with revenues approaching $20 million.

Harmonia Holdings Group is working for the Marine Corps to modernize its legacy system by using a tool the company developed to automatically migrate old software code into leading-edge languages.

Saboo said Harmonia Holdings couldn’t have won the contract without the Small Business Innovation Research (SBIR) program. Harmonia Holdings has won 89 SBIR grants over the last 15 or so years.

But Saboo said her company won the Marine Corps contract and many others not because agencies are using the SBIR program like Congress intended, but despite of it.

“The best kept secret in Phase III of the SBIR program is that any agency can put millions of dollars on the contract without competition. It’s very similar to an 8(a) contract,” Saboo said in an interview with Federal News Radio. “The problem is most contracting officers have no clue how to do that. I’ve tried to sell that until I was blue in the face. I have 89 different SBIRs, but I can’t get them to use it. That is challenging.”

Instead, Harmonia Holdings is using SBIR as a kind of venture capital fund where Saboo can obtain funding for research and development and then once the tool or software is ready, offer it back to the government through other contract opportunities.

“I use SBIR technology opportunities as areas where I want to develop competencies for my company,” she said.

GSA to offer Assisted Acquisition Services

And this is why the General Services Administration’s new pilot to use its Assisted Acquisition Services in the Federal Acquisition Service aims to connect companies like Saboo’s with federal agency buyers.

“We partnered with Small Business Administration to make this pilot program happen, said Mark Lee, GSA’s assistant commissioner of the FAS Office of Policy and Compliance, during a press briefing on July 30. “We think AAS is positioned to set up a shared service across the government to help support innovative solutions throughout the marketplace and that can lead to the job creation the program is designed to bring. There is a unique opportunity to work with companies early on and bring them to a contract vehicle and get them opportunities.”

Lee said the client support centers in Region 5 and the FedSIM office will run the pilots and have dedicated support to help expand the use of companies under the SBIR program throughout the rest of the federal acquisition offerings by GSA.

Saboo said any more attention Phase III SBIR companies can receive to help commercialize their technologies, the real key is whether FAS trains its acquisition workforce to use the program to the full extent the law allows.

“Once you finish Phase III, you are in the valley of death because there is no specific need anymore,” she said. “If you find someone who is interested in your project, you need money to really expand the project to do what they want, and the customer, especially in the Defense Department, may not be able to get you money for two years because of how the budgeting process works. We, and many other companies, have never been able to use the Phase 3 contract because contracting officers don’t know how to use it and the gap between funding is too much.”

Lee said part of the reason why GSA is stepping in is to address similar problems Saboo is referring to.

He said 13 agencies participate in the SBIR program and many lack a dedicated contracting shop so having AAS support SBIR contracts with a dedicated area

SBIR participating agencies

Jeff Koses, GSA’s senior procurement executive, said AAS is offering access to the SBIR Phase III companies currently and the pilot runs through fiscal 2019.

“We will have a governance process in place to ensure we understand the rules and making most effective use of the program,” he said. “We will communicate with SBA about future possibilities, such as extending the pilot to other parts of GSA or other areas of the SBIR program. When a customer agency comes to us with authority to use a company in the SBIR program, GSA will be the acquisition arm to support that makes the connection between the agency need and industry partner.”

John Shoraka, a former SBA associate administrator for government contracting and business development and now managing director of GovContractPros, said GSA’s idea is a good one, but the agency and SBIR companies also need to keep in mind several things.

“There should be significant SBA involvement as their Office of Innovation and Investment (OII) manages the SBIR program and reports on it to Congress,” he said. “The reporting of SBIR awards is unclear, and it is also unclear how many agencies use all of their dedicated SBIR funding, and how successful the funding is. There should be a report card grading system like the small business report cards to Congress for SBIR.”

Saboo said another way to improve the SBIR program would be for agency acquisition officers and commercialization assistance programs to spread the word about how the program works consistently and persistently.

“GSA doesn’t have to do matchmaking. I can take products and create opportunities if contracting officers are open to listening and understanding what they can do with the SBIR program,” she said.”

https://federalnewsradio.com/reporters-notebook-jason-miller/2018/08/gsa-wants-to-rescue-innovations-from-the-valley-of-death/

 

 

Techniques for Small Business Product/Services Development in Government Contracting

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Image:  Getentrepreneurial.com

“SMALLTOFEDS” By Ken Larson

“INTRODUCTION

This article will suggest approaches in developing a product or service to the point where it can be marketed in the small business federal government contracting venue. Individuals usually succeed at such an endeavor by forming a company, separating it from their personal assets and then developing the company and its product(s)/service(s); even if it is only a one-person operation at the start.

There are techniques for small business to gain government participation in growing an idea into a company. Small Business Innovative Research and Technology Transfer (SBIR/STTR) programs in major federal agencies seek concepts that can be funded and developed into products the government needs. Here are some examples:

DOD SBIR/STTR Small Business Portal

National Institute of Health SBIR/STTR

Service contracting is another form of gaining entrance into the market, creating opportunities for introducing products by selling skilled labor under a government agency service contract or prime contractor teaming arrangement.

A GSA schedule affords a platform for products and services, but sales must have been achieved historically in the commercial or government markets before applying because GSA relies heavily the most recent 2-year pricing data in negotiating a schedule.

The government contracting product and services venue is competitive and requirements by federal agencies are often bundled into larger systems procurements. Therefore, it is necessary first to position a small enterprise and its product offerings before tapping the federal market for development support.

GENERAL OVERVIEW

Product entrepreneurs all face the same challenges. Those who succeed recognize they need to visualize themselves in the product development business, structuring an enterprise, generating a business plan, protecting intellectual property and then seeking industry partners and investors to bring the product to market.

In the process, copyrights, patents and royalty issues may come into play and development and distribution agreements are formed. Pricing is finalized based on cost and expense projections and competitive factors unique to the company as negotiation results are achieved with industry teaming partners, developers, manufacturers and distributors.

Financing is always a factor and can be achieved through loans or investors with a good business plan. The remainder of this article will address the basic elements of a framework within which to succeed with your product development for federal government contracting.

BUSINESS STRUCTURE

For the majority of individuals who are starting single person or no more than 2 or 3 person operations, a Limited Liability Company (LLC) registered with the state and with the federal government is recommended.

It will separate personal assets from company assets and protect them. When product or services sales begin generating revenue an LLC has many tax advantages. It can be registered as Sub Chapter ‘S’ for tax purposes and revenue and the expenses can be passed through to personal tax returns, paying no taxes as a company. The double taxation issue prevalent with many of the other types of incorporation is avoided with a Sub chapter “S” LLC. An LLC assists in limits your personal liability for debt and court judgments that may not fall in your favor.

Representing the business as a company allows pursuing financing as an enterprise. You can think of a creative name for your LLC and you can complete the articles of incorporation necessary to bring your enterprise into existence. The term, “LLC” must conclude the name of your company if you decide to form such an organization.

Instructions for registering in your state and federally with the IRS are available at your state web site and at the IRS site. You will receive tax and employer identification numbers by registering your business.

PROTECTING INTELLECTUAL PROPERTY

Patents and copyrights for your idea may ultimately protect you to a degree but the government agencies granting them have no enforcement arm so you must discover a violation yourself, retain a lawyer, bring a court proceeding against a violator and then hope to recover your costs and a reasonable settlement if you win.

The U.S. Patent System

Therefore, most of my clients use non-disclosure agreements (NDA’s) in dealing with other companies. Teaming is a practical fact of life in pursuing the larger federal government contracts.

You can download an NDA from the “References” Box Net Cube at the right margin of this site. Fill in the blanks as appropriate for a given exchange with outside individuals and companies. Before you meet to disclose details with a potential teaming company or investor, for instance, ask them to sign the document with you up front, put a serial number on it and reference the serial number and the agreement and date on any written materials you give to them.

After the meeting draft a short letter, documenting the minutes of the meeting, what was discussed and stating that the verbal disclosures and materials in the meeting are subject to the agreement and reference the agreement by number and date. Put an acknowledgment line on the letter and ask them to return a signed copy to you. This confirms their receipt of your proprietary information and their agreement to protect it in accordance with the NDA.

There are certain exceptions with regard to individuals or companies you may be dealing with on investing where you may not choose to use an NDA. Some Angel and Capital Investors are sensitive about being asked to sign them. You will have to trade their objections off against the value they represent to your company and conduct your risk analysis on a case-by-case basis.

For detail information asserting rights in technical data and software to government agencies and protecting intellectual property with other companies please see the following article:

Protecting Intellecutal Property

BUSINESS PLANNING

Visit the SBA website on business planning. There are major topics in the business planning process which, when addressed in a plan, will insure the success of your enterprise and assist you in determining and supporting the amount of funding you need. Such topics as marketing, advertising, competitor analysis and financing are covered there. You will find a presentation and examples that you can follow in improving your plan or in generating a plan if you do not have one. The link to the site is below:

Writing a Business Plan

Articles on strategic planning and developing your marketing plan are also at the “References” Box Net Cube at this site. They address evolving an operations vision for your enterprise showing its potential to present to a banker or to an investor.

Here is a site with free business plan samples:

Business Plan Samples

It may assist you in visualizing your own business growth to look at an example of how someone else addressed a given topic. I have learned from having worked with many new business owners that it is best to have you examine the material and continue your plan, contacting me with issues and questions as they occur.

THINGS TO THINK ABOUT WHILE PLANNING

Locate teaming companies to further the objective that they would market your product as part of their offerings with your company licensing and sharing in the proceeds.

A business plan and the guidance above for its generation is the road map for developing ideas, laying out how to expand the sales of your product and researching your market to do so. It will also assist in developing pricing to considering the direct costs of product development, service implementation and distribution as well as the indirect costs of the enterprise itself (operating expenses).must be considered and financed.

A negotiation position for a given product will be driven by certain strategic factors:

1. Does a developer or teaming partner have a strong but realistic incentive to actively make the product a part of the marketplace?

2. Does market research indicate the idea will have strong sales volume once it is developed and distributed?

3. How much will a prospective teaming partner or investor have to invest in the product to get it to market? Does the product require testing?

4. Which is the better deal? Is it better to receive a 7% royalty on $5,000 worth of sales or a 1% royalty on $500,000 of sales? Even though 1% does not sound too impressive, of course it’s the better choice in this example.

A negotiation position should be based on support by for the argument that a concept will experience a certain level of sales and the royalty should be based on a % of estimated end user volume sales, discounted for the investment that the developer and distributor must make to get it to market.

The royalty should be outside of the distributor cost breakdown and the end user cost breakdown. It is simply a deductive factor the manufacturer will have to introduce into their profit equation after the costs have been tabulated. They should not view royalties as a cost factor; they should view them as a share of the profit on the total estimated sales.

Chances of succeeding with a negotiation with a developer and/or distributor are increased by showing understand the prospective market for the product and drawing some comparisons between the product and other similar successful products.

Naturally there will be some give and take with the other side about estimated costs to get the product to market. Be forthright in acknowledging their investment but also support a position with some research and comparative data on the product potential.

Lastly, settle on a % of the end user sales volume based on an estimate to which is agreed with the other party and insures that the purchase agreement for royalties entitles the agreed upon % on all future sales.

FINANCING

The SBA assists prospective business owners in completing sound business plans, which can then be presented to a banker in applying for financial assistance.

In the event that 2 banking institutions deny a loan application, a candidate can apply to the SBA for a loan guarantee that may assist in achieving a loan, since it would back up the application to a bank.

Loan officers are interested in a business plan to get a view of the business future and place a value on products and services based on the market, the competition, the sales projections, costs, expenses and profit expectations. The link to the SBA loan guarantee program is below:

SBA Loans and Grants

Veterans have access to small business loans via the Patriot express program:

Patriot Express Program

ANGEL AND CAPITAL INVESTORS

Angel and private investors have two prominent characteristics:

(A) They want a high return on investment (ROI)

(B) They typically want a great deal of control of the operation.

According to the Colorado Capital Alliance, surveys of angel investors show that:

1. Angels are seeking companies with high growth potential, proven management and sufficient information about the company, its management team, and its market to be able to assess a company’s value.

2. On average, Angels expect 10 to 15 percent above of the S&P 500 return on equity.

3. Typically, Angels invest in companies seeking between $50,000 and $1,000,000.

4. Angels generally prefer to finance manufacturing or product-oriented ventures, especially in the high-tech fields.

5. On average, Angels are 47 years old, have a postgraduate degree, and management experience in an entrepreneurial venture.

An angel investor may ask for at least ten to twenty times return in just five years. For many angel investors, it’s not just about the money; they want to actively participate in developing your business. They want to act as a mentor and sometimes even to take an active role in managing the company. This often translates into the angel investor having a seat on the company Board of Directors.

Angels are also highly interested in an exit strategy from for a full return on their investment in your business. The closest thing to it is an astute business plan that calls out the specifics of potential ROI, based on sound planning and analysis and addresses the following as possible exit strategies. Remember, investors are very aware that an exit strategy cannot be guaranteed. But they can be offered more than the wishful thinking that an IPO will occur in three years.

It is always good to have a lawyer involved in complex documents or in the development of documents. This will further protect a concept. A lawyer does not necessarily have to be present during the exchanges with prospective companies, but a lawyer review and comment on documents before they are signed.

SUMMARY

This article has conveyed preliminary steps for the small business in product development for the federal marketplace.

It should be noted that much of the process discussed in this article is the same for the commercial product development and a certain amount of commercial success is usually achieved before selling products in the government contracting venue. The exception to that rule is in highly technical product pursuits where the government is funding advanced development.

To consider non-profit grants and direct government contract funding potential please see the following article:

Grants Vs, Direct Government Contracts

Once a company is formed, a product platform established and a position to market a useful product to the federal government is achieved, please see the following articles at this site in developing a marketing plan

Registering Your Business For Government Grants and Contracts

Multiple Front Marketing

Should You Consider Small Business Governement Contracting?

Small Business Teaming

With careful structuring, planning and marketing, a product with potential can find its place in federal government contracting.”

Smalltofeds – Techniques for Product Development

ABOUT THE AUTHOR:

Ken Portrait

Ken Larson has over 40 years in the Military Industrial Complex. He is a veteran of 2 tours in the US Army Vietnam. Subsequently Ken spent over 30 years in federal government program and contract management and 10 years in small business consulting. As a Micro Mentor Volunteer Counselor, he assists many small businesses with their planning and operations processes. 

Modest Small Business Innovative Research Program (SBIR) Investments Bring Big Benefits

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Blackbox Biometrics’ Blast Gauge System

“NATIONAL DEFENSE MAGAZINE”

“The Small Business Innovation Research (SBIR) program makes funding available to small companies to develop technologies to meet warfighting requirements and that can transition to a program of record and commercialization.

The Small Business Technology Transfer (STTR) program is similar to SBIR, but requires the small business to formally collaborate with a research institution.

The defense industry is big, technologically complex and highly competitive. The bar for entry can be high. For small companies who think they have something new or different to offer, vying for a chance to compete can be daunting.

The cost and risk involved with science and technology and research and development to bring a new product or service to market can exceed the ability and resources of many small businesses. So special funding is available to help them develop their ideas and prove their technologies. Meanwhile, program managers and prime contractors have incentives to bring small companies to the table.

Then-Assistant Secretary of the Navy for Research, Acquisition and Development Sean Stackley said in a 2015 memo that a competitive, healthy small business industrial base is vital to the long term success and affordability of the service. “Where affordability is paramount, a strategy that includes small business creates more affordable outcomes and promotes innovation and technical advancement,” he said.

Bob Smith, director of the Navy’s SBIR/STTR program, said in May 2016 that the service announces topics three times a year. It issued about 170 topics in its most recent cycle. From that it received about 2,800 proposals. It reviewed, evaluated and prioritized each one, and selected two proposals for each topic. One of the two is chosen to go forward as a Phase II project. The Navy looked at 252 Phase II proposals, and selected 137 Phase III awards to help those technologies transition.

“These might seem like low numbers, but if you talk to any venture capitalist, that’s a pretty good track record,” Smith said.

While SBIR can help small companies introduce and develop their new technologies, Smith said companies should not focus solely on winning these awards. “Do not make SBIR your only business model. It will not work.”

For Midé Technology Corp., a small business in Medford, Massachusetts, SBIR efforts have led to some surprising developments. From missile instrumentation to bulkhead shaft seals to smart wetsuits, Midé has seen SBIR grant activity evolve into further opportunities including the development of products for the military and commercial markets. One good idea has led to another.

“We know the cycles when the topics and solicitations come out from the different agencies and departments,” said Midé’s Vice President of Corporate Programs Rick Orlando. We have a process in our company that ties into their schedules. We look at the topics, and glean the ones where we have interest and are suited to submit a proposal.”

In general, Orlando said a high proportion of Midé’s R&D work is funded by SBIR funding. “It’s about 80 percent of our R&D expenditures, but that doesn’t count our product revenue.”

A small company in Melbourne, Florida, has used SBIR to match existing technology with a requirement to provide communications relay radios between unmanned systems and host platforms.

“We had the technology, but we had to find a way to militarize it. It had to handle the vibrations and temperatures, and be small enough to fit inside an unmanned aerial vehicle,” said Emilio Power of RSS Technology.

The RT 1944 U radio was developed by RSS using a Navy SBIR investment. Power says the RSS radio is now part of the littoral combat ship program, and the company’s equipment is on the ship and its off-board vehicles, such as the MQ-8B Fire Scout unmanned aircraft.
SBIR and STTR projects require a technology transition plan, that specifies the “fiscal and transition commitment of participants in the transition stream to develop, deliver and integrate a technology/product into an acquisition program.”  It calls for a “seminal transition event,” to test the technology in a mission environment before it can be used by the warfighter.

“Our Phase III funding is allowing us to finish our software and conduct the seminal transition event, which is to do 80 MB at 30 miles. We’re getting ready to put that radio into production,” Power said.

RSS Technology is taking advantage of a related funding mechanism, the Rapid Innovation Fund, to further validate the concept. The Navy’s RIF enables participants to develop concepts and technologies to meet operational or national security needs, and invests in ways to reduce technical risk and cost.

“The SBIR program is fantastic,” Power said. “But one has to know how to work it. There is only a certain amount of money. But that investment can make the difference between an idea and a reality.”

Powers understands the importance and value of working with big companies. But being smaller is an advantage. “A lot of the big guys have tried doing some of these projects, but it takes a long time. A small company can act and react faster.”

Janet Hughes with Robotic Research of Gaithersburg, Maryland, said her company has participated in SBIRs for a number of agencies, such as the Army, the Defense Advanced Research Projects Agency and the Department of Homeland Security.

“We’ve had success moving to Phase II and III by working closely with the TPOCs (technical points of contact),” Hughes said. “We’ve taken technologies developed through one agency’s SBIR program and transitioned them into other agencies.

“Today we use SBIR funding almost exclusively for our research and development,” added Hughes.

Rochester, New York-based BlackBox Biometrics (B3), has been selling the Blast Gauge System, a small, wearable sensor that can detect and measure overpressure from explosions such as artillery or bombs, that can cause brain injuries. According to B3’s Scott Featherman, the Blast Gauge technology was first developed with DARPA, and was adopted by the Army. Now, because of a SBIR from the Marine Corps Systems Command, BlackBox has demonstrated the effectiveness of the technology to the service.

“We’re completing our Phase II now and getting ready to enter Phase III, and begin commercial sales,” Featherman said.

Once a company wins a Phase II SBIR award, the Navy SBIR program offers a course to the company to learn how to create a business plan and navigate the complex Defense Department business structure. This is called the SBIR/STTR Transition Program (STP).

A good percentage of NAVSEA’s SBIR companies participate in the program, Smith said. “We teach them how to be a success. That’s what STP does; we foster the relationship between the Navy and the company and teach these companies how to transition their technology.”

“Our naval acquisition community considers SBIR/STTR part of the solution for delivering quality innovation to our warfighters — quickly and cost-effectively,” said Smith. “The Navy cares about our small businesses, and we care about them succeeding.”

Tad Dickenson, Raytheon’s director of the company’s SPY-6(V) Air and Missile Defense Radar program, said Raytheon has some big reasons why it embraces small business. “Small companies offer more diverse input, and help us to think like a smaller company.”

Raytheon has developed the radar with open architecture to be flexible.  “There’s nothing proprietary, and any-sized company can be involved in the program. In fact, we can insert different algorithms for the same function next to each other to see which works best. We can select one, or both. And we can easily put in new functionality, or replace something with a better version.”

Raytheon’s SBIR teammates bring important attributes to a project, Dickenson said, because they are lean and agile, and can produce results quickly at a lower cost. “Their ideas evolve very quickly, and we can leverage that innovation. That adds up to better capability, performance and affordability for the Navy.”

Dickenson said the SBIR program creates win-win-win situations that benefit the Navy, Raytheon and the small businesses. “We look to nurture these relationships. We learn a lot from our small business partners, and we think we can offer them a mentorship relationship with our experience and expertise.”

http://www.nationaldefensemagazine.org/articles/2017/4/5/modest-sbir-investments-bring-big-benefits

New Software Uses Artificial Intelligence To Sift Through Data

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“NATIONAL DEFENSE MAGAZINE”

“As the military and U.S. intelligence agencies struggle to digest mountains of information captured from social media and sensors all over the world, companies continue to create software that can more quickly and accurately help analysts isolate relevant data [and}  is able to independently scan data streams and alert users if patterns of interest are found

Via features a “semantic reasoner,” a type of artificial intelligence that applies human-like logic to find correlations among pieces of information, said Eric Little, vice president and chief scientist of Modus Operandi, a Melbourne, Florida-based software company.

“A lot of intel analysis is about pattern analysis and pattern recognition. Analysts have lots of patterns in their heads that they understand,” he said. Instead of having to manually search through data to build a case, they can codify what they are looking for into the Via software, and it will continuously run that algorithm and look for information that is similar.

“Think of it as very complex if-then statements. If someone is a member of this group, and they have some friends who are weapons dealers and they have some friends who are financiers, then they are probably linked to terrorist activities,” he said.

Most legacy big data programs can perform statistical analysis, but cannot use logic to make more sophisticated connections among multiple pieces of information, Little said. For instance, older software can map hot zones of improvised explosive device activity based on past incidents. Using Via, a user can fuse that with other intelligence relating to IED attacks, such as the probability of such an event happening on a day where there is inclement weather or whether the bombs found in a certain area comprise similar parts.

Another feature of the program is that its interfaces are modeled to look like existing social media platforms such as Facebook, Wikipedia and Yelp, he said. Users can upload photos, add comments to information, or even rate other analysts’ work.

“We have customers in the intel space who are normally fairly young, fairly inexperienced, with limited education backgrounds,” he said. “We borrow a lot from commonly used types of applications such as Facebook or Wikipedia or something like that. When you open the software, it already has somewhat of a familiar look and feel to it.”

“We are currently working with a couple of our military customers right now,” Little said. The product has not undergone field unit testing yet, but is being employed in some of Modus Operandi’s existing small business innovation research grants.”

http://www.nationaldefensemagazine.org/archive/2015/February/Pages/NewSoftwareUsesArtificialIntelligenceToSiftThroughData.aspx

Photo Credit: Thinkstock

 

Defense Program Taps Small Business Innovation

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“NATIONAL DEFENSE MAGAZINE”

“It’s not the innovation of the technology. It’s the innovative application of a technology,” said Smith. “It could even be an innovative process change. Sometimes it’s the disruption of the bureaucracy.”

“The RIF program is not about disruptive technologies, because these technologies are mature,” said Bob Smith, the Navy’s program manager for RIF.  “But it has created a disruptive way of doing business because it has accelerated the acquisition process much faster than the normal budget cycle.”

“Making the transition from research and development to acquisition by the military is hard. A Defense Department program called the Rapid Innovation Fund (RIF) is designed to make that transition easier. It allows the military to collaborate with small businesses to provide innovative technologies that can be rapidly inserted into acquisition programs.

RIF is administered by the office of the secretary of defense, by the assistant secretary of defense for research and engineering and the office of small business programs.

Initial proposals consist of a four-page white paper. If nominated by one of the services’ program executive offices and selected by the service, funding can be awarded for up to $3 million for two years to speed the insertion into a program of record. RIF doesn’t develop technologies; it validates that existing technologies will meet a requirement of a program of record.

A recent RIF success story involved a small Massachusetts company working with Brett Gardner, an engineer at the Navy’s Fleet Readiness Center Southwest in San Diego.

Gardner is involved in the maintenance and repair of aircraft, such as the Navy’s F/A-18 Hornet fighter jet. He saw an interesting product offered by Midé Technologies of Medford, Massachusetts, at the 2011 Navy Opportunity Forum that he believed could be adapted to help the Navy test aircraft.

“We sell a vibrational energy harvester for vibrating machinery that can be used to power sensors, microcontrollers, low power antennas or things like that. It has to be tuned properly to optimize how much energy you’ll get,” said Jeff Court, a company executive. “So we developed a small accelerometer to measure the vibrations. The result was the original Slam Stick.”

Gardner asked if the Slam Stick could measure G forces.  The answer was yes.
Instrumenting an aircraft is very expensive, Gardner said. “It costs hundreds of thousands of dollars, and there has to be an engineer assigned to the project. The process takes a lot of time.”

If the fleet reports unexplained incidents of cracking in the avionics bay, Gardner said Slam Stick would help determine the cause.

”If the racks are breaking, and we don’t know what’s going on, we can put some two-sided tape on the Slam Stick; program the G loading, temperature or atmospheric pressure where you want it to go off — or it could be a combination of triggers; and place it near the area where you’re concerned about. You go out and do a flight test.” It records data that can help to make a determination if excessive G loading is causing the problem.”

The RIF funding will pay for the adaptation and validation of the Slam Stick for use as aircraft test equipment.

“It’s unbelievable how little it cost to get this designed, compared to some of the systems we’ve paid for,” said Gardner. “If it takes off, the benefits and the cost savings to the taxpayer are going to be off the charts.”

“The RIF program turned something that was sort of a useful novelty item into a real engineering tool,” Gardner said.

Slam Stick is one of 16 projects executed by the Naval Air Systems Command (NAVAIR) in the inaugural year of the RIF program. The remaining projects are on track for completion by the end of fiscal 2014, with anticipated transition shortly thereafter.

“NAVAIR’s success is due to the close relationship between the chief technology officer’s science and technology portfolio managers and the program officers,” said NAVAIR’s Chief Technology Officer James Sheehy. “The selection of topics was virtually effortless because contracting support was in place and ready to award while the program managers were poised waiting to accept the RIF project.”

Many RIF technologies have their origins in the Small Business Innovation Research program. Stuart Berkowitz of Out of the Fog Research in San Francisco said his company applied for RIF to take the technology it had developed previously under the SBIR program to build an engineering design model to evaluate for the Navy’s shipboard signal exploitation equipment program.

“With the RIF funding, we can test how well our technology performs, do shock and vibe testing and test responses to high and low temperature, electromagnetic interference and all of those things you might find out on a ship.  And that’s really the benefit of RIF. We’ve answered all those questions,” Berkowitz said.

Berkowitz has this advice for companies considering applying for RIF: “You can’t just propose this cool technology and have it transition. You have to have a program of record saying, ‘We will buy it if you can prove that it actually does what you say it’s going do, and that it’s actually deployable.’”

There are no guarantees that the program will be funded for acquisition, he said. “Perseverance is one of the key parameters to transition into the military marketplace.”
Smith said the first step to obtaining RIF funding is to watch for the next broad area announcement to come out.

“That’s your next funding opportunity, but you should start having conversations with the acquisition community now. Look at the websites, talk to the CTO’s science and technology portfolio managers, talk to the program manager and see what the challenges are. You can look at the most recent BAA, because most of those challenges will still be there in the next BAA. They are enduring challenges and we don’t have the money to solve all of them.”

The white papers are relatively simple, but the evaluators are looking for convincing opportunities.

According to Robert Parker, Space and Naval Warfare Systems Command deputy CTO and assistant PEO for science and technology within PEO C4I, the RIF program has become an important way to rapidly introduce new capabilities. “It exposes us to a wide range of companies that we wouldn’t normally see, since we don’t typically have industry days on our more generic requirements. We can get an assessment of what’s mature and what provides us a pretty high value to our programs of record.”

The funding of up to $3 million, he said, “reflects the emphasis on transition for capabilities that are already pretty mature.”

For SPAWAR, the transition rate for RIF projects is 50 percent. “I expect it to go higher,” said Parker. “We’re taking less risk. The RIF white paper process allows us to cherry pick the best capabilities for our programs.”

His advice is to take advantage of the open communications period. “Every time a business calls us up, I pair them with a program office so they can have a much more detailed conversation,” said Parker. “I think companies have appreciated talking to us, even if the outcome isn’t what they hoped for.  If we tell them ‘Your technology isn’t something we can use,’ at least they know not to waste their time.”

RIF can involve something already planned for a program of record, but deliver it faster or make it better. A RIF-funded effort by Progeny Systems Corp. of Manassas, Virginia, to test the upgrade kit for the Mk-54 Mod 1 lightweight Torpedo to improve effectiveness in littoral and mine countermeasures environments, allowed the Navy to deploy that capability a year or so earlier than planned. “It was a modest investment to verify the capability,” said Smith. “The Navy was already planning to buy it, but now it can buy a better version of it. And it got enough fleet priority that it kind of moved to the front of the line.”

Janet McGovern, one of NAVAIR’s science and technology portfolio managers who is also the command’s RIF lead, emphasizes the importance of building relationships over time. “We don’t want to discourage small companies from submitting their good ideas, but I certainly recommend that they do their homework in advance. If it’s a continuation of SBIR, then there’s a relationship with the program office already in place. But I think that it’s harder for a company to break through the barrier if they haven’t done the legwork ahead of time. It’s much more advantageous if they’ve had that relationship built beforehand.”

Smith said it comes down to effective communication. “Successful RIF projects result from starting and continuing a conversation.  And it usually is a conversation about a solution, technology solution, to my problem.  That’s how you do it.  And a lot of talking is involved because it’s a complex world.”

The time and effort is worth it, for all parties involved, he added. “On the Navy side, if you get selected, your odds really skyrocket that you’re going places — because we picked you, because we want you to succeed, because we need you to succeed, we want to transition you to our program.”

http://www.nationaldefensemagazine.org/archive/2014/November/Pages/DefenseProgramTapsIntoSmallBusinessInnovation.aspx