Roundtable Recap: Small Business Innovation Research Program (SBIR)

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.

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.

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.

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