Accelerating Defense Innovation Act of 2019

#DOD #SBIR #SDMAC

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The DOD’s Small Business Innovation Research (SBIR) program currently releases solicitations in several categories. Many of these solicitations will never be granted to small businesses. The challenge is in the extremely slow and challenging communication with the DOD. Let me explain...

“Imagine you had to write a dissertation paper, like in college. Now imagine that you had to obtain the instructions for this document from a cryptic website and the format was not in APA or MLA, it was in a specific type of "government contracting" language, with an exact format for each solicitation and each organization. Now imagine you have to turn this dissertation into the DMV. To top it off, you won't hear a response till three months later. Oh, and by the way, the SBIR was written by an office that already had a contractor in mind, so you won’t get the grant either way. Why bother?”

This is a very grim, yet realistic, perspective from the spectacle of an early start-up. The truth is, SBIRs are an incredible tool that have reshaped the way the DOD does business in many positive ways. The problem, as this article eludes to, is that venture capital majority ownership excludes eligibility. That’s irrelevant if you are a pre-funding start-up. Here’s the catch: you have to have a commercially viable company or the SBIR granting organization will not likely offer you the grant. How do you have a commercially viable company without venture capital? A start-up could maintain a majority stake and take on less funding. The problem with this method is that typically several funding round will happen before the company is as substantial as the DOD is requiring.

On paper, the DOD does not require the company to be “substantial,” but let’s run through the costs. A small tech company will need to have a contracts officer just to manage the wording of the proposal. It will need to have an accountant put together the project estimates and correct accounting percentages. It will need to have a product that is ‘developed’ enough to catch the interest of the soliciting organization, which could take years. There is a significant learning curve to be able to understand the dynamics of the DOD SBIR process, meaning more time. Don’t forget that your team will likely need to have a PhD or a significant Principal Investigator to report the findings of the initial “feasibility assessment.” All of this amounts to a big defense contractor being better suited to the DOD SBIR process.

There are SBIR training programs; some for free. It is possible to get a SBIR grant as a small tech start-up, however, there needs to be significant reform in order to make this a viable business path. The Accelerating Defense Innovation Act of 2019 is a step in the right direction. To really get technology grants awarded to smaller tech companies, the DOD will need to take on the onus of the communication management to make the process easier for small companies. The focus should be on the essence of the tech and not the proposal writing capabilities of the young start-up.

We are actively submitting DOD SBIR proposals as a pre-funding tech start-up. Reach out to chat anytime. -Robert rob@existech.us or (619) 432-7576