As you may have heard, NASA announced recently that it would be making 140 SBIR Phase II awards to 127 small business–10 of whom were 3D printing companies. You might be asking yourself “what is the SBIR/STTR program?”
That’s as good a reason as any to talk about the federal government’s efforts to incentivize innovation, especially if it comes from small businesses. It’s only natural that Uncle Sam would be interested in the newest and most promising technology. It accomplishes this goal mostly through the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs.
Let’s talk about them.
The SBIR and STTR programs are three-stage programs aimed to take an innovative product or idea from concept all the way to production. The process begins generally with the federal government explaining that it has identified a problem or goal and would like to hear innovative solutions from companies. However, it can also begin with a company approaching an agency and asking for a grant to develop a project.
One of my favorite SBIR/STTR projects had to do with exploration of the atmosphere of Venus or Saturn’s moon Titan. The government was looking for a device that would collect data while suspended in the atmosphere. Solutions included a balloon and a gilder (the details are available to read about in this GAO protest).
The phases of the programs are straightforward. Phase I is concept and development and can be funded anywhere from $50,000 to over a quarter of a million. (More is available with permission from the SBA.) It should last between six to 12 months. What the government is looking for through Phase I is an innovative idea to solve a problem that is theoretically workable. Sorry, gang. No cold fusion or time machines.
If Phase I is successful, Phase II is prototyping. It is a two-year process that can be funded up to $1.73 million without seeking permission. By the way, these funding caps are inflation adjusted every year.
Phase III is commercialization, otherwise known as selling the product, which is up to the contractor and receives no funding. But it’s not unusual for Phase III to involve selling the new product to the funding agency as part of a follow on contract.
The federal government spends a minimum of $3.2 billion through the SBIR program and $450 million through the STTR program every year in both contracts and grants.
In order to take part in the SBIR or STTR program, a company must be a small business (obviously). It must be organized for profit, majority owned and operated by an American. These programs have helpfully set a clear line as to what it means to be a small business: less than 500 employees. The work meanwhile, must be U.S.-based work, and it must be focused on research and development.
I know what you’re thinking, you’re thinking “you said these are separate programs, but they sound exactly the same.” Not so. There are key differences, mostly having to do with the STTR program’s requirement to partner with a non-profit research institution. The SBIR program has more of a commercial bent to it. In SBIR you can team with other contractors, subcontract a significant amount of the work to large businesses (up to 33% in Phase I and 50% in Phase II). But in the STTR program, 40% of the research and development must be performed by the small business and 30% by the partnering research institution. And there has to be an intellectual property agreement between the two hence the “technology transfer” part.
Various federal agencies participate in these programs, the largest by far being the Department of Defense. Both programs are overseen by the SBA, which provides information about awards and opportunities here.
As noted above, SBIR and STTR projects often come up as contracting opportunities through the procurement process that we all know and love, which means they have to operate under certain rules and the decisions can be protested. That happens, for example, when a company believes in a product but the agency does not award it Phase II funding.
If you’re a technology-forward business with eyes on working for the government, the SBIR/STTR programs could be for you.
If you have questions about the programs, feel free to contact me.