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Roundtable Recap: Small Business Innovation Research Program (SBIR)

gov IRG • November 20, 2014

SBA LEADERSHIP AND BOULDER AREA BUSINESSES COME TOGETHER AND DISCUSS THE FEDERAL GOVERNMENT’S PROGRAM TO FUND INNOVATIVE TECHNOLOGY

BUSINESS ATTENDEES:  Michael Minard: ACTA Technology, Geoff Crowley & Gerald Thompson: Astra, LLC, David Bruhwiler: RadiaSoft, Bob Levenduski: Redstone Aerospace, Doug Campbell: Solid Power Battery, LLC, Mark Yager: eCrossCulture, JD Marks: RedCanyon Engineering and Software, Stephanie Amend: Arrowhead Solutions, LLC, Andra Hargrave: Global Sales Advisors

GOVERNMENT LEADERSHIP ATTENDEES:  Matt Varilek: SBA Region VIII Administrator, Carolyn Terrell: SBA Supervisory Business Opportunity Specialist, Sharon King: Director – Boulder SBDC

Arrowhead Solutions, LLC brought together some of Boulder’s emerging, cutting-edge technology companies for a Small Business Innovation Research Program workshop. The roundtable style event took place at the Boulder Small Business Development Center. Matt Varilek and Carolyn Terrell of the SBA were on hand for this group learning experience. The two SBA representatives did more than just communicate SBA’s mission and programs, they listened to each businesses experience within the program, intending to use this valuable feedback to improve procurement processes in the future. As the SBIR and SBIC programs are both managed under the SBA’s umbrella, the roundtable proved to be an effective way for the government and industry to relay their point of view.

photo courtesy of the Boulder SBDC

STATE OVERVIEW

As a state, Colorado companies are extremely successful in the SBIR Program. The federal government is a tough customer and Colorado accounts for approximately one billion a year in contracting dollars. Surprisingly, there are no state participants in the SBIC program. The Small Business Investment Company Program (SBIC) is similar to the SBIR and STTR programs, but with this program, private investors are connected with small businesses through government assistance and financial backing. Varilek emphasized his support of the SBIC program and plans to get Colorado involved while under his watch. According to the Colorado Innovation Network (COIN), from 2010 – 2014, “Colorado ranked seventh in the nation for total number of awards and sixth for overall value of the awards.”

THE GOOD

Every business that was represented at the roundtable has received at least one SBIR Phase I and Phase II award. Most of the attending businesses have multiple awards within Phase I and Phase II, owing their current success to funding received via the SBIR program. One of the attending companies has received more than 20 Phase I awards. The technology that was represented at the table is impressive. The technological advances that these attending companies have produced is a testament to why the SBIR program– which focuses on technology research and development – is vital to our economy, society and defense.

THE BAD

Like most organizations, the government has procurement process miscues. Primarily, lack of communication and differing proposal rules and regulations within the 13 federal purchasing agencies.

The communication issues between government contractors and Project Managers (PMs) on the government’s side seem to be two-fold. First, contractors are often left without updates or responses from their PM and have no idea where their proposal “sits”. This “up in the air” experience leaves a company “spinning its wheels” for long periods of time and hinders the businesses ability to move forward in other ways, if necessary. The second communication breakdown happens when PM’s do communicate with the contractor, but provide little to no value through the communication. This happens due to the fear of crossing ethical lines and showing partiality to one contractor over another. The outcome of both issues is lack of guidance when building and submitting proposals, which leads to wasted resources on the small businesses part.

A request for the participating SBIR government agencies that procure goods and services to become more uniformed in their proposal process was also mentioned as a concern. The experience relayed by one of the attending business owners detailed the level of bureaucratic nonsense that still exists. For example, one federal agency requires a blank page to be present at the beginning of their proposals, if this page isn’t present, the proposal is immediately denied, often without an explanation. Likewise, if a blank page is present at the beginning of a proposal for a federal agency that doesn’t require it, the proposal is immediately denied.

Larger issues that would require heavy investigation and congressional changes were discussed as well. For example, SBIR businesses are finding difficulty in commercializing technology back to the federal government due to the government’s preference to meet socio-economic spending goals with set-asides. The companies that do not qualifying for anything other than “small business”, encounter a much greater challenge when attempting to sell their technology. From their experience, not being able to hold a classification of 8(a), Veteran Owned, HUBZone, et cetera, puts them at a severe disadvantage in the government marketplace.

COMMERCIALIZATION

The single biggest complaint from the SBIR funded business attendees is the difficulty to move from a Phase II award into a Phase III status. Phase III funding results from commercialization of the research and development that took place under the Phase I and II performance.

Questions from attendees:

· How do I find other federal agencies that would benefit from my technology if the agency I’m currently                 working with doesn’t have non-SBIR funding to move me to Phase III?

·   Do truly labeled “Phase III” awards exist?

·   Are some agencies better for commercialization compared to others?

·   Does having a good Project Manager increase my chances of reaching Phase III?

Moving to a Phase III award can be difficult, especially when the company’s Principal Investigators (PI) have been focused on moving technology from Phase I to II. The technical knowledge and understanding that is vital to moving through the first stages of R&D is no longer as critical a need once the emerging technology has proven its validity, technical ability and value, making it ready to commercialize. The new challenge for contractors (and their government customers) is to market the commercial viability for the technology. The commercial viability was assumed at the beginning of the project as a requirement of the Phase I and II proposals being selected for award, but executing the commercialization is challenging. This market-oriented determination should drive companies to shift course and focus on business development of the technology. A PI with strong business acumen is now needed to make accurate (as accurate as projections can be) assessments. Companies with small budgets, as most SBIR companies are, find this very difficult.

The disconnect between program goals of federal agencies and business goals of government contractors creates a barrier for business owners. The processes that led these businesses to Phase I and II awards are no longer getting traction at the most important monetary stage of the SBIR lifecycle.

BUSINESS DEVELOPMENT FOR GOVERNMENT CONTRACTORS

SBIR awardees need help selling!

The SBA and SBDC are, of course, valuable resources. But, a business development specialist that is experienced and focused on the government marketplace and government contracts is unavoidably an irreplaceable asset. Small business rarely need this type of employee on a full-time basis and the market for BD professionals within the federal contracting world has ballooned lately.

Finding and winning SBIR Phase I and Phase II contracts can be the first challenge to a small business. Getting a company’s product in front of the right government official can be a daunting task. Enlisting the help of a consulting agency that has experience on both sides of the market offers these SBIR recipients a much needed advantage. An advantage that companies like Arrowhead Solutions, LLC was built to offer.

This SBIR roundtable workshop provided both sides with valuable information and ideas. Business owners that felt stuck in the past have a better understanding of how to move forward in the future, and SBA leadership now has an updated view of “pain points” that the SBIR program officials should review.

Future roundtable events will be scheduled regarding the SBIR/STTR program, as well as other government contracting programs.  Contact us  to suggest event topics, receive notification of event information, or inquire as to how Arrowhead can assist your company with government contracts.

www.ArrowheadSolutionsllc.com

Change in Single Audit Requirement: Threshold Increase from $750,000 to $1 Million

November 5, 2024
The Single Audit threshold for organizations that receive Federal awards has been increased from $750,000 to $1 million, effective for fiscal periods starting on or after October 1, 2024. This adjustment is designed to streamline audit requirements and is intended to allow federal oversight resources to focus on larger awards. Here is a look at what this change means for organizations and how to prepare. What Is a Single Audit? A Single Audit is an audit of a non-federal entity’s financial statements and federal award expenditures, conducted to ensure that federal funds are used in compliance with relevant laws and regulations. Single Audits must adhere to Generally Accepted Auditing Standards (GAAS), Generally Accepted Government Auditing Standards (GAGAS) issued by the Comptroller General of the United States, and the Uniform Guidance. These audits assess compliance with federal award conditions and verify that organizations follow applicable financial and regulatory requirements. The Uniform Guidance, outlined in Title 2 of the Code of Federal Regulations, Part 200, establishes the standards for recipients of federal funds. It includes rules on cost principles, administrative requirements, and audit obligations to promote consistency in the management of federal awards. The New $1 Million Threshold – WHAT DOES THIS MEAN FOR BUSINESSES? Starting in fiscal years beginning on or after October 1, 2024, only organizations with federal expenditures of $1 million or more in a single fiscal year will be required to undergo a Single Audit. This threshold increase is intended to lessen the audit burden for entities with smaller awards and allocate audit resources toward higher-dollar programs. This change may benefit various organizations, including universities, non-profits, healthcare providers, and smaller government entities, that receive federal funding but typically fall below the $1 million expenditure mark. Key Points to Consider 1. Reduced Audit Burden : Organizations with federal awards under $1 million will no longer need to undergo a Single Audit, which may reduce administrative expenses and allow staff to focus more on their core programs. 2. Focused Oversight : With a higher threshold, federal audit efforts can concentrate on larger awards, where potential compliance risks may be greater. 3. Compliance Responsibility : Even if a Single Audit is not required, entities must still comply with federal requirements for award expenditures and conditions. Internal audits and controls remain essential for ensuring compliance.  4. Preparing for the Change : Organizations with federal expenditures that may vary across fiscal years should monitor their spending closely to determine when a Single Audit is needed. Resources for Navigating Single Audit Requirements While the threshold has increased, maintaining compliance with federal standards remains critical. The following resources provide additional information on Single Audits and compliance under Uniform Guidance: - Council on Governmental Relations (COGR): 2024 Uniform Guidance Readiness www.cogr.edu/sites/default/files/UG%20Readiness%202024_5th%20Look_Final%20Draft_9.17.24.pdf - U.S. Department of Health & Human Services: Office of Inspector General - Single Audit FAQs oig.hhs.gov/compliance/single-audits/frequently-asked-questions-faqs/single-audits-faqs/ The increase in the Single Audit threshold is likely to reduce administrative demands for many organizations. However, maintaining sound internal controls for managing and reporting federal funds remains essential. Preparing now for these changes will help organizations transition smoothly and stay compliant with federal requirements. Consulting with audit professionals or compliance advisors is recommended to ensure internal processes align with the latest federal guidelines. About govIRG govIRG is the government contract specialist with deep expertise across CFO Services, Contracts Management, Accounting, Accounting System Implementations, and Human Resources. Our mission is to provide government contractors with peace of mind by simplifying compliance and increasing business value. With a dedicated team focused on the unique needs of government contractors, govIRG delivers tailored solutions that streamline processes, ensure regulatory compliance, and foster business growth. We are the audit professionals you need. If you have any questions, please contact us.

Overview of Provisional Billing Rates

By Chuck Anderson and Associates at govIRG • October 4, 2024
Government contractors with cost-reimbursable contracts are required to submit provisional billing rates (PBRs) annually. While this may seem like a tedious compliance requirement, it’s actually an exercise that all companies should perform in some form. The insights gained not only help with billing on cost-reimbursable contracts but also offer a deeper understanding of a company’s finances. Developing PBRs is essentially a budgeting exercise that provides indirect rates representing the company’s break-even point. These rates are then used for invoicing on cost-reimbursable contracts in the following year. There are various ways to determine these rates, but the key requirement is that the process be well-documented and the data organized in a clear, intuitive format. Before starting the budgeting process, it’s crucial to ensure your Chart of Accounts (COA) is structured to categorize costs by “objective.” Typically, this structure will divide your COA into sections for recording costs such as Direct, Fringe, Overhead, G&A, and Unallowable. With this setup, you can easily identify and present the necessary details for calculating and submitting your PBRs. The budgeting process itself will vary based on the size, structure, and complexity of your business. The goal is to balance the time and cost of developing the budget with the accuracy of the results. govIRG can help you find the “sweet spot” to deliver an accurate forecast with the right level of effort. Our team can support this process at whatever level is appropriate for your company. Whether you need simple calculations and presentation or a deep dive into the details, we have the expertise to help you efficiently and accurately prepare your annual PBR.  Government contractors operate in a world where compliance is key. While developing PBRs may seem like a compliance obstacle, it’s actually a great opportunity to improve your company’s management. govIRG’s comprehensive approach to compliance management helps contractors avoid cash flow issues, stay compliant with government regulations, and ultimately increase the value of their business.

What is SBIR/STTR?

By Kevin Hoskins • August 23, 2024
SBIR , or Small Business Innovation Research , and STTR , or Small Business Technology Transfer , are government-funded programs designed to engage small businesses in research and development efforts across the United States. These programs aim to boost the commercialization of federally funded research, enhance national investment, and foster technological innovation. The difference between SBIR and STTR The SBIR program is a three-phase award system that offers qualified small businesses the opportunity to propose innovative solutions that address the federal government’s specific research and development needs. The three phases are as follows: Phase I focuses on creating a proof of concept for the innovation; Phase II involves continuing research and development efforts; and Phase III is dedicated to pursuing commercialization in the private sector. STTR is intended to promote technology transfer by facilitating cooperative research and development between small businesses and research institutions. The key distinction from SBIR is that STTR requires the small business to formally partner with a research institution. At the time you apply for a SBIR you might also be eligible for “TABA (Technical and Business Assistance)” funds that is in addition to the SBIR funding to help you with your IP (Intellectual Property), Accounting System setup, and other things. You might also be eligible for R&D (Research & Development) Credits when you win an SBIR. GovIRG is committed to helping businesses thrive by simplifying compliance and increasing their business value. Our goal is to help businesses understand the available options and resources that can set them on the path to success. Some of this article references information found from SBIR.gov and U.S. Department of Education.
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