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SBIR at NASA (2016)

Chapter: Appendix E: Case Studies

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Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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Appendix E

Case Studies

To complement its review of program data, the committee commissioned case studies of 11 companies that received Phase II Small Business Innovation Research (SBIR) and or Small Business Technology Transfer (STTR) awards from the National Aeronautics and Space Administration (NASA), undertaken in 2009-2011. Case studies were an important source of data for this study, in conjunction with other sources such as agency data, the survey, interviews with agency staff and other experts, and workshops on selected topics. The impact of SBIR/STTR funding is complex and often multifaceted, and although these other data sources provide important insights, case studies allow for an understanding of the narrative and history of recipient firms—in essence, providing context for the data collected elsewhere.

The committee studied a wide range of companies (see Box E-1). They varied in size from fewer than 10 to more than 500 employees and included firms owned by women and minorities. They operated in a wide range of technical disciplines and industrial sectors. Some firms focused solely on military applications, and others focused on commercialization either through the Department of Defense (DoD) or through the private sector. Overall, this portfolio sought to capture many of the types of companies that participate in the SBIR program. Given the multiple variables at play, the case studies are not presented as any kind of quantitative record, and only a limited number of case studies were completed as part of this study. Rather, they provide qualitative evidence about the individual companies selected, and although they are not intended to be statistically representative of NASA SBIR award winners or their award outcomes, they are, within the limited resources available, as representative as possible of the different components of the awardee population. The featured companies have verified the case studies presented in this appendix and have permitted their use and identification.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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ADVANCED COOLING TECHNOLOGIES, INC.

Based on interviews with Jon Zuo, CEO, October 19, 2009 and William Anderson, Chief Engineer, September 24, 2015. Lancaster, PA

Advanced Cooling Technologies, Inc. (ACT) is a privately held company located in Lancaster, Pennsylvania. ACT develops and manufactures heat management products and performs contract research for both the government and the private sectors. In addition to developing one-off custom designs for individual customers, it has had success converting such projects into low volume (production runs of 1-10,000 units), highly engineered products. These products have been used in applications ranging from spacecraft thermal control, to cooling of high performance electronics, LEDs and surgical instruments, to energy recovery in HVAC systems, at temperatures ranging from -150°C to 1,100°C. One of the most successful products has been the company’s constant conductance heat pipes for aerospace applications.

ACT was founded by Jon Zuo (CEO) and Scott Garner (Vice President for Defense and Aerospace Products) in January 2003 after Zuo and Garner left Thermacore, another company located in the Lancaster, Pennsylvania area and

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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also focused on heat management technologies. ACT was initially supported by research and development (R&D) contracts, including some from Thermacore. However, even during this period, Zuo and Garner intended for ACT to develop products and related services enabled by this R&D, and not simply to perform contract R&D.

The company has been growing profitably since its inception and currently has 95 employees. Continuing growth is expected based on an emphasis on low-volume, high-margin applications (see Business Model below). In August 2015, ACT expanded its manufacturing facilities to support the production of its energy recovery products for improving the efficiency of building HVAC systems.1 The SBIR program has played a pivotal role in the development of new technologies and products, with the company having received 28 SBIR/STTR grants worth $5.6 million in 2013 and 2014 alone.

ACT Technologies

From an initial focus on heat pipe technologies, ACT has expanded into new technologies of heat management, especially thermal storage systems, modelling, and coatings.

Heat Pipes

Heat pipes are designed to move heat2. They consist of a vacuum tight tube containing a working fluid and a wick. The fluid evaporates under heat. The production of vapor at the evaporator end of a tube holding a vacuum creates a pressure differential between the evaporator and the condenser at the other end of the tube. The vapor flows towards the cooler section where the heat dissipates. The working fluid condenses and is recycled back to the evaporator section using capillary action along the wick. Because of the continuous condensation of the vapor, the pressure differential from one end of the tube to other is maintained.

As heat management systems, heat pipes have obvious benefits. They take no power, are low cost, are resistant to both vibration and freezing, and lastly will operate indefinitely as long as there is a temperature gradient between the evaporator and condenser sections.

This basic structure can be customized in several ways.

  • Annular and planar configurations can be built where tubes are not optimal.
  • Loop heat pipes and loop thermosyphons move the heat considerable distances, using additional mechanisms such as gravity feeds and

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1 ACT Announces Facility Expansion, http://www.1-act.com/news/act-announces-facilityexpansion/.

2 Heat Pipe Resources, http://www.1-act.com/advanced-technologies/heat-pipes/.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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distant condensers. Loop heat pipes are currently used for thermal control in spacecraft.

  • The heat pipe loop (HPL) uses an evaporator like a heat pipe and a distant condenser like a loop heat pipe.

Water is typically used at operating temperatures between 20oC and 270oC. Beyond these temperatures, heat pipes use various working fluids including methanol, ammonia, ethane, nitrogen, and hydrogen. ACT heat pipes operate at temperatures ranging from -150oC to 1,100oC. Similarly, the materials used in building the pipes vary based on performance requirements.

Pumped Liquid Cooling Technologies

Pumped liquid cooling is a standard approach for cooling systems as varied as automotive engines, avionics, and nuclear reactors. Typically, pumped

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
×

liquid cooling systems consist of a pump, a cold plate, a heat exchanger/sink and liquid lines. The pump circulates the fluid in the loop, which picks up the heat at the heat exchanger and dissipates it at the cold plate. High perfomance pumped cooling systems require high pressure to move the working liquid, sometimes on the order of hundreds of pounds per square inch (psi). Consequently, it is difficult to design systems that require minimal maintenance over long periods. Using techniques like osciliating liquid cooling and jet impingement, ACT is working to realize high performance cooling without the necessity for high pressure. Potential applications include power electronics and computer microprocessors.

Thermal Storage

Phase Change Materials (PCMs) store thermal energy by properly managing the phase change from solid to liquid. Because the latent heat of melting / freezing is at least 1-2 orders of magnitude larger than the energy stored as specific heat, PCMs are an effective means of thermal management. By smoothing the temperature observed in systems during non-continuous, pulsed operation, heat removal systems can be designed for the average heat load rather than the peak load. Because of the dynamic, time-dependent thermal properties of a PCM heat exchanger, advanced modeling capabilities and experience in thermal design are essential. ACT has designed PCM based cooling systems, ranging from milli-watts to kilo-watts for applications including energy weapons, pulsed electronics, missiles, and battery cooling.

Modeling

ACT engineers apply modeling both to develop products and as a service provided to customers. They use industry best-in-class finite element, CAD, fluid dynamics, and thermal analysis tools. In addition to commercial software tools, ACT has developed in-house models to evaluate the performance of specific applications related to the company’s areas of technological and commercial strength such as heat pipes, heat exchangers, two-phase pumped loops, phase separation, and thermal storage.

ACT now performs advanced modeling as a service to its government and commercial customers3. ACT’s Advanced Modeling Research focuses on developing a fundamental understanding of physical and chemical processes at the micron and sub-micron scale. These bottom-up multi-scale simulation approaches can link atomic-scale analyses to product scale performance. ACT has developed modeling competency in areas such as corrosion resistance, ab-

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3 Advanced Computational Methods and Modeling, http://www.1-act.com/advancedtechnologies/advanced-modeling/.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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initial modeling of ablation chemistry, and Boltzmann-transport based modeling of thermal and electrical behavior in single transistors.

Coatings

In addition to conducting thermal R&D, ACT has recently begun investigating the effect of different types of coatings on heat exchanger and cold plate performance. The earliest work developed a coating to prevent erosion and corrosion of the microchannels in copper heat exchangers used to cool laser diodes.4 Additional research on surface coatings has increased the boiling heat transfer coefficient of heat exchangers in two phase systems by providing nucleation sites, and improved condensation heat transfer at cold plates by creating non-wetting condensation surfaces.

ACT has used SBIR awards to fund research in these advanced technology areas.

Business Model

The market for heat pipe technologies divides into higher volume standardized products and small-scale customized batch production design for individual customers. For example, heat pipes are an important component in cooling multicore processors in modern personal computers. They are produced in the millions for less than a dollar each. ACT does not participate in this end of the market. Instead, ACT focuses on highly engineered, low volume products. The company started in 2003 with passive heat pipe technology before diversifying later into related thermal control markets.

ACT’s founders believed that high-volume heat pipe production would eventually migrate overseas, a belief which proved largely accurate. They did not believe that U.S.-based production could remain competitive in a commodity business. Bill Anderson observed that most of the contemporary high volume business in personal computers is served by plants in Taiwan and China.

Focusing on lower volume production required ACT to work hard to acquire more customers. ACT engages in a wide range of activities to attract customers, including the following:

  • trade show appearances (and booths)
  • scientific papers
  • extensive use of the Internet, including ACT’s deep website
  • extensive efforts to attract publicity through traditional means (press releases, etc.)

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4 Advanced Coatings, http://www.1-act.com/advanced-coatings/.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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Dr. Zuo believes that ACT’s most successful marketing tool is its own high-quality customer service. He noted that ACT works hard to ensure that everyone at the company focuses on customer satisfaction. ACT performs regular customer service surveys and has data that strongly supports Dr. Zuo’s assertion that word of mouth from satisfied customers is ACT’s “biggest and cheapest” source for new customers.

Funding and Customers

ACT is now primarily funded by its own customer base. It has more than 300 current customers, divided between R&D contracts and commercial sales, and between civilian and military or prime contractor customers. ACT’s government and nonprofit customer list includes the following organizations (not a complete list):

  • Air Force Research Laboratory (AFRL)
  • Army Tank Automotive & Armament Command (TACOM)
  • Defense Advanced Research Projects Agency (DARPA)
  • Department of Energy (DoE)
  • Florida International University
  • Lawrence Livermore National Laboratory (LLNL)
  • Max-Planck Institute
  • Missile Defense Agency (MDA)
  • NASA Glenn Research Center (GRC)
  • NASA Goddard Space Flight Center (GSFC)
  • NASA Jet Propulsion Laboratory (JPL)
  • NASA Johnson Space Center (JSC)
  • NASA Marshall Space Flight Center (MSFC)
  • National Institute of Standards and Technology (NIST)
  • National Physical Laboratory of United Kingdom
  • National Research Council of Canada
  • National Science Foundation (NSF)
  • Naval Air Warfare Center (NAWC)
  • Naval Research Laboratory (NRL)
  • Naval Surface Warfare Center (NSWC)
  • Office of Naval Research (ONR)
  • University of California, Los Angeles
  • University of California, Riverside
  • University of Canterbury (New Zealand)
  • University of Nevada Reno
  • University of Utah
Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
×

Along with the successful run of SBIR awards (see SBIR section below), ACT has been successful attracting other research contracts. For example, in late 2003, a critical component of early funding for ACT was a $1.2 million contract from Glenn Research Center at NASA. Most recently, in May, 2015 ACT and its partners received a $3.2 million contract from ARPA-E at DoE to investigate efficient and scalable dry-cooling technologies for thermoelectric power plants. Coupled with an earlier $1.1 million from SBIR to study the coating technologies, ACT seems well positioned to build strong technical capabilities in this area.5

ACT has also had success working with prime contractors. For example, in July, 2015, ACT announced that it had received a contract from Lockheed Martin to help develop, test and ultimately field the Long Range Anti-Ship Missile (LRASM), a weapons program funded by DARPA, the U.S. Navy, and the U.S. Air Force. ACT is responsible for replacing the active pumped cooling system used to cool the targeting electronics with its passive thermal management technology. By reducing system complexity, ACT expects to achieve higher reliability.6

Knowledge Effects

ACT owns five patents as assignee,7 and Dr. Zuo is named as inventor in 14 patents in total. The company also supports the publication of scientific and technical peer-reviewed papers as a part of its mission. The company website lists 123 journal and conference papers.

In 2001 ACT received the Tibbetts Award from the SBA and the Small Business Technology Council (SBTC) for excellence in technology research and commercialization. The citation recognized the company’s valuable contributions in developing the Constant Conductance Heat Pipe products and technology.

SBIR

Dr. Zuo said that SBIR funding was “very important to the company’s success during the early years, and continues to be important today.” That importance is reflected in the pattern of SBIR awards.

ACT won its first Phase I award from DoD in 2003 and three more from DoD and NASA in 2004. Since then, it has been remarkably successful, winning 109 SBIR/STTR awards between 2003 and 2015 for total of $31.29M. (See Table E-1.)

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5 “ACT Awarded $4.3M to Develop Technologies for Dry Cooling,” (June 8, 2015), http://www.1act.com/news/act-awarded-4-3m-to-develop-technologies-for-dry-cooling/.

6 “ACT Receives Lockheed Martin Contract to Support Missile Development, (July 20, 2015), http://www.1-act.com/news/lockheed-martin-missile-development/.

7 ACT Patents, http://www.1-act.com/resources/act-patents/.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
×

TABLE E-1 SBIR/STTR Awards to Advanced Cooling Technologies by Program and Phase

Program/Phase Number of Awards Funding (Dollars)

SBIR Phase I

69

7,414,414

SBIR Phase II

29

20,360,130

STTR Phase I

6

569,254

STTR Phase II

5

2,944,022

Total 109 31,287,820

SOURCE: https://www.sbir.gov/sbirsearch/firm/all. Accessed September 23, 2015.

Most (90 percent) of the funding that ACT has received through the SBIR/STTR programs has been SBIR awards. ACT has depended on four principal sources for its SBIR/STTR funding, receiving 42 percent of its funding from DoD, 31 percent from NASA, 23 percent from DoE, and 4 percent from NSF.

SBIR awards have had particularly significant effects on the company’s development. Four in particular have resulted in the development of products that contribute substantially to the company’s revenue stream. In 2015, approximately 2/3 of ACT’s revenues were derived from product as opposed to research contracts. Of the product stream, Bill Anderson noted that about half is based on SBIR funded research.

ACT’s core competence in heat pipes for spacecraft thermal control was developed in collaboration with NASA using SBIR funding. NASA was looking for a second source for thermal control in space craft. ACT received an SBIR contract, which generated very promising results. The company then undertook a market survey. In light of the results, ACT added self-funding to accelerate development. The funding was used to develop and launch products aimed at addressing needs expressed by other thermal control customers.8 Getting ISO 9001 and AS-9100 quality certifications was also critical to successful market penetration. The resulting Constant and Variable Conductance Heat Pipe (CCHP and VCHP9) products have generated millions of dollars in

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8 NASA Phase I “Heat Pipe Heat Exchangers with Double Isolation Layers for Prevention of Interpath Leakage”; DoD Phase I “VCHP Heat Exchanger for Passive Thermal Management of a Fuel Cell Reforming Process.”

9 According to ACT, “Variable conductance heat pipes (VCHPs) are used to achieve temperature control. This is accomplished by blocking a fraction of the condenser with a small amount of non-condensable gas. When the heat load or the condenser temperature increases, the heat pipe temperature tends to rise. The increased vapor pressure compresses the non-condensable gas, exposing more condenser area and as a result increases the heat pipe conductance. The opposite happens when the heat load or the condenser temperature decreases. The variation of the conductance keeps the heat pipe operating temperature nearly constant over a wide range of heat inputs and condenser thermal environments.”

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
×

revenue for ACT, for thermal control of both government and commercial satellites.10

ACT has continued to follow this pattern of technically successful Phase I and Phase II projects followed by market evaluation with self-funding where analysis shows potential for market acceptance. A cooling system for high performance LEDs (such as theatre or automotive lights) originated in a DoE SBIR project. Likewise, ACT’s PCM heat sinks began life as a DoD Missile Defense Agency SBIR project to investigate passive heat management systems that could reduce the active cooling requirements of high energy beam weapons. PCMs are ACT’s strongest selling product line currently with applications from thermal energy storage, to solar power plants, to electronics cooling.

Dr. Anderson also cautioned against reading too much into ACT’s success with commercializing SBIR technologies. Although ACT has had notable successes productizing SBIR research, considering the number of technically successful Phase II awards that it has performed, the company has had a larger number of programs that stopped after the Phase II, without successful commercialization. On the other hand, this is true for of any early stage R&D organization. (Table E-2 reports ACT’s conversion rates from SBIR Phase I to Phase II for different agencies. ACT has a good record of success, especially for NASA and DoE.)

Dr. Anderson also noted that depending on the agency, the commercialization problem is slightly different. As mission driven agencies, both DoD and NASA want ACT to solve a problem that they have. In a sense, you begin with one customer. Because DoE topics are driven by national energy strategy, they aren’t usually the end customers and ACT has to come up with the complete commercialization pathway.

TABLE E-2 SBIR/STTR Awards to Advanced Cooling Technologies by Phase and Source (1979-2014)

Agency Number of Phase I Awards Phase I Funding (Dollars) Number of Phase II Awards Phase II Funding (Dollars) Total Funding By Agency (Dollars) Agency Funding as Percent of Total Phase I to Phase II Conversion Rate (Percent)
DoE 12 1,449,567 6 5,748,747 7,198,314 23 50
NSF 3 449,569 2 935,294 1,384,863 4 67
NASA 22 2,161,832 12 7,398,511 9,560,343 31 55
DoD 38 3,922,700 14 9,221,600 13,144,300 42 37
Total 75 7,983,668 34 23,304,152 31,287,820 100 45

SOURCE: https://www.sbir.gov/sbirsearch/firm/all. Accessed October 8, 2015.

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10 Constant Conductance Heat Pipes, http://www.1-act.com/products/constant-conductance-heatpipes/.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
×

ACT expects its NASA SBIR awards to result in the take-up of ACT technology in NASA projects. However, Dr. Zuo noted that most NASA SBIR awards focused on projects still far from maturity and that the initial $1.2 million non-SBIR award from GRC, although technically successful, focused on a project that NASA subsequently cancelled. Dr. Anderson elaborated, noting that although a NASA or DoD award usually provides ACT with its first customer, successful commercialization requires identification of additional customers. This can be a challenge given the performance requirements of NASA/DoD designs and the cost constraints faced in commercial markets.

STTR

ACT has also received STTR funding. It constitutes about 10 percent of the $31.29 million received by ACT from SBIR/STTR programs. In general, STTR allows ACT to access university expertise more easily. In recent years, ACT has done quite a lot of modeling work in which university professors have deep expertise. Dr. Anderson cautioned that ACT also hires university consultants on SBIR contracts. The real advantage with STTR is if we need a lot of university expertise. He observed, “With SBIR, you can allocate about 1/3 of the budget to consultants. With overhead, that means only 25 percent of the budget becomes useful work done by the faculty member. If we need more than that, we would apply to STTR.“

The biggest challenge with STTR is interacting with a large bureaucracy like a university. It takes time to get things approved. Also, Anderson noted, “Sometimes it’s difficult to get the full attention and productivity of the faculty member, but that’s unusual and besides it can happen with employees too.” Also, negotiating IP sharing is an additional problem that you typically don’t have with SBIR. Some agencies require that this be done prior to the proposal, some not. He preferred not.

Improving SBIR and STTR

Both Dr. Zuo and Dr. Anderson emphasized that agencies must continue to manage SBIR as a research rather than a development program and expressed concern that, while commercialization is important, the agencies are funding an insufficient number of high-risk, high-reward projects. Dr. Zuo noted that not every funded project can be a winner and that it is important for the agencies to continue to encourage experimental research with the program.

Dr. Zuo was strongly opposed to an increased award size if there is no additional funding to pay for the increase. He argued that, in funding early-stage research, the agencies should hedge their bets to ensure that research funding is not overly concentrated, because it is not possible to determine in advance which projects will be successful in the end. He was convinced that a reduction in the number of awards—even if each receives increased funding—will result

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
×

in reduced outcomes. He also believed that a concentration of resources would favor certain companies. Dr. Anderson agreed.

Dr. Anderson observed that not all agencies treat STTR quite the same. For example, the DoE allows an applicant to make the same application to both an STTR and SBIR program. Another agency does not require the firm to have an IP agreement in place with the university at the time of application. He thought both innovations improved the utility of STTR applications.

CONTINUUM DYNAMICS INC. (CDI)

Based on interviews with Dr. Alan Bilanin, Founder and CEO / Dr. Todd R. Quackenbush, Senior Associate on October 20, 2009, and Dr. Todd R. Quackenbush, Senior Associate on October 8, 2015

Continuum Dynamics is a privately held company located in Ewing, New Jersey. Founded in 1979 by Dr. Alan Bilanin, it currently has about 20 employees, with a strong emphasis on Ph.D. researchers. The company has worked for a wide range of clients including a number of Federal agencies, aerospace companies, nuclear power companies, and pharmaceutical companies. CDI’s initial technical focus was in aerospace research, modeling rotorcraft blade performance and aircraft aerodynamics. Over the past thirty years, however, CDI has also built a substantial business providing testing and analysis services to the nuclear power industry.

Many of the underlying physical mechanisms of the fluid phenomena encountered by propeller blades and power turbines are similar, and a wide range of solution methods developed for one set of problems is transferrable to the other domain. For example, as part of SBIR efforts for the U.S. Army and NASA, CDI had developed algorithms to model coupled fluid structural systems. Unexpectedly, this solution proved to be of major value for the nuclear power industry. CDI teamed with General Electric to deliver testing and design services based on this technology to power utilities. As this component of CDI’s business has grown, CDI has developed relationships with other equipment vendors.

Currently, CDI is receiving Phase III support from the Department of the Navy to commercialize fully a flight simulation module developed under SBIR. The company is working closely with program officers in Navy and the flight simulation software vendors to improve realism of simulated flight by integrating CDI’s core fluid flow technologies into the vendor software, and it is expected that this simulation technology will be transitioned to Navy fleet trainers within the next year.

During its early years (1982-1999), CDI was located on an outlying campus of Princeton University, where it could access facilities and research staff. Several of the current staff members were drawn from the university.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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Today, because of the growth of the company and the advent of more distributed research models facilitated by the Internet, locational issues are less significant.

Technology and Products

Based on its work in the aerospace sector, CDI has developed a portfolio of tools for advanced modeling and simulation of air vehicles, as well as novel flow control actuation systems using smart materials. CDI has applied these tools broadly in the analysis of flow patterns for fixed-wing aircraft, unmanned vehicles, and ship airwakes.

Many of these tools are the result of SBIR efforts funded by NASA, in particular projects that were sponsored by the Subsonic Rotary Wing and Supersonics elements of the Fundamental Aeronautics Program through NASA/Ames, NASA/Glenn, and NASA/Langley Research Centers. Also, in work with NASA and DoD to develop these tools, CDI has developed close working relations with large aerospace and defense contractors such as Sikorsky Aircraft, Lockheed Martin, Boeing, CAE, and General Electric Aircraft Engines.

CHARM

One key element of CDI’s aerospace modeling capabilities is CHARM. CDI’s Comprehensive Hierarchical Aeromechanics Rotorcraft Model (CHARM) is software that models the complete aerodynamics and dynamics of rotorcraft in general flight conditions, resulting from more than 25 years of continuous development of rotorcraft modeling technologies at CDI. According to CDI, CHARM incorporates “landmark technical achievements from a variety of NASA, DoD, and company-sponsored initiatives,”11 including several SBIR awards from NASA in the 1980s and 90s for helicopter wake modeling played a central role.

CHARM supports advanced rotorcraft aerodynamic design, as well as research on emerging rotorcraft technologies. According to CDI’s website, CHARM was designed to address a range of needs in advanced aerospace design. They include:

  • Detailed prediction of rotor power and propulsive force as a function of thrust and flight condition
  • Detailed prediction of rotor aerodynamic loads, blade motion and vibration
  • Vortex wake modeling
  • Time-accurate modeling of rotor/wake/airframe interact ional aerodynamics

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11 CDI, Comprehensive Hierarchical Aeromechanics Rotorcraft Model, http://www.continuumdynamics.com/pr-charm.html. Accessed November 6, 2009.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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  • Coupled multiple rotor/multiple lifting surface solutions for realistic airframes
  • Coaxial and ducted rotor unmanned aerial vehicle (UAV) design
  • Simultaneous evolution of the aerodynamic and structural dynamic solutions to model rotorcraft response to pilot inputs
  • Real-time free wake modeling for simulation applications
  • Modeling of rotorcraft systems within wind tunnels and in ground effect
  • Prediction of thickness and loading noise, including BVI noise, using an automated interface with NASA/Langley’s WOPWOP
  • Prediction of rotor wash in operations near the ground and ships to model multiple aircraft interactions and brownout.”12

CDI has also developed a number of software packages complementary to CHARM, as shown in Table E-3.

VorTran-M

A more recent element of CDI’s portfolio of software is the VorTran-M wake module is a “first-principles Eulerian vorticity transport wake module”13 that provides enhanced ability to capture the “temporal and spatial structure of the rotor wake, when coupled”14 to a wide range of Computation Fluid

TABLE E-3: Continuum Dynamics, Inc., Software Portfolio

Software Description Drawn from Continuum Dynamics Website

EHPIC-HERO

“Rotor blade design software [uses] a unique “influence coefficient” method for fast, accurate performance optimization.”

MAST

The Multiple Aircraft Simulation Tool (MAST) is a standalone, modular tool that simulates “real-time flight simulation of multiple aircraft with wake interactions.”

VLA

The Visual Landing Aid (VLA) is PC-based “software for the design of shipboard lighting systems to [facilitate] rotorcraft landings at sea.”

LDTRAN

“LDTRAN analysis software for predicting the entrainment and transport of hazardous biological/chemical agents by rotorwash.”

VorTran-M

VorTran-M is a “first-principles Eulerian vorticity transport wake module that captures the true temporal and spatial structure of the rotor wake when coupled to Eulerian and Lagrangian [computational fluid dynamics (CFD)] tools.”

BROWNOUT

BROWNOUT is a “standalone/modular software that provides a physics-based model of visual ‘brownout’ rendered directly in flight simulation and analysis software when rotorcraft land in sandy/dusty conditions.”

SOURCE: Continuum Dynamics, Inc., http://continuum-dynamics.com/solution-aertc.html?

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12 Continuum Dynamics, Inc., CHARM, http://www.continuum-dynamics.com/pr-charm.html. Accessed September 1, 2015.

13 Continuum Dynamics, Inc., http://continuum-dynamics.com/solution-ae-rtc.html?

14 Continuum Dynamics, Inc., website, http://continuum-dynamics.com/solution-ae-rtc.html?

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
×

Dynamics (CFD) tools (both Eulerian and Lagrangian). The wake module can also be used to define structures in space and time and model the fluid flow past those structures. As such, VorTran-M is a critical part of the CDI’s ability to model the effect of the physical environment on aircraft. Using this module, CDI researchers can model interactional flows, such as those encountered in ground effect, formation flight, flights into “urban canyons,” terminal area operations, and ship airwake-rotorcraft wake interactions.

Business Model

Over the past five years, CDI’s business model has not qualitatively changed, though the balance of its revenue streams has shifted significantly It remains a 20 person company that gets revenues from three sources: 1) SBIR R&D, 2) Software (and other technology) licensing, and 3) Services. Since the company’s founding, design and analysis of aircraft and rotorcraft has been the core of both CDI’s business and its research activities in the aerospace and defense sector. Additionally, CDI has also long had a strong presence in supporting the nuclear power generation industry with critical niche capabilities in fluid-structure interaction. The company developed software based on its SBIR R&D activities, and its services have mixed contract R&D with consulting work applying CDI-developed software tools. Modeling work on coupled fluid structural systems that CDI performed for the Army and NASA has also proved useful to the nuclear power industry, as noted above.

Since 2010, the relative size of CDI’s revenue streams within aerospace and defense work has shifted quite substantially. Over the past 5 years, the proportion of SBIR research (Phase I, II) has dropped. With new customers and new applications, CDI now receives a larger fraction of its revenue from services and software licensing activities. Whereas 50 percent of revenues derived from SBIR contracts in 2010, at present, software licensing and services (mostly contracts applying CDI tools) now comprise 65 percent of revenues. Also, the different business cycles of the two major sectors of CDI’s customer base have continued to provide CDI with generally stable revenue streams. (See Table E-4.)

TABLE E-4 Continuum Dynamics, Inc., Revenue Mix (2010-2015)

Percent of Company Revenue, by Year

2010

2015

SBIR R&D

50

35

Software Licensing

30

20

Services

20

45

SOURCE: Interviews with CDI Personnel.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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The shift to services might have been even more pronounced had more formal sales and marketing capabilities been developed. To date, CDI has been successful selling services based on its research reputation, exploiting a very strong R&D brand. A major opportunity for CDI going forward is to develop a more disciplined approach to their sales and marketing work. As Dr. Quackenbush observed, “We are still in the process of figuring out an efficient process of determining to whom we should be selling.”

SBIR (Phase I and II)

NASA SBIR award (see Table E-5) have played a pivotal role in supporting both CDI and, indirectly, rotorcraft manufacturing in the United States. According to Dr. Bilanin, all U.S. manufacturers (and most of those overseas) now utilize CDI rotorcraft software in the design and analysis of helicopters. CDI has been highly proficient in winning SBIR/STTR awards, garnering a total of 196 awards worth $46.60 million as of 2015, though only a small part of CDI’s funding stream comes from STTR (less than 3 percent).

CDI has received SBIR awards from a number of agencies, including the Department of Agriculture (USDA), the Department of Defense (DoD), the Department of Energy (DoE), the Department of Health and Human Services (HHS), NASA, the Environmental Protection Agency (EPA), and the National Science Foundation (NSF). Awards from NASA and DoD accounted for just over 80 percent of CDI’s Phase II awards. (See Table E-6.) CDI maintains a solid record in converting Phase I awards to Phase II, including at DoD and NASA.

Dr. Bilanin also observed that CDI had built a longstanding and durable relationship with some NASA Centers, in some cases reaching back more than 30 years. The company’s collaborative work with NASA/Ames has, for example, resulted in numerous benefits not only for the company—including a steady flow of work and access to NASA expertise and facilities—but also for NASA, where CDI has consistently delivered modeling tools needed to solve some of NASA’s most pressing problems. In addition, the Center has helped link CDI to industry groups and companies that use the NASA/Ames facilities. This linkage was especially helpful during CDI’s early years.

TABLE E-5 SBIR/STTR Awards to Continuum Dynamics, Inc., by Program and Phase

Program/Phase Number of Awards Funding (Dollars)

SBIR Phase I

130

10,194,082

SBIR Phase II

61

34,834,937

STTR Phase I

3

269,894

STTR Phase II

2

1,298,768

Total 196 46,597,681

SOURCE: https://www.sbir.gov/sbirsearch/firm/all. Accessed October 8, 2015.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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TABLE E-6 SBIR/STTR Awards to CDI by Phase and Source (1979-2014)

Agency Number of Phase I Awards Phase I Funding (Dollars) Number of Phase II Awards Phase II Funding (Dollars) Total Funding By Agency (Dollars) Agency Funding as Percent of Total Phase I to Phase II Conversion Rate (Percent)
Agriculture 2 113,500 1 209,915 323,415 1 50
DoE 4 299,826 3 1,748,875 2,048,701 4 75
DoT 3 249,204 1 296,012 545,216 1 33
HHS 6 448,671 4 2,358,898 2,807,569 6 67
EPA 3 139,452 1 224,980 364,432 1 33
NASA 45 3,421,375 20 11,198,592 14,619,967 31 44
NSF 11 717,299 3 919,691 1,636,990 4 27
DoD 59 5,074,649 30 19,176,742 24,251,391 52 51
Total 133 10,463,976 63 36,133,705 46,597,681 100 47

SOURCE: https://www.sbir.gov/sbirsearch/firm/all. Accessed October 8, 2015.

SBIR – Phase III

Through the Technology Assistance Program, the Navy offers additional commercialization support to a small number of successful Phase II projects. The program does not simply provide additional transition funding. It also introduces the company to potential customers, brings in program managers from DoD, and runs technology showcases aimed at various segments of the defense industry.

At present, the Technology Assistance Program has helped highlight Navy-funded Phase III work that is adapting CHARM for use in flight simulation. Air flow past an aircraft is complex, and in the past, the flight simulation vendors have approximated these effects using look up tables or other highly simplified aerodynamic models. With advances in computational power and accelerated algorithms, it is now possible to bypass these simplified models and do these calculations in real time with much higher physical fidelity during the simulation. Integrating CDI technology into flight simulations will allow better, more realistic training for U.S. pilots.

CDI’s contribution is not limited to the modeling rotorcraft flight with CHARM, but also modeling the air flow generated by the environment. For example, simulating the flight of a helicopter landing on a ship requires modeling the air flows generated by the ship as well (typically using VorTran-M and CGE). The new technology offered by these coupled tools is modular. The flight simulation vendor doesn’t have to swap out their simulation engine; instead they only have to drop in a new, pre-validated module in place of the look-up tables and their simulation will show an immediate improvement in physical accuracy.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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SBIR has been a significant component in this. It funded the original work that developed CHARM, VorTran-M and CGE and is now providing the resources to enable commercialization. Dr. Quackenbush emphasized that “the Navy has been unusually forward looking in funding and organizing this work. The have provided transition funding, they’ve found program offices committed to continuing that funding, and they’ve introduced us to key flight simulation vendors. There has been a great deal of cross-fertilization.” CDI has self-funded some elements in this process, but mostly Navy dollars are supporting it.

Commercialization

Other downstream impacts of CDI technologies have been substantial. Carson Helicopters, of Perkasie, Pennsylvania, used CHARM to simultaneously increase the payload of its Sikorsky S-61 helicopter by 2,000 pounds and cruise speeds at 10,000 feet by 15 knots.15 According to CDI, Carson is now selling rotor blades designed with help from CDI to commercial operators worldwide, as well as to the U.S. Navy and the U.K. Royal Navy. Significantly, the Carson rotor blades are now in use on the military version of the S-61 used for “Marine One” Presidential Helicopters, extending the life and improving the performance of these helicopters. Also, Sikorsky benefited from CDI’s work under NASA 1999 and 2002 awards, resulting in additional revenues of $24 million.16

CHARM has also been incorporated into a joint CDI-Army study focused on software to practice landing rotorcraft in sandy or dusty conditions (known as brownout), where sand and debris blinds pilots and can damage equipment.

__________________

15 NASA, “Modeling Tool Advances Rotorcraft Design,” Spin-off 2007, http://www.sti.nasa.gov/tto/Spinoff2007/t_2.html.

16 Ibid.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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The wide range of software products developed by CDI has led to other less dramatic commercialization impacts. For example, SBIR awards from NASA Glenn Research Center in 1988 and 1993 supported development of software that predicts turbomachinery flutter. The wide ranging impact of SBIR research and development is apparent in the fact that elements of this software were subsequently adapted for use by customers as diverse as New Jersey pharmaceutical companies (for fluid flow analysis in medication delivery systems) and the Washington Public Power Supply System (for the study of engineering problems in fluid/structure interaction). CDI’s products have also generated revenues from licensing and contract research.17 NASA funding for aircraft wake studies supported development of an agricultural dispersal modeling tool (AGDISP) used by the Forest Service, the Federal Aviation Administration (FAA), and various agricultural chemical manufacturers, including DuPont.

Dr. Bilanin noted that other technologies developed with SBIR support have also been successfully commercialized, notably smart materials that generated more than $1 million in revenues from components for test facilities for aeropropulsion and the use of shape memory alloys to develop actuators. CDI anticipates the adaptation of this technology to new areas, including wind turbines and other energy applications.

Knowledge Effects

CDI has patented what it believes are important technical advances with commercial application; it is the assignee on 13 U.S. patents. Its patent library includes devices for rotorcraft and UAV flight control that use smart materials, vortex wake mitigation systems for jetliners, and advanced filtration hardware for the emergency cooling water systems for nuclear power plants. CDI also publishes extensively in peer-reviewed journals.

CDI personnel take an active role in the larger aeronautical research community. For example, at the 71st Annual Forum of the American Helicopter Society, in addition to demonstrating the flight simulation software that they are developing in collaboration with CAE, CDI staff also presented four technical papers and sat on three technical committees. CDI researchers are recognized as experts in their fields. A CDI staff member was the keynote speaker in October, 2014 at the annual Symposium on Overset Composite Grids and Solution Technology at Georgia Tech and will serve as Technical Chair for the upcoming 72nd Annual Forum of the AHS in May 2016. A review of its website shows 79 articles published between 1974 and the present.

CDI has also been recognized for its contributions to the SBIR program itself. In February, 2011, Senior Associate Todd Quackenbush received a “Champions of Small Business Innovation” Award from the Small Business

__________________

17 NASA SBIR Success Stories, “Computational Method for Aeroelastic problems in Turbomachinery, http://sbir.nasa.giv/successes/ss/3-071text.html.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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Technology Council for his energetic advocacy on behalf of the long-term reauthorization of the SBIR program in 2011.18

STTR

The greatest benefit of STTR to CDI is access to skilled people and to new ideas. Dr. Quackenbush emphasized that the benefit is not only gaining access to the faculty but also to the students. “We get exposed to new ideas, new approaches and potentially new employees. We really welcome that.”

The biggest challenge in developing an STTR proposal, however, is often the universities’ attitudes towards intellectual property rights. Funding agencies require that an IP agreement be developed within 60 days of the notice of selection for an STTR award. CDI finds meeting that deadline to be a challenge, and typically, there’s an argument about royalty levels. “Our most challenging experiences are in the intellectual property offices of the big research universities. They seem to have little understanding of the business situation of small businesses, being used to dealing either with the federal Government or major corporations.” Despite the formal requirements of STTR for collaboration, they don’t really do much to help CDI or other small businesses in this process. As a consequence, Quackenbush said, “We have generally steered away from STTR except in cases of truly special opportunities.” Indeed, only 3 percent of CDI SBIR/STTR awards are through the STTR program.

Drilling a little deeper, Dr. Quackenbush opined that many major universities would be happy if SBIR/STTR went away. “When it launched in the 1980s, SBIR was an unwelcome development as being competition for Federal sponsored research. Since then, the universities have never really embraced the program. It’s always been a cultural and organizational mismatch.” While CDI’s experiences have varied somewhat, in general the IP offices of many major universities do not seem prepared to work with small companies.

Improving SBIR and STTR

To improve the STTR/SBIR program, CDI management suggests that all agencies emulate the Navy’s Technical Assistance Program and also put aside more funding and support for Phase III projects. As Dr. Quackenbush put it, “Of course, self-funding does work but having Phase III as a legitimate possibility is a good thing.”

Also, if agencies are to broker introductions between small business and the defense primes, they need to address not only funding but also support. For example, from CDI’s perspective, the biggest problem in working with

__________________

18 National Small Business Association, “SBTC Honors” Champions of Small Business Innovation” February 12, 2011, http://www.nsba.biz/content/printer.4422.shtml.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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primes at the request of agencies is data rights. Because CDI can’t patent its’ simulation software, data rights are how CDI protects its intellectual property.

Somehow there’s a view among the primes that because the technology was funded by the government, the prime shouldn’t have to pay royalties or have any restrictions on the use of software supplied by a small business. For Phase III to work, the agencies need to be committed to backing the small business’ rights. If a small business licenses to a prime, those licenses must get honored, and it is crucial for the agency to understand its role as an advocate.

CYBERNET SYSTEMS CORPORATION

Based on interviews with Dr. Charles Jacobus, Chief Technology Officer and Co-founder September 15, 2011; November 7, 2014 By telephone

Cybernet Systems Corporation (Cybernet) is a privately held company headquartered in Ann Arbor, Michigan. Founded in 1989 by Ms. Heidi Jacobus and Dr. Charles (Chuck) Jacobus, the company has completed a large number of DoD contracts and has been a certified 8(a) woman-owned small business and Tibbetts award winner. The company’s vision has focused on amplifying human capabilities through the application of technology.

Utilizing the founders’ expertise in robotics and human factors research, Cybernet has been a leader in robotics since its inception. It has provided innovative defense products in a number of areas and has applied its expertise in the health care sector.

Company formation was directly influenced by SBIR. The company was founded because Heidi Jacobus had won Phase I awards related to her PhD thesis. In 1990 Cybernet received its first Phase II award, which was sufficient to hire Chuck Jacobus and to permit a move to new premises.

The company initially focused on force feedback and human factors research, and it filed its first patents for force feedback in game controllers in 1992. By 1996, the company had 40 employees, largely Ph.D.s, with the work closely centered on robotics, sensors, and remote applications. During this period, SBIR awards opened the door to a number of sponsors especially in DoD and NASA.

Markets and Capabilities

Cybernet’s capabilities are all oriented around the core vision of amplifying human performance through the advanced application of technology. Commercial products and services cover a range of product areas. Key milestones for the company include the following:

  • 1996: First portable robot control stations
Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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  • 1996: First Internet-enabled medical device
  • 1998: License/spin-off of force feedback to Immersion Corporation
  • 1998: NetMAX™ product launched—national distribution in 1999
  • 1999: Immersion initial public offering (IPO) (NASDAQ: IMMR)
  • 2001: Cybernet Medical launched for MedStar product
  • 2004: First Automated Tactical Ammunition Classification System (ATACS).

Selected Cybernet Technologies

Cybernet has worked with every major branch of the U.S. military. The following list includes a number of defense technologies developed by Cybernet.

ATACS

One important product has been the Automated Tactical Ammunition Classification System (ATACS). ATACS is a tactical small arms ammunition sorter designed to completely automate the rapid sorting and inspection of loose small arms ammunition ranging from 4.6 mm to 50 calibers. ATACS operates at a rate of 12,500 rounds per hour, in contrast to traditional, time-consuming methods of hand sorting by military personnel.

ATACS was developed using existing commercial-off-the-shelf (COTS) components and the company’s Projectile Identification Systems (PIDS), based on a previous SBIR award. ATACS can determine chambering dimensions to include length, width, height of primer, concentricity, bent bullet tips, dents, corrosion, and perforation in cartridge case and/or bullet.

ATACS is portable enough to cost-effectively employ in the field. Within 60 days, Cybernet quickly developed and fielded the ATACS for the U.S. Army at Camp Arifjan, Kuwait, where the product was used to reclaim serviceable ammunition through this faster, safer, and more consistent inspection process. Cybernet is currently building its sixth ATACS for Army.

This rapid delivery was made possible in part by the SBIR compete clause, which permitted the Army to sole source the contract to Cybernet based on the competition for the previous SBIR award.

LCAR

The Large Caliber Automated Resupply (LCAR) program aimed to apply robotics technology to store, supply, and replace ammunition for military vehicles such as tanks on the battlefield. This product automatically load the ammunition into the vehicles, and unloads unwanted casings or ammunition, reducing the danger associated with manual re-supply efforts in volatile situations by removing soldiers from vulnerable exposure.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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This project addressed the need to automate loading in the Future Combat Systems program. Boeing had in fact selected Cybernet as a supplier when the FCS was cancelled. The design package remains relevant for future programs. This program also derives from the Projectile Identification Systems (PIDS) SBIR award.

VSIL

According to Cybernet, the Virtual Systems Integration Lab is a virtual prototyping package for modeling “vehicle systems and components, developed by Cybernet and [Army’s] Tank-Automotive Research, Development and Engineering Center (TARDEC). VSIL leverages its commercial virtual-design technology—pioneered in the automotive industry—to simulate Army vehicles and perform rapid trade-off analysis for soldier safety and operational effectiveness.”19

A subsequent follow-on project focused on providing Navy with automated tools for the system test and repair of submarines, to augment the ability of system maintainers to prevent and repair system faults in a timely manner. The objective is to release war fighters from the burden of performing routine diagnostic and maintenance, allowing them to focus on the mission at hand.

Health Care Technologies

NASA also, in part, funded the technology development that would lead to MedStar™, a web-based system for outpatient care that collects physiological data from personal patient devices and sends the data to a web-based electronic patient and data management system. Cybernet launched the MedStar in 2001, and it has been distributed nationwide since 2006.

The system collects physiological data from patients and their in-home devices (such as scales, respirometers, pulse oximeters, glucometers and blood pressure cuffs) and records it in Cybernet’s web-based electronic patient and data management system. This provides physicians, nurses, pharmacists, and other health care professionals with immediate access to updated outpatient information, regardless of location.

MedStar appears to have had particular relevance in rural communities, where specialist (or even general) medical help may be remote. For example, the MedStar system has been piloted by the Oklahoma City-based INTEGRIS Rural Telemedicine Project. According to Cynthia Miller, director of the project, remote vital sign monitoring can help eliminate the distance barrier and provide nurses with more timely information. It has helped prevent unnecessary trips to the emergency room, and patient quality of life has improved.

__________________

19 Cybernet Systems Corporation website, http://www.cybernetsystems.com.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
×

Although other competitors have largely sealed off the Veterans Administration—a substantial potential market—Cybernet has had more success breaking into the hospital systems market, in which diversified hospitals offered the best market. MedStar helps to keep chronic but not seriously ill people out of expensive beds and lowers the cost of nursing. Many diversified hospitals run home care programs or are affiliated with preferred provider organizations (PPOs) and therefore have interests that align with Cybernet solutions.

Overall, while the original NASA need focused on tracking the metabolic state of astronauts, using unobtrusive monitoring technologies, this did not quite amount to medical instrumentation, and Cybernet found that NASA needs did not overlap much with market demand for medical monitoring: NASA wanted data, while the private sector wanted tests that could attract fees. Going forward, Dr. Jacobus said that Cybernet plans to follow its strategy for other projects and license the technology to ensure wider distribution.

Automated Transportation Technologies

Cybernet has also focused on addressing the federal mandate20 that one-third of operational ground combat vehicles be unmanned by 2015. Cybernet converted a minivan into an autonomous ground vehicle and was 1 of only 35 teams worldwide invited to the National Qualifying Event for the 2007 DARPA Urban Challenge.21

Cybernet has developed an approach that uses COTS technology to implement driverless autonomy, an approach that can be rapidly and directly inserted into Army’s existing fleet of medium tactical trucks currently used in convoy operations.

Cybernet has contracts to build robotic forklifts. The company transitioned its DARPA Urban Challenge technology to build these automated forklifts for the Army. There is a potentially significant market for this technology in mid-sized warehouses that are too big for fully manual operation and too small for installation of a fully automated materials movement system. Automated vehicles know traffic rules, and sense people, other vehicles, and obstacles out to 30 meters from the vehicle, which permits them to find and fetch materials safely in mixed human and machine environments. Other Army bases are interested in using the technology to handle ordnance.

Sensors and Robotics Technologies

Cybernet has been working in this area for more than 20 years. Currently available products include those based on the company’s computer

__________________

20 2001 National Defense Authorization Act.

21 The 2007 DARPA Urban Challenge was the third in a series of competitions held by the Defense Advanced Research Projects Agency (DARPA) to foster the development of autonomous robotic ground vehicle technology that can execute simulated military supply missions. The 2007 competition was held in a mock urban area.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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vision systems that can be used to recognize objects (e.g., spacecraft, parts, grasp points, docking targets, or anything that can be defined by a computer aided design [CAD] drawing or description) from views taken from one or several cameras.

As noted on the Cybernet website, “NetMAX Robotics focuses on product sales and commercial development of robotics, situational awareness systems, and embedded sensor products.”22 Although the company was originally focused on networks and Linux-based software development, this Cybernet subsidiary changed direction in 2007 and has become the deployment mechanism for Cybernet technologies “in robotics, sensor systems integration, and algorithm development, man-machine interface design,”23 modeling and “simulation (with focus on massive multiplayer scale simulations), and network appliances and security.”24 Earlier work in this area included the force feedback work that eventually led to licensing by Immersion, Inc.

Currently, Cybernet is working on leading-edge applications in gesture recognition from video streams. One product in use today is GestureStorm™, which allows TV meteorologists to control their on-air weather displays through purposeful gestures.

Cybernet and NASA

NASA has been interested in force feedback for decades. Effective force feedback is required to operate robots in space, and as a result NASA has been a leader in this field. Cybernet’s work in this area has, according to Dr. Jacobus,25 been directed primarily at space science where the company works on “sensors and advanced robotics,” focused on manufacturing and manipulation.

As a result, Cybernet’s work has been most fruitful when NASA is pursuing a manned space program. Robotics is, in general, about convenience, safety, or productivity, and in space, because the cost of using humans is so high, NASA has strong incentives to find ways to automate processes where possible, as well as to use remotely guided robots.

In the early 1990s, NASA was preparing to build the space station, which required advanced robotic arms. The Mars mission accelerated this process, because it required NASA to develop the capability for human life on another planet, which in turn required new technologies for utilizing local resources (mining, growing food, etc.).

Cybernet received a number of early NASA SBIR contracts to work on force feedback, but this did not immediately lead to large-scale

__________________

22 Cybernet Systems Corporation website, http://www.cybernet.com/index.php/products/netmaxrobotics?

23 Ibid.

24 Ibid.

25 Dr. Jacobus previously headed the NASA Center for Commercial Development of Autonomous and Man-Controlled Robotic and Sensing Systems in Space (CAMRSS). CAMRSS developed robotics and sensing technology for use in space applications and spin-offs.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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commercialization. About 5 years after Cybernet’s NASA contracts concluded, according to Dr. Jacobus, Cybernet’s technology for managing force feedback became a new tool for toys and games—most notably the market for game joysticks eventually dominated by Microsoft.

Cybernet and Immersion Inc. emerged as the two leading companies in the provision of technology for integrating force feedback into game controllers. While the two companies competed for Microsoft’s business (Microsoft was the leading game controller company at the time), the latter was able to use that competition to push down prices and limit commitments.

In 1998, Cybernet decided that it would be best to license its technology to Immersion in exchange for royalties and some equity—a decision that led Microsoft to announce an agreement with Immersion within weeks of the deal. Even though Cybernet did not directly commercialize its SBIR-supported force feedback technologies, they were eventually deployed by Immersion and are now found in a majority of mobile phone handsets as well as many game controllers. Cybernet itself benefited substantially from the subsequent Immersion IPO in 1999.

The licensing strategy adopted by Cybernet works well with the bootstrap strategy often adopted by Michigan companies, where venture or angel funding remains difficult to acquire. Even though Cybernet raised $5 million in funding for its force feedback projects in the late 1990s, Dr. Jacobus considers this to be the exception rather than the rule.

Cybernet’s portfolio-based strategy is quite different to the Silicon Valley/venture capital model. Dr. Jacobus likens Cybernet’s strategy to farming—where some years are better than others but no project ever really dies, in contrast to the prune-and-focus approach of the venture model.

Overall, Dr. Jacobus observed that this example shows how the SBIR program could be credited with the development of entire industry sectors. Technology development primarily initiated by NASA funded everything in the force feedback industry. Game controllers would not have been developed without NASA SBIR funding. Although initial work was funded by the Army, tactile output was the result of NASA funding. Today, it is fair to say that 100 percent of game controllers, plus a considerable share of buzzers and haptic feedback on phones, has resulted from SBIR investments.

Patents and Awards

Cybernet has developed more than 20 original devices and systems that are currently in use across a spectrum of commercial and defense clients, with more than 200 completed contracts and 45 awarded patents, with more patents pending.

In addition to its patents, Cybernet has won a number of industry and government awards. These include a Tibbetts Award in 2006, three NASA spinoff awards, the Army commercialization recognition awards, and others.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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Licensing and Spinouts Strategy

Cybernet’s substantial patents portfolio has permitted the company use of licensing as a core commercialization pathway. The company’s experience also shows that commercialization with SBIR funding is rarely the simple linear process sometimes expected.

Cybernet has discovered that while in a Phase I project it is almost always necessary to find a marketing partner to enter specialty markets. According to Dr. Jacobus, those partners are rarely prepared to pay for technology development. It is in that context that the SBIR program continues to play a key role for Cybernet—funding the technology development that can later be licensed or spun out.

Comments on the SBIR program and NASA

General Comments on SBIR

Dr. Jacobus said that he was speaking personally, not on behalf of Cybernet. Overall, he believes that the SBIR program is grossly undervalued by many people in the government. It provides funding and access to small, agile businesses, which employ more technologists than the university system, and focuses on technology transition where research to commercial employment process is weakest. University researchers do good work based on the priorities of their own peer groups; big companies do well at scaling. But in the middle there is in almost every industry a dead man’s zone between research labs and the big companies. This is in part because the manufacturing technologies needed for new products are missing, as the demand does not yet exist.

He observed that the small business community has always been good at addressing these needs, and the SBIR program in general has always funded a considerable amount of research that does not yet have a clear market—frequently, it takes 10 years or more before the technology eventually finds an appropriate use. Thus the SBIR program creates a resource flow to this weak link in the technology pipeline. It was weak even when Bell Labs existed and, in his experience, at Texas Instruments where he worked prior to Cybernet. It takes five times more money to take an idea to market as it does to research the idea in the first place. Funding for that part of the process is very scarce: investors do not want to put money into something that is not yet real.

Dr. Jacobus said that the SBIR program has been willing to fund technology across a broad set of technical areas. This is critical for non-software technologies: Dotcoms do not need SBIR funding; they have private money. But no private funding is available for small businesses to develop a new kind of plastic. In addition, not every idea will be a success; the point is to ensure that enough people are working on the right sort of things. Some of them will be successful.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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Overall, Dr. Jacobus believes that the SBIR program provides a critical connection between small business and government acquisitions programs. Small business cannot break into the acquisitions business on its own, and it usually cannot reach larger DoD contacts without the help of the SBIR program, which supports direct contact with government, which would otherwise view companies such as Cybernet as much too small.

The NASA SBIR Program

Under the NASA SBIR program, linkages to centers and personnel have changed in recent years. Dr. Jacobus said that connections to NASA staff used to be informal—a researcher could suggest some ideas and some might find their way into a topic. Today, the competition is much more formal, and researchers have little contact with NASA until after the contract is awarded. Although this opens the door to new entrants, it excludes from the process potentially useful sources of expertise and insight. The focus is on ensuring that the competition is run fairly.

Dr. Jacobus noted that NASA can be viewed as a halfway house between basic research agencies and the highly applied technologies needed at DoD. Some of NASA’s work seemed closer to that of the National Science Foundation (NSF)—sometimes, NASA staff are only interested in the technology and topic areas and are seeking good ideas. In these cases, the agency is open to any good idea, and if a researcher can find the NASA staffer running the study group, then the idea could be proposed and adopted. At other times, NASA is seeking specific solutions to identified problems, although even in these cases NASA needs less applied research than does DoD.

Detailed Recommendations for the SBIR Program

To address the bifurcation between investigatory and applied research, Dr. Jacobus suggested that NASA consider moving to two solicitations per year, one focusing on NASA’s immediate technology needs and the other providing more room for exploratory research along the lines of NSF. The National Institutes of Health (NIH) currently offers separate solicitations for grants and contracts, which might be a model for NASA. Simply identifying these two directions would in itself make for a better selection process.

In addition, Dr. Jacobus suggested that NASA adopt the DoD open discussion period, where DoD technical staff are available to discuss topics for a short time after the solicitation is published. This opportunity helps to guide potential respondents, reducing wasted effort for both the companies and the reviewers.

  • Regarding award size, Dr. Jacobus believes that results would be optimized by keeping Phase I SBIR awards as small as possible, while
Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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ensuring Phase II funding is sufficient to complete prototype development or a similar level of technology exploration.

  • Regarding incentives for commercialization, Dr. Jacobus said that there was no need for additional incentives and pressure—in his experience, commercialization is what business people do and few companies are satisfied with simple technology development. The point of being in business is commercialization.
  • However, he also noted that finding ways to better connect to the acquisition process would be a key to improving results. This for him was always the most difficult part of technology development, and he noted that successful connection to government initiatives especially in acquisitions would elevate the stature of SBIR program managers.
  • Nonetheless, Dr. Jacobus noted that it is possible—perhaps necessary—to view the parameters of success in SBIR differently than in strictly commercial development. It does not make sense to apply venture capital benchmarks to SBIR outcomes, because the circumstances and objectives are different.
  • Regarding commercialization support programs, Dr. Jacobus noted that, although he had participated in almost all of them over time, they provide limited value to experienced executives. Like any strategic planning process, they have some value, but no more than any similar exercise. However, he strongly supported activities such as the Navy Opportunity Forum, which specifically focused on connecting SBIR companies to the acquisition programs and prime contractors (primes).
  • More generally, Dr. Jacobus said that every program office, particularly at DoD and NASA, should have an SBIR strategy. Currently, topics are usually generated by staff familiar with current programs, and hence the topics address current problems. But, by the time the Phase II has been issued and completed, those programs are in the past and the SBIR company is stranded.
  • Dr. Jacobus offered two more suggestions for improving the program:
    • Allow the program offices to allocate a percentage of funding for efforts to expand outreach to small business. In his view, this would be more useful than commercialization training.
    • Allocate some SBIR funding via the primes, that is, allow the primes input into the development of topics and the selection of awards.
Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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ELTRON RESEARCH AND DEVELOPMENT, INC

Based on telephone interviews with Paul J. Grimmer, CEO and majority owner April 7, 2010 and September 22, 2015

Founded in 1982, Eltron Research is a materials research company located in the Denver, Colorado area. Eltron won its first SBIR award in 1983. Since 1983, the company has won over 300 SBIR and STTR awards, especially from the Department of Energy (DoE). In June, 2005, the company was purchased. Over the past ten years, the company has moved to an industry-funded business model and eliminated its SBIR as a source of funding. The company has not started an SBIR project since mid-2013 and now submits only 1 to 2 SBIR proposals per year (as opposed to the 186 submitted in 2005 when ownership changed).

Prior to 2005, while Eltron actively pursued SBIR funding, the company had developed a substantial portfolio of intellectual property (IP) based on SBIR funding. It did not, however, commercialize any of these technologies. Indeed, until 2005 Eltron was a prime example of a “lifestyle” SBIR company, one in which revenues were largely generated from SBIR awards, and where minimal efforts were made to commercialize the results of SBIR-funded research. At Eltron, as at many companies, the previous owners had used SBIR to cover its costs for research, recover overhead and G&A costs related to research, and make a small (4.5 percent) profit. They spent very little on pre- and post-SBIR project work necessary to commercialize technologies invented in these projects successfully.26

This lack of commercialization activity provided a substantial opportunity for new ownership. Eltron had more than 70 technologies already in its IP portfolio of which 30 might be commercially viable. The new strategy was to look for industry partners that would fund and enable commercialization.

To do this, Eltron added three business development professionals to engage industry and find companies willing to fund additional R&D on the already-invented SBIR technologies. In return, Eltron planned to offer favorable licensing terms when and if the technologies were commercialized. Eltron also hired engineering staff to plan and manage scale-up as these technologies shifted to mass production. Finally, management directed its scientists to support commercialization efforts by making samples and test units based SBIR technologies for evaluation by prospective clients.

From 2005 to 2011 the company not only pursued more SBIR projects but also tried to engage industry in “Phase III” funding of its SBIR technologies. Eltron made product samples for prospective clients, spent internal funds to improve upon the SBIR technologies in the lab, created business plans, and tried

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26 Note that profits are in addition to direct labor costs for principal investigators and other company staff and are also in addition to recoverable overhead and G&A costs defined in the FAR.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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to attract angel funds to advance these technologies. Eltron spent approximately $5 million of its own funds in these efforts. Unfortunately, the company was unable to interest any third parties in any SBIR-funded technologies.

In 2011 Mr. Grimmer, Eltron’s CEO and majority owner, concluded that a business based on SBIR technology would not be commercially successful and that the company needed to change significantly. “SBIR provides small business “free money” with very little, if any, risk. Unfortunately, the technologies created using this vehicle are not needed by industry,” he said. Because Mr. Grimmer is not interested in doing research but in commercializing new products, he began exiting the SBIR business.

By 2014, Eltron had essentially left the SBIR program. The number of Phase I applications had dropped to zero from a peak of 179 in 2005. For a company that has done 333 SBIR/STTR projects in its 31 year history, this was a significant and fundamental change. The company continues to be reliant on industry for funding its R&D activities. This has not been an easy change but is one that Eltron management believes was absolutely necessary.

Eltron management believes that in its current form the SBIR program is largely a waste of taxpayer money and is of questionable value to the companies themselves. It could be changed but the change would be difficult and would be opposed by the many people who benefit from the current program both inside and outside of the agencies administering the programs.

At present Eltron Research has approximately 15 employees with PhDs, Masters, and Bachelors in engineering and the sciences.27 The company’s workforce has dropped substantially from the 50 employees, 20 of whom held PhDs, who worked at Eltron when it was purchased.

Technologies and Products

Eltron is a materials company based on the application of chemistry, materials science, and engineering to problems managing the production of energy. It has strong capabilities in membranes and catalysis, among other areas of materials science. Table E-7 describes its core areas of technical competence.

Across these core competencies, Eltron continues to look for corporate partners either to sell or license Eltron technologies or to fund further development of Eltron technology in return for future license or purchase.

Eltron’s patent portfolio contains 71 patents which broadly cover intellectual property in materials, catalysts, sensors, catalytic membrane reactors, electrolytic systems, and electrical storage systems. The company has licensed 29 of these patents to other companies (see Box E-4 for examples).

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27 “Eltron Research and Development, Incorporated,” https://www.sbir.gov/sbirsearch/detail/155281.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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TABLE E-7 Eltron Research and Development Core Technology Competencies

Core Competency Description

Catalysts

Eltron has developed hundreds of heterogeneous/homogeneous and supported/unsupported catalysts. Eltron personnel can design, synthesize, evaluate and scale-up catalysts in fields such as energy, propulsion, chemicals, polymers, and the environment.

Advanced Materials

Eltron integrates broad capabilities in materials science, chemistry, and engineering experience to develop, produce and analyze custom materials such as polymers, membranes, coatings, ceramics, nanostructures, and multifunctional composites.

Energy and Fuels

Eltron has substantial expertise in the development of technologies to enable clean and sustainable energy. Based on Eltron’s expertise with catalysts, Eltron has developed systems for novel biofuels synthesis, fuel reformation, fuel gasification, and carbon sequestration.

Environmental Technologies

Related to its research on biofuels and carbon sequestration, Eltron has developed green systems for electrolytic water treatment, contaminant remediation, and pollution sensing and response.

Chemicals and Chemical Processing

Eltron personnel are also expert in the design and implementation of both ambient and high temperature chemical and electrochemical processes.

SOURCE: Eltron Research website, “Company Overview,” http://www.eltronresearch.com/company.html.

Company personnel publish actively in peer-to-peer journals. The company website lists 96 publications ranging from as early as 1997 up to the present.28

Business Model: From SBIR Toward Industry-Sponsored Research

Following the current owner’s purchase of Eltron in June 2005, Eltron aggressively promoted Eltron’s SBIR funded IP portfolio, attempting to license and/or sell the technologies and partner with licensees to commercialize those technologies. Mr. Grimmer believed when he bought the company that he could license or sell some of the technologies which in turn would enable further development of other company technologies which would then be sold or licensed. Unfortunately, very few of the company’s technologies were sufficiently developed to be desirable by industry and the rest were simply of no interest to industry.

The investment by SBIR in Eltron was substantial. Since the company’s founding in 1982, Eltron received 333 SBIR/STTR awards with a total value of $68.1 million. The Department of Energy provided 44 percent of

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28 ”Technology Licensing Opportunities,” http://www.eltronresearch.com/techb.html. Accessed October 15, 2015; “Licensed Technology,” http://www.eltronresearch.com/licensed_technologies.html. Accessed October 15, 2015.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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this amount, the Department of Defense delivered 22 percent, and the National Aeronautic and Space Agency funded 14 percent. The remainder came in combination from the National Science Foundation, the Environmental Protection Agency, the Department of Health and Human Services, and the Department of Agriculture.29

To support commercialization of the results of these 333 projects, between 2006 and 2013 Eltron spent an additional $5 million of its own funds trying to secure Phase III funding from industry. These funds were spent on internal R&D (IR&D) to progress technologies to a point of interest to industry and also on business development for prospective licensors or purchaser, on generating test samples, and on writing business plans. Mr. Grimmer emphasized that not one of Eltron’s 333 SBIR projects has ever received industry funding for a Phase III. “Not one!” Fundamentally this is why Eltron has exited the SBIR system.

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29 “Eltron Research and Development, Incorporated,” https://www.sbir.gov/sbirsearch/detail/155281.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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The time series of SBIR awards for Eltron shows the extent of this structural transformation since Eltron’s purchase in 2005. There was fairly continuous upward growth in the number of SBIR awards received by Eltron from its founding in 1983 until 2002. In 2002, the number of SBIR awards received peaked at 32 awards worth $6.3 million. For the next five years until 2007, Eltron averaged about 17 SBIR awards annually worth on average about $3.4 million. Between 2008 and 2013, SBIR activity dropped steeply. Eltron has not received any awards for the years 2014 or 2015. SBIR documentation shows that through 2010, Eltron employed 50 people and as recently as 2013 employed 40 people.

The reasons why Eltron’s potential licensees did not partner or invest in Eltron’s SBIR technologies are two-fold:

  • Insufficient Relevance: Potential licensees did not invest because they did not view Eltron’s SBIR technologies as being relevant to their businesses. According to Mr. Grimmer, industry does not appear to have expressed need for the SBIR topics at the time of Phase I submissions, at Phase II submissions or post Phase II.
  • Insufficient Performance: The level of technology development enabled by a pair of SBIR grants is insufficient to push a technology to a level of performance where development risks are sufficiently low to entice industrial investment.

Other than providing employment for several hundred people over 33 years of operations, Mr. Grimmer believes that the government expenditures through his company have not yielded anything of value for the public.

Although it is difficult to engage industry to support R&D, since 2005 Eltron has had some success developing technologies in industrial partnerships addressing non-SBIR funded technologies. The company has done over $25 million of development work funded by the DOE, Eltron, and corporate partners. In addition, the company has funded 2 internal projects that cost $14 million, again with funds that did not come from SBIR.

Commercialization

Like all companies attempting to commercialize SBIR-developed technology, Eltron faces a fundamental problem in commercializing its technologies. This challenge is an inability to access funding for Phase III transition or private market commercialization. Mr. Grimmer outlined three ways in which Eltron is addressing this capital gap:

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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  • By looking for large industrial companies with market share with whom to partner during the technology development and commercialization process;30
  • By identifying federal or state funds to help reduce the development cost burden to the industrial partner and Eltron; and
  • By investing personal funds provided from the current owners to convince an industrial partner to fund full technology development and commercialization.

In working to commercialize SBIR-based and non-SBIR-based technologies, Eltron has attempted essentially all of the above. None have been successful for SBIR-based technologies.

Industrial Partnerships

Core to Eltron’s growth strategy was the creation of industrial partnership to fund commercialization and drive growth. Eltron expected that partners would provide resources to develop and market the technology licensed from its IP portfolio. In addition to ample resources to back development, Eltron looked for partners with deep market knowledge, customer relationships, and sales and operations entry to facilitate market entry.

Eltron management always accepted that this model necessitated patience building relationships with a potential partner. It would not be easy, but Grimmer envisioned a three stage process taking up to four years. First, Eltron had to determine whether the potential partner had a real need for innovative technology. Then, Eltron had to determine whether the partner was willing to outsource the technical development process, and finally Eltron had to convince the partner that even though a small business, Eltron could deliver.

Despite substantial internal investment, Eltron had no success interesting companies in funding commercialization of SBIR projects. Even non-SBIR technologies have proven challenging. As an example, Eltron’s partnership with Eastman Chemical shows the challenges faced in managing a partnership of government funders and industrial customers even when the commercial partner holds a clearly defined problem.

In 2005, DoE initiated funding for Eltron of a non-SBIR technology to develop membranes for carbon capture and hydrogen separation from a mixed gas stream. This technology offered the potential to reduce the capital and operating costs of producing industrial hydrogen while simultaneously ensuring

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30 A partnership can involve a variety of different relationships. The industrial company may be the technology as-is or undertake development and then buy it. It may fund Eltron to perform development, license the technology, and then take the technology to market by itself. Joint-ventures between Eltron and the industrial partner are also possible.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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CO2 capture and storage. Ultraclean hydrogen energy generated from coal seemed within reach.31

Unlike SBIR programs, the DoE initiative required an 80/20 cost share that forced Eltron to commit $500 thousand of its own funds annually to receive $2 million from the government. After three years of successful research, Eltron convinced Eastman Chemical to come into the project and pick up the cost share. By then, Eltron had sunk $1.5 million sunk into the technology. In 2010, DoE extended funding for the project by another $8 million.

Interestingly, Eastman Chemical did not partner with Eltron to develop a CO2 capture technology. Unlike the DoE sponsors of the program, they were interested in separating carbon monoxide (CO) from a mixed gas stream to be used as input stock for other chemical processes. Despite early technical success, as the project shifted from laboratory prototyping to a demonstration plant and capital costs rose, tensions in the partnership began to emerge. Eastman had agreed to demonstrate the technology at its coal gasification plant in Kingston, Tennessee to test CO capture. Although DoE had agreed to generous 97/3 split contract to provide $72 million in Recovery Act monies to set up a pilot system, their goal remained CO2 capture.32 Eventually, Eastman withdrew from the project.

Despite DoE’s continuing commitment to allocate $72 million, Eltron was unable to find a partner willing to pay the ~$2 million in cost share. Eltron spoke with most of the U.S. and European oil and gas companies, the coal companies, the electric power utility companies through via their research institute, EPRI, and even Cleantech VC’s. Although most agreed that in the long run carbon capture technologies would be necessary, they did not want to foot the bill for a technology for which there may be no market for 10 or 15 years. Then, at the same time as an ammonia company expressed interest in piloting Eltron’s membrane system to removing H2 from the waste streams emitted by ammonia plants, the Obama administration pulled funding of all technologies developed for clean coal production.

Even when a customer clearly articulates a need, developing technologies as capital intensive as carbon capture is difficult. Industrial partners will not invest where there needs are not addressed. DoE was unwilling to budge from its requirement that these technologies address carbon capture. Eastman was willing to fund the early research in this area because there was some indication that it would be applicable to CO capture. But when costs increased and they saw their needs not being addressed, they withdrew support. Shopping a grant for nearly $70 million in government support, Eltron was unable to replace Eastman as a pilot site. Mr. Grimmer comment, “None of these

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31 “Eltron Research & Development and Eastman Chemical Company Team for Joint Development and Pilot Testing of Membrane System for Hydrogen Production and Carbon Capture,” (August 4, 2010), http://www.eltronresearch.com/eltron_eastman_press_release.pdf.

32 Industrial Carbon Capture Project Selections (September 1, 2010). http://energy.gov/sites/prod/files/2013/04/f0/iccs_projects_0907101.pdf.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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technologies can be brought to market with an investment of less than $50 million. They’re materials that require prototyping, testing, scaling up. At every stage, costs increase, and without a real need commitment from industry attenuates.”

Eltron Spin-off Companies

Another potential strategy for commercialization at Eltron has been the formation of spin-off companies. Eltron has formed three subsidiaries, Eltron Water Systems, Continental Technologies, and The BioCompactor Company.

Eltron Water Systems (EWS) focuses on water purification and disinfection. At present, EWS has developed two products, a peracetic acid reactor for onsite production of peracetic acid (ImPAACT) and semi-permeable, nanofiltration membranes (Duraflex). The peracetic acid reactor is licensed to three commercial companies, and before the end of 2015, the first products ever derived from Eltron technology will enter the market. All technology development was done with internal funding without government support. Three other products are currently in development. EWS does not appear to have attracted outside funding.33

Continental Technologies (CT) designs, fabricates, and tests skid-mounted (transportable) pilot plants for the oil, gas, and chemical industries. Unlike EWS, CT is not intended to commercialize intellectual property developed by Eltron Research. Instead, CT is designed to build on Eltron’s engineering expertise designing pilot plants and provide this service to its customers. CT also supports implementation of Eltron technologies marketed to other companies.

The BioCompactor Company (TBC) is not technically a spin-out. The company licenses a technology developed in Brazil that uses sugar cane waste, called bagasse, as a fuel source for power generation. TBC provides turnkey plants to convert bagasse into uniform, energy dense briquettes which can be easily transported, handled and stored. TBC has piloted the technology in the United States at the Graceland sugar refinery in Louisiana. Furthermore, it has tested the briquettes produced by the process at Colorado’s Valmont coal-fueled power plant.34

Improving SBIR

The absence of Phase III funding from industry for SBIR developed technologies is why Eltron left the SBIR program. In discussion with Mr. Grimmer, he expanded in some detail on the challenges confronting a company that hopes to take SBIR developed technologies to commercial markets. He

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33 “Water Treatment and Disinfection Systems and Membranes,” http://www.eltronwater.com/products.php.

34 “News,” http://www.biocompactor.com/news.htm.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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believes that other SBIR recipients are unlikely to discuss these problems frankly for fear of “biting the hand that feeds them.” Mr. Grimmer no longer has that constraint.

To explain the inability of Eltron to attract industrial interest in SBIR-funded technology, Mr. Grimmer highlighted the following:

  1. Commercial Relevance of Topic Lists. Across many agencies, the topics lists generally address problems that are not of interest to industry. In the mission-oriented agencies (primarily in DoD) the topics are selected to address problems specific to the agency, not to industry. For other agencies such as DOE, the topics are motivated more by long term policy goals than immediate needs. Mr. Grimmer pointed to Eastman Chemical and the longstanding entry on the DOE topic list of CO2 capture. For 10 years, Eltron received DOE funding to investigate carbon capture. Over that period, Eltron was unable to attract anyone in industry to spend more than token amounts when commercialization of this technology would require tens of millions of dollars. Although it’s clear that as a long-term tool for reducing global warming, CO2 capture technology is necessary, industry won’t spend money on compliance enabling technologies when it isn’t clear that such regulations will ever be required.

    Topic lists should be generated with commercial need as the primary concern. Grimmer stated, “SBIR needs to be reformed, so that it’s driven by actual commercial (and not future policy) needs. Without need, there is no way industry will support Phase III. Topic list should be developed in partnership with the corporate sector. If you want to see commitment from industry, ask for technology that industry will buy and not simply write a meaningless commitment letter.”

  2. Proposal Costs. A rough accounting of proposal costs shows that the Eltron lost money on each Phase I proposal that it won. Eltron prepared and submitted over 2,350 Phase I SBIR/STTR applications, each taking 50 hours of Principal Investigator time to write and an additional 15 hours of support staff time. Each application cost approximately $7,100. Because the success rate for a Phase I award is only 10 percent and the “winners” have to cover the costs of the “losers”, the 9 losers at $7,100 each add up to an additional $63,900 that has to be covered. The total cost of submission for a successful Phase I award is $71,000, almost half of the $150,000 Phase I award.35

    To make up this shortfall, SBIR recipients have three options: 1) accept the losses, 2) reduce the costs of submission by sloughing some of the proposal development time and costs onto other funded projects, or 3) increase success rates dramatically. The first option is difficult to rationalize unless there is a significant probability of

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35 Eltron provided this analysis (November 19, 2015).

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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commercialization. This has not been borne out by Eltron’s history. The second option compromises commitments made to the funders of the other projects. The third option of increasing success rates dramatically (to perhaps 70 percent or more) is not possible unless the company can influence topic list selection which is prohibited. Mr. Grimmer’s view is that SBIR recipients regularly resort to all three tactics, thereby pushing their company into the red, shortchanging other contract holders, and breaking program regulations.

  1. Submission Time. The time between topic list release and proposal submission is typically 2 months. Although this may be sufficient time to develop a technical solution, it is insufficient time to also develop an understanding of the commercial opportunity. Most challenging is identifying an appropriate partner that might be interested in the technology and engaging them to the point where they will commit to the proposal. If the development of a commercializable technology is the goal of the SBIR program, more time is needed.
  2. Low Funding Levels. Eltron is a materials science company. Successful development of a materials technology requires far greater investment than a SBIR grant can provide. For example, Eltron licensed to Air Products, Inc. an oxygen separation technology. With DoE, they spent $300 million to commercialize the technology without success. In the physical sciences world, the $1.15 million maximum provided through a successful Phase I/Phase II project hardly scratches the surface and generally is not even enough to show the progress in reducing technical risk necessary to engage outside investors.
  3. Long Development Timelines. From Phase I through the end of Phase II is typically a 3 year process in which only $1.15 million is spent. If a new technology were of real use to industry, this is much too low a spend rate. Any company producing technologies for a real market need must move quickly to develop the technology, create a defensible patent position, and get to market before its competitors do. SBIR does not enable this.
  4. Influencing Topics on the Topic Lists. Eltron believes successful companies influence the contents of the topic lists. Even when the topics are not specifically written for a company, it appears to Mr. Grimmer that many companies become involved with the agencies very early in the process and know about topics long before everyone else does. The SBIR system is supposed to be organized so that participants don’t influence the topic lists or have sweetheart deals. Grimmer believes this happens frequently driven by the economics and constraints of the proposal writing process.
  5. SBIR Phase I Development at Proposal Time. Ten to 15 years ago, Phase I SBIR funding could be obtained to test a concept. According to Mr. Grimmer, while theoretically this is still the case, in practice this rarely happens. At present, it’s difficult to win a Phase I grant unless
Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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you have already done an amount of work equivalent to a Phase I award. Although it could be argued that this is simply the government selecting the most competitive applications based on the work they have done, in Mr. Grimmer’s opinion, this trend is driving a massive change in SBIR that has largely gone unnoticed.

Most small businesses don’t have funds to develop new ideas on their own and, even if they did, there isn’t time to do sufficient work when there is only 2-3 months total to develop a proposal. What this means is that Phase I winners are often those who have already worked on a topic with funding from elsewhere. Typically those winners are university professors who have received NSF funding and are spinning off a small business to get SBIR funding to do more research (but generally not product development.) Over the 10 years that he has owned Eltron, Mr. Grimmer sees an increase in the number of small, university-based spin-outs receiving grants. Lacking commercial track records and engineering capabilities, he believes that this trend to fund faculty researchers may actually be lowering the commercialization success rate for SBIR as a whole (which is already low in his mind).

  1. Evaluation process. Grimmer is extremely concerned about the transparency of the review process and the potential for reviewers to appropriate ideas developed by small businesses. Because all agencies forbid communication between agency personnel and SBIR applicants, companies do not even know who the reviewers are. Although there are good reasons for doing this, there must be a middle ground. Grimmer is convinced that several Eltron outside-the-box proposals that were rejected showed up several years later in other proposals, particularly from professors who he believes had been reviewers of those earlier Eltron proposals. Without winning an award, Eltron lacks resources to patent everything, so it is relatively easy for a reviewer to pick off new technologies especially when Eltron doesn’t know who its reviewers are and no complaint process exists.

    Other concerns with reviewers include a lack of commercial expertise, a lack of technical expertise, and a lack of capacity for real-time response to criticism. Grimmer admitted that there had been improvements in the past ten years—in selecting, for example reviewers with commercialization experience—but he believes that at its core, the process remains opaque and easily abused.

In the end, the measure of SBIR’s success is the measure of Eltron’s success commercializing SBIR technologies developed at Eltron. He emphasized, “I would bet we received $75 million in SBIR funding, and it was stupid, a complete waste of time. None of the SBIR projects have produced a successful project.” Grimmer is not against the concept of government funding for small businesses commercializing technology. But he is strongly critical of the current implementation. “In and of itself, providing R&D funding to small

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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businesses is not a bad idea, but it’s very poorly implemented and has created numerous poor incentives. As it currently operates, it’s a racket for the researchers, it’s of no value to the tax payer, and it has only the most miniscule return on investment.”

HONEYBEE ROBOTICS

Based on telephone interview with Ms. Irene Yachbes, Director of Technology Development, October 11, 2010, and e-mail exchange with Mr. Kiel Davis, President, October 25, 2015 New York, NY

Honeybee Robotics is a privately held company located in New York, New York. Founded in 1983 by Stephan Gorevan and Chris Chapman, the company originated in the co-founders’ deep interest in advanced robotics and automation. Over 32 years of operation, Honeybee has created strong ties with NASA and the aerospace primes on the basis of its reputation for high quality research and development, design, manufacture, and testing. Despite strategic uncertainty in the direction of the U.S. space program, space robotics remains the primary focus of this company.

Honeybee began as a systems integrator focusing on the space robotics market and utilizing off-the-shelf robots. Some of its early projects included robotic arms and robot end-effectors for large companies such as IBM, Allied Signal, The Salk Institute, Merck, and 3M. Honeybee received its first NASA contract in 1986, and since then, the company has focused on the design and development of innovative and reliable systems for use in space. It has worked on more than 100 NASA projects at nine NASA Centers. Over the past 15 years, Honeybee supplied NASA with critical technologies for each of the last three Mars missions, the Mars Exploration Rovers (MER), the Mars Phoenix Lander (MPL), and the Mar Science Laboratory (MSL).

In 2015, Honeybee has over 55 employees and generates more than $11 million in annual revenues. At the company’s headquarters in Brooklyn, New York, in addition to its manufacturing facilities, it operates a machine shop, a Class-100 clean environment for assembly, and testing chambers that simulate the extreme environments encountered in space. In 2008, Honeybee opened an additional office in Longmont, Colorado to perform satellite mechanism and sensor development. The company opened a third office in 2010 in Pasadena, California that specializes in geotechnical work for NASA and various commercial partners in the mining, oil and gas sectors.

Technology

The company’s strategy has been to parlay its successful space exploration robotics technology and expertise into mainstream spacecraft

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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product and services for next generation space systems. To support the design and manufacture of robotic systems, the company’s core technological competencies extend across a broad range of systems, electrical, mechanical, and manufacturing capabilities. These are described in Table E-8.

Honeybee Robotics owns seventeen patents in technologies ranging from high temperature electric motors, to spacecraft docking systems, to dust tolerant electric connectors.

Products and Services

Focusing primarily on space robotics, Honeybee’s main customers operate in an industrial and technological ecosystem with NASA at its center. Mr. Davis noted, “We focus on selling products and services to the primes and lower tier space contractors as well as directly to government agencies such as NASA or DoD.” Key partners include the numerous flight and research centers at NASA, Lockheed Martin, Boeing, 3M, Siemens, Johns Hopkins, and UCLA. See Box E-5 for a partial list of customers and other partners). In addition to its

TABLE E-8 Honeybee Robotics Core Technology Competencies

Core Competency Description

Systems Engineering

To ensure effective project management, Honeybee has invested deeply in systems engineering and has strong capabilities in specification development, requirements flow-down, configuration management, and in the overall management of project costs, timelines, and risk.

Mechanical Design

To design high performance robotics systems requires deep competence in mechanical engineering. Honeybee technologists are expert in solid modeling and 3D design, event simulation, finite element analysis, fault analysis, operational testing, and subsystem integration.

Electrical Design

Electrical design enables the control and monitoring of space systems. Honeybee has extensive expertise in the design and layout of both analog and digital printed circuit boards, harnesses, and electrical ground equipment.

Software Development

Control of complex space systems also requires expertise in software coding, both in the development of resource efficient algorithms and embedded software. Honeybee also has broad experience designing data acquisition, processing and visualization tools.

Manufacture

Honeybee builds its own robotics system at its manufacturing facility in Brooklyn. The facilities are ISO9001 and AS9100C process compliant. Its technicians are certified to NASA 8739 standards. The company assembles in Class-100 and Class-10,000 clean room environments.

Design Validation

Quality is built into both the design and manufacturing processes. Honeybee has procedures for full verification and validation of its systems, environmental testing (thermal, electromagnetic, and vibrational), load testing, and functional/operational testing in space analog environments.

SOURCE: Honeybee Robotics website, “Technical Capabilities,” http://www.honeybeerobotics.com/services/technical-capabilities/.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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main business providing products and services to the aerospace industry, Honeybee also provides robotic technologies to the defense, oil and gas, mining, and healthcare industries.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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Based on over a 100 projects for NASA, Honeybee has produced numerous successful mission critical products used in NASA space programs. Two particularly successful projects produced the Rock Abrasion Tool (RAT) and the Icy Soil Acquisition Device (ISAD).

Designed, developed, and manufactured by Honeybee Robotics as a part of NASA’s 2003 Mars Exploration project, the RAT uses grinding wheels of diamond dust and resin to gently abrade the surface of Martian rocks. This system enabled the discovery of mineral formations strongly suggestive of the presence of water and substantially enhanced Honeybee’s reputation in the space community.36

The RAT meets a number of critical mission needs. To begin with, it is compact and low power. Using three small motors, the RAT requires only 11 watts of electricity to cut into Martian rock. The RAT weighs 685 grams and is 7 cm in diameter and 10 cm long—about the size of a soda can.37

According to Ms. Yachbes, Honeybee was originally brought into the Mars mission by the principal investigator (PI), Steve Squyres, to implement some preliminary ideas about a rock abrasion tool. This developed into a project to design and build the system. As built in the Mars Exploration Rovers (MER), RAT was the first machine to access rock interiors on another planet to develop data about the properties of Martian rocks.

Remarkably, the RAT has continued to perform long beyond its design life in the dusty Mars environment. In fact, the RAT was originally designed to open 1-3 rocks. Ms. Yachbes noted that during its initial operations, it completed more than 100 grinding and brushing operations and was instrumental in some of the key Mars discoveries—notably blueberries (hematite concretions), which on Earth are found only in the presence of large amounts of water.38

The Icy Soil Acquisition Device (ISAD) flew on NASA’s 2007 Phoenix Mission. The ISAD—or the Phoenix Scoop as it is sometimes called—is both a soil scoop and a precision ice sampling tool integrated on the end of the Phoenix lander’s robotic arm.39 The ISAD was used to dig into the surface surrounding the lander and to acquire icy soil samples, which were then delivered to science instruments for examination.

Honeybee designed, built, and tested the ISAD in only 14 months in response to an urgent request from NASA for improved methods of gathering samples from very icy soil targets. According to Ms. Yachbes, this was possible in part because Honeybee maintains the facilities and expertise for simulating extreme environments. Only Honeybee had the capacity to prepare and test tools

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36 “Rock Abrasion Tool,” http://www.honeybeerobotics.com/portfolio/rock-abrasion-tool/.

37 See http://marsrover.nasa.gov/mission/spacecraft_instru_rat.html.

38 See http://marsdata1.jpl.nasa.gov/gallery/photoContest/index.cfm?pollContentID=7&getDetails=Yes&showHeader=Yes.

39 See http://phoenix.lpl.arizona.edu/index.php; also, “Icy Soil Acquisition Device,” http://www.honeybeerobotics.com/portfolio/phoenix-scoop/.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
×

quickly in an environment that simulated the soils and temperatures that these systems would face on Mars.

Current Projects

At present Honeybee is focusing its commercialization efforts on a line of motion control products that includes actuators, actuator components and drive electronics. Past and ongoing SBIR/STTR funding is an important element in supporting company efforts to reduce technical risk and commercialize these projects.

Market research done by Honeybee indicates that there is a real need for low cost, high reliability motion control devices. As cost constraints increase driven by federal budget concerns, this need will only greater. Commercialization of these products is a long drawn out process, partly because of the extensive qualification testing that NASA requires for space missions and partly because the market requires several successful space missions before wide spread market adoption is possible. Honeybee is committed to developing motion control devices and continuously seeks opportunities to get feedback from its customers to update these product requirements and commercialization strategy. In this approach, SBIR/STTR funding is one step in a continuous cycle of improvements based on market information. Mr. Davis wrote, “The company leverages SBIR/STTR funding in part to pay for product development activities and mission non-recurring engineering.”

Based on technologies developed during the Mars missions, Honeybee owns two proven actuator technologies—the ESPA Solar Array Drive Actuator and the MSL Carousel Actuator—and a range of as yet unproven ones. Actuators are critical to high-performance robotic and mechanical systems, making components move properly even under harsh conditions. Operating temperatures can range from as much as 350°C to as little as -150°C. This poses a major challenge in designing actuators and other components such as motors and gearboxes. Actuators that can operate under such conditions are an enabling technology for a broad range of aerospace applications—enhanced geothermal well bores, surface exploration of Venus, and positioning actuators for space-based optics—as well terrestrial operations in various industries such as oil, gas, and mining. Specific innovations by Honeybee include a gear bearing system designed for low temperature operations and a patented motor designed for high temperature operation. Both technologies were the result of SBIR/STTR projects undertaken between 2007 and 2009.40

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40 “Gear Bearing Transmission for the Lunar Environment,” (2007 / Phase I), https://www.sbir.gov/sbirsearch/detail/182553; “Brushless DC Motor and Resolver for Venusian Environment,” (2007 / Phase I, 2008 / Phase II), https://www.sbir.gov/sbirsearch/detail/182563.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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Manufacturing and Quality Systems

Because spaceborne missions have effectively zero tolerance for failure, Honeybee has developed extensive quality controls. Honeybee’s Quality Management System is certified to ISO 9001:2008 and AS9100 Revision C. Ms. Yachbes observed that the fact that Honeybee is a NASA-approved supplier of flight hardware reflects the agency’s belief in Honeybee’s commitment to these design and quality standards.

Honeybee’s facilities include small-scale mechanical and electrical test equipment calibrated in conformance with MIL-STD-45662 and ISO 17025. Equipment includes a FARO GagePlus articulated-arm coordinate measuring machine for precise measurement of large or complex parts, optical comparators and microscopes, digital micrometers, gages, and precision balances. The Quality Control room also features ultrasonic cleaning equipment for parts processing and secure storage in preparation for flight.

SBIR and STTR

The SBIR program has made a critical difference to the development of Honeybee, to its technology, and to the success of NASA missions flown using Honeybee equipment. Especially in Honeybee’s aerospace activities, SBIR/STTR has been and continues to be an important source of funding for early stage development of mission technology.

Since its founding in 1983, Honeybee has received 92 awards under the SBIR/STTR programs worth $24.4 million. NASA and DoD have been the principal funding agencies for Honeybee. As Table E-9 shows, NASA has provided 70 percent of the funding, DoD 29 percent, and the remaining 1 percent through a lone NSF grant in 2014. Honeybee has been exceptionally successful converting Phase I into Phase II grants with an overall conversion rate of close to 50 percent. Finally, over 99 percent of SBIR/STTR funding to Honeybee has come through the SBIR program.

TABLE E-9 SBIR/STTR Awards to Honeybee Robotics by Phase and Source (1983-2015)

Agency Number of Phase I Awards Phase I Number of Funding Phase II (Dollars) Awards Phase II Funding (Dollars) Total Funding By Agency (Dollars) Agency Funding as Percent of Total Phase I to Phase II Conversion Rate (Percent)
NSF 1 149,883 0 - 149,883 1 0
NASA 43 3,924,073 21 12,777,136 16,701,209 68 49
DoD 19 1,769,932 8 5,787,149 7,557,081 31 42
Total 63 5,843,888 29 18,564,285 24,408,173 100 46

SOURCE: https://www.sbir.gov/sbirsearch/firm/all. Accessed October 8, 2015.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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Over the past 5 years, SBIR funding as a percentage of revenues has dropped from 30-35 percent in 2010 to 20 percent in 2015. Partly this reflects the overall growth in the company and successful development of other revenue sources. Corporate revenue increased from $8 million to $11 million annually over the same period. At the same time though, the absolute amount of SBIR awards going to the company has dropped from around $2.6 million in 2010 to around $2.2 million in 2015. Mr. Davis explained this transition, saying, “SBIR/STTR topics are usually very mission specific and in many cases are not likely to yield commercializable technology. As Honeybee Robotics has gained commercialization traction with its products, the company has opted not to pursue SBIR/STTR funding unless there is a strong link to its current product line initiatives.”

The company continues to seek SBIR funding. Because of its close ties to NASA, it frequently comes close to the five award annual limit that NASA enforces for Phase I awards. In the seven years between 2008 and 2014, Honeybee received four or five Phase I awards from NASA four times. Honeybee also maintains good relations with many elements within DoD, most notably the Air Force Research Laboratory, and has received many SBIR awards from DoD.

Improving SBIR and STTR

From Honeybee’s perspective, the biggest change to the SBIR program has been in the increase in Phase I award size. Because Honeybee frequently breadboards proposed Phase I technologies, the proposal writing process is expensive. Phase I projects were often run at a loss. Mr. Davis explained that “The increase in Phase I award amounts is particularly important because it allows a more thorough evaluation of a technology’s value and feasibility. As a result our Phase II proposal quality is higher and Phase II programs are better positioned for success.”

Another important change, especially for a company focusing on technology commercialization, was the creation of the minimum transition benchmark. As winners of multiple SBIR awards, Honeybee must demonstrate that it has met or exceeded a minimum level of successful commercialization transitions over a moving multi-year window of time. The process of analyzing and evaluating the commercialization outcomes in terms of revenue, patents, and other success variables has helped Honeybee. Mr. Davis emphasized that this process has sensitized Honeybee to those SBIR/STTR funded programs most likely to result in commercial success. He explained, “It has made us smarter about which topics we pursue and what our commercialization strategy should be.”

Honeybee supports the DoD concept of bridge funding and recommends its implementation in NASA. It also approves the notion of a 9-month Phase I, because some necessary work simply takes longer than 6 months. Ms. Yachbes noted that this timeline is in reality even shorter, because

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
×

Phase II preparation must begin well before the application is due and usually depends on Phase I results.

Honeybee is comfortable with the NASA annual solicitations and believes that the timing works well in the industry. NASA meets its timelines, and hence contracts and funding flows are predictable. In contrast, DoD suffers from “proposal crowding,” with numerous deadlines close together. Overall, SBIR applications are very time consuming to complete.

Honeybee would like the program to better support its efforts to develop relationships with NASA’s prime contractors. For example, in Honeybee’s work on the now cancelled U.S. Orion Service Module effort, NASA assisted Honeybee with developing and strengthening its relationship with Lockheed Martin. From Honeybee’s perspective this was advantageous both in the short run to deliver the contracted technology modules but also in the long run to create an ongoing source of business. Ms. Yachbes elaborated, “This process is rather hit and miss currently. We would benefit from more structured support from the SBIR program officers.”

INTELLIGENT AUTOMATION, INC.

Based on an interview with Dr. Vikram Manikonda, President and CEO, October 15, 2015

Intelligent Automation, Inc. (IAI) is a technology innovation company headquartered in Rockville, MD. IAI specializes in providing advanced technology solutions and R&D services to federal agencies and corporations throughout the United States and internationally. Leveraging agile R&D processes, a multi-disciplinary collaborative environment, and its substantial intellectual property portfolio, IAI specializes in developing technology platforms to support market-focused products and customer-driven solutions. Founded in 1987 by Drs. Jacqueline and Leonard Haynes, IAI is a privately held woman-owned small business, with offices in Rockville MD, Rome NY, and Orlando, FL.

IAI’s research activities are led by Dr. Vikram Manikonda, IAI’s President and CEO, and supported by a cross-disciplinary team of more than 150 research scientists and engineers, with backgrounds in Computer Science, Cognitive Science, Experimental Psychology, Human Factors, Education, Electrical Engineering, Mechanical Engineering, Robotics, Aerospace Engineering, Optical Engineering and Physics. More than 75 percent of IAI’s technical staff has advanced degrees and 50 percent of the staff holds Doctoral Degrees.

Historically, IAI might best be understood as a diversified R&D “think tank.” Since 2009 however, IAI has expanded beyond state of the art, multidisciplinary collaborative R&D to aggressively transition the results of its R&D into products, licenses, and/or productized services. IAI is a Small Business

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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Innovation Research (SBIR) program leader and has successfully executed more than 1,000 SBIR and non-SBIR R&D contracts as the prime contractor.

IAI’s current core R&D areas include Air Traffic Management, Big Data and Social Media Analytics, Control and Signal Processing, Cyber Security, Education and Training Technologies, Health Technologies, Modeling and Simulation, Networks and Communications, Robotics and Electromechanical Systems, and Sensor Systems.

Over its 27 year history IAI has served clients in government agencies, the prime contractor community, and commercial organizations. Federal customers include the Department of Defense (DoD), National Aeronautics and Space Agency (NASA), National Institutes of Health (NIH), Department of Homeland Security (DHS), National Institute of Justice (NIJ), Federal Aviation Administration (FAA) and Department of Education.

IAI pursues technology transition through programs, partnerships, products, and spin-off opportunities. IAI participates in programs as a valuable partner to prime contractors. The company utilizes disparate contract vehicles, beyond SBIR, to meet its customers’ needs. For some technologies, IAI actively pursues partnerships with market leaders to license its technology. IAI’s corporate partners include first tier integrators such as BAE Systems, Boeing, Booz Allen Hamilton, CSC, Exelis, General Dynamics, Lockheed Martin, Northrop Grumman, Raytheon, and SAIC. IAI also has active relationships with more than 50 top universities.

Working directly with its customer or through collaborations with industry leaders, IAI has transitioned its technologies into several programs of record. Examples of such program transitions include NAVEODTECHDIV AEODRS Program, Joint Service Small Arms Program, NASA ECOSAR Program, Army Future Combat Systems (FCS), NASA’s Airspace Concept Evaluation System, NASA LITES and GESS III programs, Joint Strike Fighter Program, Centers for Disease Control CIMS Program, ADL SCORM S100D testbed, and NAVAIR PMA 268 Scalable Network Access Protocol Program, DHS/AFRL Cyber Security programs, and DOD Data Analytics programs.

IAI also develops IAI-branded products, generally in niche areas, and uses government R&D programs to reduce risk. IAI is aggressive at patenting critical technologies that support product development efforts. Some examples of IAI’s current products include CybelePro® (agent-based infrastructure for large scale modeling and simulation), ARGUS™ (wireless perimeter security), RFNest™ (wireless network emulation system), and Scraawl® (social media analytics tool).

Finally, for certain technologies that have exceptional market potential and a strong market position, IAI raises external funds and launches spin-off companies for focused commercialization. IAI recently launched Cryptonite, LLC, a cyber security spinoff for commercializing IAI’s innovative Self Shielding Dynamic Network Architecture (SDNA™) technology for cybersecurity.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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Technology

IAI’s ability to develop internal research products, tools and frameworks in each of its core technology areas has been Integral to the company’s vision as a recognized leader in the research and development community. These products, tools and frameworks encapsulate and formalize the company’s intellectual capital, thus enabling an unusual degree of technology reusability and research agility. IAI’s core competencies are described in greater detail in Table E-10.

Products and Services

IAI’s original strategy for product development generally involved technology development coupled with partnership with companies already positioned in specific markets. IAI licensed its technology and benefited indirectly. This reduced the burden on IAI to develop its own marketing and distribution channels. Examples of IAI technologies productized in this way include:

Technology

Description

BulletTrax 3D

BulletTrax 3D is two- and three-dimensional forensics imaging equipment for matching bullets and is integrated into Forensic Technology, Inc.’s IBIS TRAX HD3D system used by police forces and forensics labs worldwide.

GradAtions®

GradAtions® is an intelligent literacy tutor designed to help learners improve their reading proficiency. IAI licensed this technology to university and training centers for marginalized and ESOL students.

Although licensing has provided a reasonable return on investment, IAI recognizes that developing IAI-branded products and starting spin off companies provides a stronger strategy for driving long term profitable growth.

Since 2009, IAI has adopted a more aggressive strategy of developing, funding, and marketing products based on the technologies it develops. Examples include:

Technology Description Phase III Funding

CybelePro®

CybelePro® is an Intelligent Agent Framework licensed by most NASA labs and leading aerospace companies for modeling and simulation of Air Traffic Management related technologies.

$5M+ in NASA contracts

RFnest™

RFnest™ is a laboratory-based test and evaluation environment for mobile networks. It enables accelerated development and fielding of new wireless protocols and network solutions. Principal customers include primes and government agencies.

$5M+ including Rapid Innovation Fund award

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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ARGUS™

ARGUS™ uses a network of unattended wireless sensors to create a wireless “trip wire” around a perimeter and provide early warnings against intrusions. IAI sells directly both in domestic and international markets. Customers are government agencies interested in border protection.

$2M+ including Rapid Innovation Fund award

Scraawl®

Scraawl® is a social media analytics platform that allows analysis of tweets, social presence, influence and sentiment. IAI currently has over 1000 users across the government, private and individual subscriptions.

$3M+ including DARPA, JIDA programs

SDNA®

SDNA® provides an IPv6-based integrated security architecture that enhances network security before, during, and after an attack. It creates a network secure by default. IAI recently spun off this technology as a separate company called Cryptonite, LLC.

$2.5M+ including DHS and Air Force programs

All of these products developed from successful SBIR Phase II projects and benefited from subsequent Phase III funding from the Rapid Innovation Fund, IDIQ contracts, NASA NRAs, DOD BAAs, and DARPA programming/BAA, with augmentation by internal R&D support from IAI.

In addition to product development, IAI also integrates SBIR technology into service modules for delivery within custom contracts overseen by prime contractors. IAI calls these activities productized services. In offering such services, IAI can either operate as part of a bid team for the contract or as a vendor providing technology and services for integration into the larger project. The company has developed close relations with a number of prime contractors such as BAE Systems, Honeywell, Northrop Grumman, Boeing, and Raytheon.

Business Model

IAI has diversified its revenue streams as a strategy for growth. While SBIR revenue has remained reasonably constant, the growth in product revenues and especially productized service revenues has grown substantially over the past five years. In 2010, 75 percent of IAI’s income derived from SBIR awards. By 2015, only 51 percent of IAI’s revenue was from SBIR funding. The 3 year moving average of IAI’s SBIR funding in 2014 is $16.1 million, less than 5 percent lower than the same number in 2010. Table E-11 shows this long term shift in the company’s business model.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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TABLE E-10 Intelligent Automation, Inc., Core Technology Competencies

Core Competency Description
Air Traffic Management IAI has considerable expertise in Air Traffic Management (ATM), in developing cutting-edge tools for both NASA and the Federal Aviation Administration (FAA), and using them to solve topical problems in the aviation community. IAI’s team of researchers and engineers have experience developing several tools, including NASA's Airspace Concepts Evaluation System (ACES), NASA's Multi-Aircraft Control System (MACS), the Department of Transportation's (DOT's) Aviation Environmental Design Toolkit (AEDT), the FAA's TARGETS system, and NASA's Air Traffic Operations System (ATOS). In addition, IAI has expertise in developing a number of visualization and analytical tools to better understand and translate the large quantity of data produced by these models into actionable information for aviation decision makers.

Controls and Signal Processing

IAI applies controls and signal processing expertise in the areas of machine learning, prognostics health monitoring, and transportation. In machine learning, IAI applies cutting edge techniques for sophisticated audio, image, and video analysis. Within transportation, IAI is active in developing innovative traffic management, monitoring, and safety solutions. IAI is also focused on operator safety. In prognostics, IAI utilizes predictive algorithms to address DoD health maintenance challenges.

Cyber Security

IAI provides practical and customized solutions for protecting the network, information, and the overall system. IAI utilizes advanced technologies and has extensive hands-on experience with wireless network security, cyber-attack analysis and mitigation, and cyber security testing and training. IAI’s practical research and development is guided by the latest cryptographic theories.

Big Data Analytics

IAI has developed and commercialized innovative data analytics tools. With expertise in data mining, natural language processing, text analytics, and social media analytics, IAI’s has developed solutions in scientific data analysis, health informatics and intelligence analysis.

Education and Training Technology

IAI applies the latest research in computer, behavioral and learning sciences, game design, engineering, and mathematics, to develop innovative solutions in education, in training and performance enhancement assessment methods, and in improving human-computer and human-machine interfaces. IAI personnel are leaders in creating Immersive Training Environments that provide effective, intelligent, and adaptive training in all spheres of instruction, including the military and the K-12 community. IAI also develops innovative Human System Integration products, using human factors engineering principles to improve human-system interfaces.

Health Technologies

IAI is actively engaged in research, development and the transition of health related applications, systems and technologies. IAI is a leader in developing mobile health solutions that fully engage the user by going beyond basic interactions and providing new functionalities that leverage the power of mobile platforms. IAI is active in health-IT and informatics focused on the areas of clinical decision support, Geographic Information Systems (GIS), health data mining, and natural language processing. IAI uses its extensive experience in developing innovative sensors, devices, and systems for biomedical applications.

Modeling, Analysis, & Simulation

IAI is a leader in the development of distributed simulations that emulate the behavior of physical systems and large complex networked systems. IAI’s modeling and simulation expertise includes: aircraft and missile flight dynamics, flight trajectories, unmanned aircraft and ground vehicle performance and trajectory modeling, modeling and simulation of the

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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behaviors and interactions of entities in the National Airspace (NAS), communication and network modeling, and agent-based highly scalable simulations for planning, scheduling, and logistics.

Networking and Communications

IAI specializes in the design, development and production of a wide spectrum of networking and communication technologies for both military and civilian applications. IAI provides solutions in domains ranging from the battlefield to rear echelon computer systems, and from wireless and satellite communications to local- and wide-area network protocols. Working from the physical through the application layer, IAI designs advanced networking and communications systems to support advanced wireless networking, network analysis and management, network evaluation, and advanced radio communication and antenna technologies.

Robotics and Electromechanical Systems

IAI has considerable expertise developing custom solutions for high performance machine vision, machine autonomy, human-machine interfaces, and remote robotic manipulation and inspection. IAI develops state-of-the-art simulation and control software with a focus on high-degree-of-freedom systems. IAI is actively applying this software to a wide range of applications to enable remote robot operators to perform advanced dexterous manipulation for inspection, maintenance, repair, EOD, material handling and others complex tasks.

Sensor Systems

IAI specializes in developing advanced sensor systems for military, transportation and medical applications. Areas of focus include radar, location and tracking, non-destructive evaluation/structural health monitoring, and electronic systems. IAI has extensive experience with a wide range of sensor modalities including electromagnetic, acoustic, optical, and electrical as well as the simulation, test, and evaluation of sensor systems.

SOURCE: Intelligent Automation, Inc., “Products and Services,” http://i-ai.com/?product.

TABLE E-11 Intelligent Automation, Inc., Company Revenue Mix (2010-2015)

Percentage of Company Revenues, by Year

2010

2015

SBIR R&D

75

51

Productized Services

23

41

Products

2

8

SOURCE: Interviews with IAI Personnel. Numbers are approximations.

To support a more structured product development and commercialization process, IAI has also invested in its sales and marketing function. IAI has staffed a formal technology transition team that includes Dr. Vikram Manikonda, President and CEO of IAI; Thomas Wavering, Vice President, Strategic Technologies; Dr. Peter Chen, Senior Director of Advanced Technology; and Ms. Ilene Godsey, Vice President of Operations. Previously Vice President at a technology company that he helped take public, Mr. Wavering joined IAI in 2009 and leads IAI’s business development and technology transition activities. Dr. Chen was a senior executive of a series of business units focusing on defense programs and joined IAI in 2012. He leads

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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IAI’s product development efforts including ARGUS™ and RFnest™. In addition to being VP of Operations Ms. Godsey is also IAI’s in-house General Counsel, and works closely with the product development and transition team on issues related to intellectual property, patents, export control, and compliance.

IAI’s ongoing transition to a product-oriented approach has required reorganizing itself so that it can develop and market products more relevant to its customers needs. At the same time, increased support of commercialization by DOD and the U.S. government in general has accelerated this transition.

SBIR

IAI is among the most prolific winners of awards in the SBIR program. Over a period of nearly 30 years, it has won over 800 awards. It has been particularly successful in NASA competitions where it is among the Top 10 winners of Phase II awards.41 IAI has had particularly close relationships with NASA-Ames (related to Air Traffic Management (ATM) systems), NASA-Goddard (related to Airborne SAR radar for biomass measurement), NASA Langley and NASA Glenn (related to ATM and UAS systems).

Table E-12 shows that in total, IAI has received slightly over $200 million in SBIR awards as of year-end 2014 from 596 Phase I awards and 213 Phase II awards. Approximately 73 percent of this funding was from DoD and another 16 percent was from NASA. The remainder was shared between nine other agencies, including the Department of Homeland Security (DHS), the Department of Commerce (DoC), the Department of Energy (DoE), the Department of Transportation (DoT), the Department of Education (ED), the Department of Health and Human Services (HHS), the National Institute of Standards and Technology (NIST), the National Oceanographic and Atmospheric Administration (NOAA), and the National Science Foundation (NSF).

The distribution of Phase I awards by year and agency for 1987 through 2015 shows consistent long term growth in the number of SBIR Phase I awards won by IAI. After 2007, however, broadly speaking the number of awards plateaus at between 30-50 awards annually.

Looking more closely at data in the last 5 years (Table E-13), IAI’s Phase II conversion rate is comparable to the national average across all agencies. For NASA, IAI’s Phase II conversion rate is significantly higher than average since 2009.

Having won most of its SBIR awards from NASA and DoD partially explains IAI’s approach to contract research during the early years of its existence. IAI has been highly successful in meeting these agencies’ research needs, demonstrating that the agencies find significant value in

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41 SBA tech-net database. Accessed November 1, 2009.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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TABLE E-12 SBIR/STTR Awards to Intelligent Automation, Inc., by Phase and Source (1979-2014)

Agency Number of Phase I Awards Phase I Funding (Dollars) Number of Phase II Awards Phase II Funding (Dollars) Total Funding By Agency (Dollars) Agency Funding as Percent of Total Phase I to Phase II Conversion Rate (Percent)
DoE 6 700,000 0 0 700,000 0 0
HHS 14 1,649,366 4 3,281,816 4,931,182 2 29
DHS 5 499,998 4 3,294,998 3,794,996 2 80
DoT 16 1,824,999 8 5,189,880 7,014,879 4 50
NOAA 1 95,000 1 400,000 495,000 0 100
NSF 18 1,412,815 2 501,985 1,914,800 1 11
DoC 8 384,729 2 489,153 873,882 0 25
NIST 3 270,000 1 300,000 570,000 0 33
ED 5 210,000 2 650,000 60,000 0 40
NASA 90 6,943,314 40 25,332,611 32,275,925 16 44
DoD 430 40,293,414 149 106,325,557 146,618,971 73 35
Total 596 54,283,635 213 145,766,000 200,049,635 100 36

SOURCE: https://www.sbir.gov/sbirsearch/firm/all. Accessed October 16, 2015.

TABLE E-13 Intelligent Automation, Inc., Phase II Conversion Rate (2009-2013) by Agency

Conversion Rate (Percent)

All

IAI

All Agencies

45

43

National Aeronautical and Space Administration

41

55

Department of Defense

50

41

SOURCE: https://www.sbir.gov/sbirsearch/firm/all. Accessed November 6, 2015.

companies that successfully address difficult research topics within the relatively limited budgets afforded by the SBIR program. Like many companies dependent on DoD and NASA SBIR funding, in its early years, IAI found it difficult to find a successful model for transitioning and productizing the technologies that it developed. However, since 2009, with its new initiatives and corporate reorganization and focus on productization and transition, IAI now has multiple successful products, productized service offerings, and recently even raised external funding to launch its first spin-off company.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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Knowledge Effects

IAI has patented technical advances that have commercial application; it is the assignee on 15 U.S. patents. IAI also has over 200 publications in journals, conferences, books and magazines and several “Best Paper” awards at major conferences.

IAI has been recognized by its customers and peers for excellence, receiving the Northrop Grumman Information Systems Supplier Excellence Award and the Most Innovative Communicators Award from Northrop Grumman, two National Tibbetts Awards from the U.S. Small Business Administration, the Administrator’s Award from U.S. Small Business Administration, Raytheon Supplier of the Year award from Raytheon, the NASA team achievement award and NASA Space Act Software Release Award from NASA, and the Best of Rockville Award from the City of Rockville for its advances in Aerospace Technology.

IAI has also been recognized for its contributions to the SBIR program itself. In February, 2011, IAI won a “Champions of Small Business Innovation” Award from the Small Business Technology Council for its work in helping realize the long-term reauthorization of the SBIR program in 2011.42

STTR

IAI has worked extensively with universities and university faculty on many projects. IAI has used the STTR program to access the expertise of universities and university faculty. Of the $200 million in funding received by IAI through the SBIR/STTR programs, about 10 percent has been through the STTR program. While the STTR program provides access to university partners, finding the right partners is challenging. Also, because of university policies regarding export control regulations and restrictions on publication, many university professors won’t or can’t participate.

Although IAI works extensively with universities, the company prefers to use SBIR over STTR funding when the transition customer or product is a DoD agency. Constraints on publication stemming from SBIR/STTR awards and constraints on team composition because of export restrictions limit the number of universities willing to participate in STTR-funded programs. Non-DoD agencies tend to be more flexible on the issue of publication. Dr. Manikonda thought that given a choice, for several DoD agencies, IAI would choose an SBIR contract over an STTR. “In the end, you just have more flexibility with whom you can work in SBIR. Also, SBIR provides more flexibility when it comes to transitioning the technology to DoD customers.”

__________________

42 National Small Business Association, “SBTC Honors” Champions of Small Business Innovation” February 12, 2011, http://www.nsba.biz/content/printer.4422.shtml.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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Improving SBIR and STTR

Overall, IAI believes that the SBIR program provides great value to the small business community, serving as an invaluable source for seed funding to support development of innovative and high risk technologies, to meet the needs of the government and commercial sector.

Recently, some agencies have begun committing additional program funds to SBIR Phase II funding to accelerate commercialization. IAI supports this interesting innovation. For example, in 2013, IAI was awarded a $4M SBIR Phase II program (the usual ~$1 million for an SBIR Phase II augmented by an additional $3M in program monies) to support the need, voiced by the F-35 program office, for a system to inspect jet exhaust ducts. By program’s end, IAI will have taken the technology to TRL6 while positioning it on the F-35 roadmap through close interaction with the government, Pratt & Whitney, and the Lockheed Martin Integrated Product Team. IAI would like to see more programs that provide extensive funding for SBIRs that closely map project results to program needs.

In many cases, STTR contracts require that the prime contractor and subcontractors (the university) receive permissions and approvals from the agency before publishing their results. Although IAI supports the need of the agency to review publications, this practice is a serious concern to university professors and students for whom career advancement depends on the publication of research results. According to Dr. Manikonda, on several occasions, despite a winning application, university faculty members have withdrawn from proposal teams because they would not accept restrictions on publication. “Relaxing these publication clauses on STTRs would significantly increase the value of the STTR program and enable more universities to participate in the STTR program” said Dr. Manikonda.

The SBIR program’s sole-source provision allows an agency to avoid competitive bidding and give preference to a company with a technology that fully serves the agency’s needs when that technology was originally funded through a competitive SBIR or STTR process. Although IAI has had success in identifying Phase III funding for many of its Phase II SBIR projects, IAI has had limited success in using the sole source provision in the SBIR funding program to receive Phase III funding. Historically only NASA has awarded IAI Phase III funding under the sole source provision. Dr. Manikonda believes that the limited use of sole sourcing in practice stems from an incomplete understanding of this provision by contracting officers in some of the DoD program offices.

IAI continues to see no reason to limit the number of applications a company can make by solicitation or year. Dr. Manikonda thinks that this policy limits the number of quality ideas to which the government is exposed, which is bad for innovation. “Quality and merit should be the standards,” said Dr. Manikonda. “Some SBIR challenges require a cross disciplinary solution that is only possible by small businesses that have the breadth of R&D expertise and

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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resources to meet those challenges.” Restricting the number of applications results in suboptimal SBIR solutions for government customers.

An issue that surfaced in 2013 and 2014 (largely due to the impact of sequestration), and has continued to prevail in some agencies is the amount of time taken to deliver funding following the announcement of selection for a Phase II award. “In the worst cases, this can take a year” said Dr. Manikonda. While larger small businesses like IAI can withstand such delays, this can be devastating for smaller companies, as it puts the employees hired to work on these projects at significant risk. “Reducing the time between the end date of the Phase I and start of a Phase II would greatly benefit small business participating in the SBIR/STTR program” said Dr. Manikonda.

Another recommendation from IAI is related to the metrics for measuring commercial success. Since 2010, SBIR has implemented the minimum transition benchmarks. While IAI has no trouble meeting these benchmarks (given its strong record for transition), and agrees that these are valuable and much needed metrics, Dr. Manikonda felt that, in its current form, many small businesses often do not receive full credit for transitioning technology to what IAI terms productized services. As productized services, SBIR technologies are often central to a large prime program’s success. However, the SBIR company only gets limited credit for providing this key technology. For example, if an SBIR technology enables a $1 billion program but the small business only gets a subcontract worth $10 million from the prime, at present, the small business only gets credit (in transition /non-SBIR revenue) for the $10M paid in licensing/subcontracting revenue. In many situations, Dr. Manikonda noted that what limits larger participation in the program of record by the small business are certifications (e.g. CMMI), clearances levels, and maturity at the time of transition. Dr. Manikonda suggested that the SBIR program should consider weighting the total value of the transition program and the role of the SBIR technology in its success as one of the metrics for the transition benchmark, “If the SBIR technology is integral to the success of the transition program, the small business should receive more credit than simply its subcontract value for the transition,” suggested Dr. Manikonda.

Overall, IAI views the SBIR program positively. Dr. Manikonda affirmed that SBIR funding provides critical seed funding that allows high-risk, high-value projects to be explored and completed. SBIR funding has been integral to IAI’s growth and success.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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PARAGON SPACE DEVELOPMENT CORPORATION

Based on interview with Mr. Grant Anderson, President and CEO and co-founder and Dr. Volker Kern, Senior Director of Programs December 19, 2014 Tucson, AZ

Paragon Space Development Corporation (Paragon) is a small business headquartered in Tucson, Arizona, with additional offices in Houston, Texas, and Denver, Colorado. The company provides environmental controls for extreme and hazardous environments, including life support systems and thermal control products for astronauts, contaminated water divers, and other extreme environment adventurers, as well as for unmanned space and terrestrial applications. Paragon is headquartered in a 21,500 square-foot facility near the Tucson International Airport, close to the University of Arizona. Approximately 9,000 square feet of Paragon’s facilities are devoted to an easy-access high bay, plus laboratories, with a 4,500 square foot workshop, a bonded storage, and a ~200 square-foot class ISO Class 7 clean room. The remainder of the building is used for engineering design a conference room and offices.

Paragon was founded in 1993 by a small group of scientists and engineers who realized that the engineering and aerospace communities differed sharply in outlook from the biosciences- and life sciences-related communities. In their view, physics and engineering were in “clean hard science,” while biosciences was still a more intuitive field, so they modeled the Paragon business to combine the thinking of both types of disciplines.

Mr. Anderson observed that these cultural differences run deep: the two communities speak different languages and in some ways see each other as too lax or too rigid. They even tend to have different social views and dress code. So a core objective for the company was to bring together these two scientific/engineering cultures.

Paragon started by developing a small closed ecosystem, which it patented. The ecosystem involved controlling the nitrogen and carbon balance in ways analogous to the control exerted by a central bank over currency. Paragon used these systems to undertake the first completed animal breeding and life cycle in space. Its experiments were used to explore the role of innate and learned capabilities by examining animals swimming outside the gravity well and to compare those animals born in space with those that experienced gravity then adapted. In addition, those animals born in space were also observed adapting to gravity once they returned to earth.

During the 1990s, NASA work in biological sciences testing in space did not expand as expected because of delays in the International Space Station as a science laboratory and because of priorities, according to Mr. Anderson. In response, Paragon’s emphasis shifted toward life support and thermal control, which was where market demand could be found.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
×

During the late 1990s, Paragon became part of the team working on the shuttle’s replacement and soon became involved in the Orion program, and more generally in space capsule life support design.

Paragon’s dive suit project offers an excellent example of understanding the biology and physiology needed to keep a person alive while solving difficult issues of material compatibility and use. Paragon adapted space suit design for diving applications in contaminated waters where total isolation of the diver is required. This constituted an early effort by the company to explore options outside space.

Paragon has encountered some business problems in part because it has remained primarily a government contractor working for NASA. As such, funding is uncertain and margins are low, which make it difficult to weather difficulties with funding cycles (government funding is authorized on an annual basis) and limit the ability to take products to wider markets. When times become difficult, the company usually does not have a significant backlog of work, resource base, or reserves to fund internal R&D.

NASA and DoD SBIR funding help to partially close the R&D gap by providing resources for developing technology. However, this technology is usually attractive only to the small market interested in the directed topic, and, in NASA’s case especially, tends to be directed toward meeting the agency’s needs, which contributes to the funding cycle problems noted above.

The company has worked successfully in life support and space fields for more than 20 years. Even today, it is deeply involved in work on the next generation of space suits the Orion vehicle for NASA, while supporting private space and other life support initiatives, such as the recent successful development of a “Stratospheric Explorer” for Google executive Alan Eustace.

Current Strategy

Paragon is working diligently to diversify its customer base, according to Dr. Kern (see Annex E-1). However, the company was to a large degree founded around human life support, and its founders and employees are passionate about that mission. Therefore, diversification introduces some tensions as well as benefits. Company strategy has recently shifted from contract R&D and integration of systems of components, usually made by other companies, to development and deployment of components and products for larger systems suppliers such as Lockheed, Boeing, and other established aerospace companies.

Both Mr. Anderson and Dr. Kern are concerned about the future of space flight and space development in the United States. They argued that Congress (and to some degree NASA) realize neither the importance of these capabilities to the nation nor the role of the small companies that provide the management and the technical innovation required. Today, most modern spacecraft are made in China and by commercial suppliers, and the United States has shut down its only human launch capacity for the near term—perhaps

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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for more years than estimated when the shuttle was retired in July, 2011. The country is entirely dependent on Russian infrastructure for manned operation of the International Space Station (ISS).

Markets/Products

Paragon’s market is life support and thermal control products and systems, which can be divided into three areas, although systems often include elements of all three areas to provide a complete life support system:

  1. Air revitalization
  2. Thermal control
  3. Water management, recovery and conditioning

Paragon is a cutting-edge company. Its technologies have been used for a number of ground-breaking scientific and technical efforts, including the following:

  • The “first commercial experiment on ISS. Paragon designed, fabricated, tested, and prepared”43 this experiment for flight in only 10 weeks, utilizing a Russian Progress vehicle. Paragon claims “this work was the pathfinder for all future commercial projects involving the RSA/Energia and SPACEHAB.”44
  • “The first animals in space to perform complete life cycles.”45 Paragon managed “complete life cycles from birth, to adulthood, to procreation”46 and subsequent generation births. It “did so during a [4-]month experiment”47 on the Russian Mir Orbital Station. This “first multigenerational animal experiment in space is [still] the longest [duration] microgravity animal experiment”48 to date at more than 18 months.

    Subsequent experiments on four space flights (shuttle, ISS, Mir) used Paragon’s Autonomous Biological System (ABS) to deploy the “first aquatic angiosperms to be grown in space; the first completely bioregenerative life support system in space; and, among the first gravitational ecology experiments”49 in space. The “first full-motion, long-duration video (4 months, 60 minutes) of plant and animal growth on orbit was accomplished with a Paragon-designed digital camera

__________________

43 Paragon Space Development Corporation website, http://paragonsdc.com.

44 Ibid.

45 Ibid.

46 Ibid.

47 Ibid.

48 Ibid.

49 Ibid.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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system using a Paragon-specified Sony DCR-7 digital camera with custom EPROM.”50

  • Turn-key air revitalization system for the NASA Commercial Crew Development project. The system handles trace contaminant control, carbon dioxide removal, humidity removal, and cooling to a cabin air environment. The humidity control portion has been adapted for Boeing’s commercial CST-100 manned vehicle.

Recently, Paragon-made tubing and instruments flew to outer space as part of the Orion EFT-1 test flight. This tubing was for water, ammonia, thermal fluids, and oxygen and nitrogen supplies. Paragon also supports the NASA Constellation Space Suit System (CSSS), also known as the C-SAFE, through thermal analysis, thermal system component design and fabrication, and testing of specific components.

Paragon also continues to develop the Paragon Dive System (PDS) which allows divers to dive safely in highly contaminated water that includes jet fuels, ship fuels (diesel oil), sewage, heavy metal contaminants, biological warfare agents, and chemical warfare agents.

Paragon and the SBIR Program

During its first 7-8 years of existence, Paragon did not apply for SBIR funding; in fact, it operated with more commercial contracts at that time. Among its projects, it worked for a German airship company, and was funded by Japanese research organizations to develop and manage experiments on Mir. Paragon used the space shuttle to transport the payload to Mir, completed its research program and then sold the research and samples to a consortium of Japanese universities and researchers.

Paragon’s first SBIR award was for the diving suit project noted above. This project was for the State Department, which did not fund Phase II. The U.S. Navy picked up Phase II 3 years later. The project has progressed through Phase III and other development efforts and is now in Phase III driving toward certification of the system across the Navy.

Overall, the SBIR program has made three crucial contributions for Paragon, according to Mr. Anderson. First, it provides seed funding to explore an idea. Paragon usually loses money on Phase I, and sometimes loses money on Phase II, so SBIR is a supplement to internal funding rather than a profit center (i.e., “subsidized R&D”). Second, the program allows Paragon to mature technologies so that they are more attractive to potential customers. Finally, it helps Paragon develop working relationships with people running programs that might be customers. According to Mr. Anderson, this latter contribution is “as important for our ability to work with NASA as the funding for research.”

__________________

50 Ibid.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
×

Overall, Paragon believes that a substantial share of discretionary R&D at NASA would not be funded without the SBIR program. In fact, the program remains the research seed corn at the agency; for a long time, almost all of the non-program-specific research has been funded by SBIR.

Problems with Data Rights

The SBIR program funded another project to work on a spacecraft radiator. The Phase III for this project was indirectly picked up for the Orion program. In this case, there were difficulties with ownership of data rights and requests from NASA to release the technical data from company proprietary limits. Previously, NASA contracts stated that the summary “quad chart” required with the final report should be free of proprietary information, which was reserved for the technical report itself. However, NASA rejected Paragon’s final report because it contained proprietary data. This presented significant difficulties because, by definition, a technical report on the program must contain confidential information to be sufficient for evaluation by the contracting officer’s technical representative (COTR).

Recent changes to NASA SBIR contracts provide some improvements, but they are still sufficient from the company’s perspective. The company shared the following clause from its most recent SBIR award:

(1) The Final Report shall include both a single-page project summary as the first page, identifying the purpose of the research, a brief description of the research carried out and the research findings or results, and a “Final Phase 1 Accomplished/Updated Briefing Chart.” The summaries shall be submitted without restriction for NASA publication. Proprietary data shall not be included in the final report nor contain proprietary restrictive markings unless authorized by a Contracting Officer (CO). Instructions for the electronic submission of the project summary and a sample of the Summary Chart are posted on the NASA SBIR EHB located in the NASA SBIR/STTR Forms Library. For instructions for completing the accomplished/updated briefing chart and a template see Attachment 2.

Although Paragon agrees that distribution of the summary chart should not be restricted, a requirement that the contracting officer approve inclusion of proprietary data runs counter to the program’s purpose of the program. It also raises concerns about the possible distribution of the report to other parties outside NASA.

Paragon is also concerned about the new technology report (NTR). Sometimes, Paragon creates new technology, but would like to retain it as a trade secret because a patent would not necessarily provide the best protection. But the NTR submission is governed by this clause:

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
×

NEW TECHNOLOGY REPORT (NTR)

In accordance with 1852.227-11, the contractor is required to disclose subject inventions and when new technology is developed. A final disclosure is required at the end of the performance period of the contract when new technology is developed. Additional information can be viewed at http://invention.nasa.gov

As stated, NASA requires the company to make a determination on whether to patent a technology to maintain its rights, or to relinquish those rights at the end of the performance period. This not only conflicts with the data rights section of SBIR reauthorization, but also with the relevant sections of the Bayh-Dole Act on which NASA appears to be relying. Mr. Anderson said that the NTR clause in NASA contracts should be further reviewed.

Recommendations for Improving SBIR

Mr. Anderson said that DoD’s funding structure works much better for Paragon than does NASA’s. NASA funds Phase II awards steadily in small amounts over 2 years, and therefore all Phase II projects take 2 years even if they could be completed in less time. Some of Paragon’s DoD awards were completed in less time—in one case within 9 months. It could be argued from the company’s perspective that NASA’s approach represents the worst possible contracting model. It often provides set funding limits per year for 2 years, payable month by month based on invoices for work completed. Effectively, it is a time and materials contract, but one with a fixed fee and an annual funding cap. Recipient companies must account for every hour of work; therefore, any acceleration would incur risk.

Paragon would prefer payment for milestones accomplished. This is the approach adopted under Space Act agreements for commercial crew, where a $1.4 million contract to Paragon was milestone based.

The current approach prevents NASA from investing more rapidly and effectively in projects that are succeeding. The alternate approach has been applied by other agencies, the Navy in particular, which Paragon considers to be a very positive development. Phase II could be used as a more flexible mechanism, with some funding held back for additional investments in successful projects. In general, one size does not fit all, and flexibility is critical.

Other possible improvements include the following:

  • Variable funding size: Some projects require more than the standard award, and others require less. Paragon sees the Navy model as a compromise on this issue.
  • Reapplying for funding. Companies should be permitted to reapply for Phase II funding (along the lines of NIH).
Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
×
  • Multiple solicitations. The NASA solicitations should be released twice a year, as in many other agencies. The current approach imposes substantial application burdens on NASA-centric companies, especially those with limited senior staff time. The influx of proposal work during the November to January timeframe burdens companies and NASA and invariably leads to squeezed time at the company and delays of evaluation and award.
  • Phase I-II bridging funds. Paragon recommends that NASA adopt the Navy model. NASA has recently developed some Phase II alternatives (E and X funding), which are helpful but not as flexible as the Navy model.
  • Award size. Paragon believes that SBIR awards should be larger in size, even if this means fewer awards. The larger awards would encourage NASA to focus more clearly on its top priorities, which would in turn lead to better connections between SBIR and Phase III opportunities.
  • Program review. Paragon noted that NASA technical reviews are usually high quality, although they vary by contract officer. Paragon insists that its NASA clients participate in the review process and sign off on the technical review documents. NASA should mandate that they do so.

Finally, Paragon sees publication in peer-reviewed journals as integral to maintaining its competitiveness. Mr. Anderson observed, “We often publish, because it shows our quality and sometimes scares off the competition when they know how far ahead you are,” and added that it is not enough to win a Phase II award—the target community must accept the proposed technical solution as well. Peer review is a key element of acceptance, so holding back on publication is a strategic mistake. Paragon’s strategy is to create some IP cover using patents, and then to publish. This strategy seems to have helped Paragon during the review process.

Annex E-1
Paragon Customers

  • Andrews Space
  • Bigelow Aerospace
  • Boeing
  • CargoLifter
  • Draper Laboratory
  • Excalibur Almaz
  • GPC
  • Inspiration Mars Foundation
  • JPL
Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
×
  • Jacobs
  • Lockheed Martin Aeronautics, Skunkworks
  • Lockheed Martin Astronautics
  • Mars One
  • MIT
  • MineShield
  • Moon Express
  • NASA
  • Naval Sea Systems Command
  • Oceaneering Space Systems
  • Odyssey Moon
  • Raytheon
  • Rocketplane COTS
  • Rocketplane Kistler
  • SPACEHAB
  • SpaceX
  • SPARTA
  • Toyo Engineering
  • United States Navy
  • University of Arizona
  • World View

PRINCETON SCIENTIFIC INSTRUMENTS

Interview with John Lowrance, CEO. October 20, 2009 Monmouth Junction, NJ

NOTE: Princeton Scientific Instruments is no longer in business following the death of CEO and founder, John Lowrance. The following case study was completed in 2009. The firm’s closing demonstrates the impact on small firms of the loss of key personnel.

Princeton Scientific Instruments (PSI) is a privately held company located in Monmouth Junction, New Jersey. John Lowrance founded PSI in 1980, after working at RCA on satellite-based TV cameras, including a camera used in the Apollo program, and for the Advanced Physics program at Princeton University.

In 1980, Dr. Lowrance helped the European Southern Observatory design the specifications for a solid state camera, which he was subsequently asked to build. Along with a contract from the Max Planck Institute, this

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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contract formed the basis for the new company, PSI. The company was originally founded to design and build charged coupling device (CCD) cameras for astronomical observing and other scientific imaging applications, although initially PSI was only a part-time venture.

In 1984-1985, PSI found out about the SBIR program (from a competitor). PSI won an initial SBIR award from the Army at the Aberdeen Proving Grounds to work on improving the ability to track muzzle deflection in tank turrets. This initial award led to others (see SBIR section below) and allowed the company to fully launch. Since then, the company has focused on a series of projects, most of which have been successful technically, but anticipated markets have failed to fully materialize. PSI has therefore remained largely a contract R&D company, focused on a series of projects to a considerable degree defined by SBIR awards.

Products and Projects

Ultra-Fast CCD Camera

PSI was in part founded to build an ultra-fast CCD camera. For some applications, extremely high frame rates are required to capture changes in target characteristics—up to 1,000,000 frames per second. At the time, digital technology did not allow for capture and transmission of these data at sufficient speed to permit these frame rates.

Consequently, PSI built an analog camera with memory sufficient to capture and retain locally a fixed number of frames—originally 32 and later expanded to more than 300. The camera refilled the analog memory on a continuous basis, discarding older frames as new frames were captured.

Results allowed for the capture of very rapidly changing targets. For example, a figure from PSI shows the results of applying the camera (set at 1 million frames per second) to a Mach 2.5 jet of air/carbon dioxide mixture. The figure depicts four adjacent pixels in the array. Each pixel consists of a photo detector and a CCD type charge storage memory array. In one clocking cycle, photoelectrons generated in the photo detector shift into the adjacent charge storage site of the pixel's memory array, thereby acquiring a frame. Each frame is separated by one micro-second. PSI has several versions of the camera available for sale.

The camera has been adapted for use in a number of scientific environments, including Princeton’s Plasma Fusion Lab. In 1992, a PSI digital CCD camera system was adapted for use in ionospheric observations as part of the Combined Release and Radiation Effects (CCRES) program.

Lightning Mapping Sensor

Lightning strikes are a significant target for weather-oriented applications. Lightning activity can be continuously monitored from

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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geostationary orbit satellites, but the ~38 kg weight and ~140 W power consumption of current CCD-based lightning mapping systems have discouraged their use on synchronous orbit satellites.

PSI is developing a solid state complementary metal-oxide semiconductor (CMOS) array of “smart-pixels” that circumvents the problem of high data rate operations (and attendant high power requirements) by detecting and measuring the optical pulse associated with lightning transient events prior to array readout. This approach reduces power consumption and weight by an order of magnitude.

Similar “smart pixel” arrays, with the ability to detect, locate, and measure unpredictable events, have applications in other scientific research, such as cosmic ray shower detection and in military weapon systems. Some of these applications have also attracted SBIR funding.

PSI’s LMS system was regally by a Navy SBIR award focused on detect laser activity. Although the technology was successfully tested by the Navy, it was not adopted for acquisition. PSI then adapted the technology for use by NASA’s lightning detection group, but the technology did not perform to specifications.

Automatic Muzzle Reference System (AMRS)

The AMRS accurately measures the angular motion of the muzzle of a tank-mounted cannon relative to its trunnion at any elevation angle, while the tank is in motion and as the round exits the muzzle. This system allows for the accurate re-calibration of the gun muzzle for enhanced accuracy, in near real time.

The AMRS is based on viewing the muzzle from the cannon trunnion. The optics assembly consists of an autocollimator-type instrument mounted on the trunnion of the gun, and a mirror rigidly fastened to the muzzle. A beam of light projected by the autocollimator telescope reflects off the muzzle mirror and passes back through the telescope to be re-imaged on a solid state position-sensitive detector located in the focal plane. The AMRS generates analog signals representing muzzle azimuth and elevation.

The AMRS has to some extent been a source of both promise and frustration to PSI. The system has performed as predicted technically and has produced a substantial increase in accuracy of use.

Initially, the system was expected to be installed as part of an anticipated upgrade to the Arm’s Abrams M-1 tank. However, after passing technical tests, the Army made the decision not to perform a full upgrade, and the AMRS system was one component that was not adopted.

PSI received more than $1 million in funding to adapt the AMRS to the upcoming new lightweight tank planned by DoD as part of the Future Combat System (FCS). Again, the AMRS was technically successful and included in preliminary designs for the new tank. More importantly, PSI developed a good relationship with General Dynamics (GD), the likely prime contractor for the

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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new tank. PSI successfully built and delivered a working prototype. PSI’s strategy was not to build the device itself, but to team with a military hardware developer such as GD.

Unfortunately for PSI, the new tank was abandoned by DoD, and the AMRS system was once again not adopted for acquisition by DoD—after more than 20 years of work dating back to 1985. Dr. Lowrance noted that the design could still be adapted for use with subsequent generations of DoD tank technologies.

Therefore years of technically successful R&D at PSI, primarily supported by several SBIR awards from DoD, did not lead to deployment of a commercially successful product. This experience once again illustrates some of the difficulties faced by SBIR companies in matching SBIR technologies to DoD’s acquisition needs.

Client Base

According to PSI, current customers include the Air Force, Navy, Army, NASA, and the Department of Energy. CCD camera customers over the years include the European Southern Observatory, Max Planck Institute of Astronomie, Tokyo Observatory, University of Arizona Lunar and Planetary Laboratory, Princeton University, Cornell University, and Lawrence Livermore National Laboratory. Most of these systems have been custom designed or modified for the customer's application.

Dr. Lowrance observed that the economics of businesses involving sensors are tilted against small companies. Typically, the cost of such systems is heavily influenced by the yield from silicon-based sensor fabrication, which is contracted out to foundries in small batches. Although large companies making high-volume applications such as microprocessors can afford to fine-tune the process to generate high yields, PSI typically could only afford one batch and had to accept the output whatever the yield.

PSI continues to seek new avenues for R&D and technology development. Currently, it is working with Johnson and Johnson on advanced testing systems for condoms and on a skin analysis project. PSI also has two current SBIR awards.

SBIR Awards

As shown in Table E-14, PSI has successfully won a series of awards from four agencies: DoD, DoE, Department of Health and Human Services (HHS), and NASA. The initial series of awards focused on a new approach to improving the accuracy of tank guns (see AMRS above). PSI claims to be the only U.S. company working in this area (its international competitor from Israel) and that this work was entirely funded by SBIR awards. This work followed a winding path both technically and in the market, developing systems for testing

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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TABLE E-14 SBIR Awards at Princeton Scientific Instruments: Summary Table

Agency Number Phase I Awards Phase I Funding (Dollars) Number Phase II Awards Phase II Funding (Dollars) Year of First Award Year of Most Recent Award
DoD 23 1,726,524 13 7,664,269 1986 2008
DoE 8 674,363 4 2,400,000 1992 2004
HHS 6 334,622 4 1,922,632 1989 2001
NASA 7 459,303 4 2,181,248 1991 2002
Total 44 3,194,812 25 14,168,149 1986 2008

SOURCE: SBA Tech-Net database.

and using SBIR to address specific technical issues. In all cases, Phase III contracts proved elusive. The awards span more than 20 years, from 1984 to 2008, and average about $800,000 annually, which appears to constitute a significant percentage of PSI revenues.

SBIR Comments

As reflected in testimony given in 1992 before the House Small Business Committee, Dr. Lowrance believes that the program’s emphasis on the commercialization of technologies provides a substantial advantage to larger “small companies.” These firms have more in-house commercialization capability and can also afford to maintain staff on site at National Laboratories, where many SBIR topics originate.

Dr. Lowrance considers the SBIR program to be a highly successful effort to tap the energies of small creative businesses. He noted that topics in general focus on identified problems and provide sufficient funds to pay for the necessary R&D. Working with the labs often opened doors for projects that were too small to interest the prime contractors or large acquisition programs. Funding through the SBIR program is typically not available from other sources.

Dr. Lowrance said that he supported changes in the award size, even if offset by a decrease in the number of awards. He believed that current sizes were in some cases simply not sufficient to fund prototype development.

His biggest concern with the program focused on the quality of referees, as reflected in their reports on applications. PSI experienced considerable variation in quality, especially at DoD, which is a substantial problem for the program.

Dr. Lowrance was especially critical of reviewers’ comments about commercialization plans in Phase I applications. He believes that reviewers focus on this aspect of the project in part to avoid addressing technical issues that they may not feel qualified to judge. He recommended that the emphasis on commercialization plans in Phase I selection decisions be sharply reduced, or the need for a plan eliminated altogether at this stage. He did not express similar concerns about commercialization plans for Phase II projects. Dr. Lowrance

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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observed that Phase I commercialization plans are of very limited value because companies often have to change their commercialization strategy along the way: for example, he noted that PSI never sold a CCD camera system for the original purpose defined in the SBIR application, but had adapted and sold systems to meet other researchers’ pressing needs in other areas.

STOTTLER HENKE ASSOCIATES, INC.

Interview with Mr. Dick Stottler, CEO August 17, 2009 San Mateo, CA

Stottler Henke Associates, Inc. (Stottler Henke) is a privately held company headquartered in San Mateo, California. Founded in 1988, Stottler Henke applies artificial intelligence and other advanced software technologies to deliver software for planning and scheduling, education and training, knowledge management and discovery, decision support, and computer security and reliability. Stottler Henke’s clients include government agencies, manufacturers, retailers, and educational media companies.

Since 1990, Stottler Henke has won 158 Phase I awards and 60 Phase II awards, from four federal agencies (although almost all are concentrated in DoD and NASA).51 Currently, SBIR funding accounts for about 50 percent of Stottler Henke annual revenues, and has ranged from zero at its inception to as much as 95 percent over a decade ago. In 2008, Stottler Henke won nine Phase I awards and four Phase II awards, all except one NASA award from various components at DoD.

Stottler Henke can be described as technology-driven rather than revenue-driven. It was founded to explore technical opportunities identified by the founders. There are no explicit goals for the company, and management has at times reined in growth to avoid upsetting existing organizational structures. Most technical staff have been with the company for more than 10 years. Currently, Stottler Henke employs about 50 people. This continuity is important to the business. New technology projects are built on the basis of previous projects. All training systems are, for example, customized for each application, but are built on existing software code and applications.

SBIR Awards at Stottler Henke

As shown in Table E-15, Stottler Henke has been the recipient of more than 100 SBIR awards from several agencies. In some respects, Stottler Henke’s role is to perform closely specified research for NASA and DoD, plugging gaps

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51 SBA Tech-Net database. Accessed September 10, 2009.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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TABLE E-15 SBIR Awards to Stottler Henke

Agency Number of Phase I Awards Phase I Funding (Dollars) Number of Phase II Awards Phase II Funding (Dollars)
NASA 25 2,227,781 5 3,323,752.00
NSF 3 94,515
HHS 3 299,999
DoD 127 10,063,334 55 36,829,253
Totals 158 12,685,629 60 40,153,005

SOURCE: SBA Tech-Net database. Accessed September 10, 2009.

and meeting rapid turn-around requirements, while the agencies use the SBIR program to fund this work. Mr. Stottler observed that for Stottler Henke, Phase II awards usually result in operational software, rather than the preliminary prototypes often delivered at the end of Phase II in other (non-software) sectors. This is not unusual in the software sector.

Clearly, Stottler Henke’s consistent success in winning SBIR awards from multiple agencies (and especially DoD and NASA) indicates that the company has been highly successful in meeting agency needs by providing these kinds of services. Utilizing its core code library, the company is well placed to deliver customized applications based on its basic scheduling and learning technologies. The extent of this success is underlined by the detailed analysis of two products developed for NASA, discussed in more detail below.

Other Awards and Publications

In 2004, Stottler Henke received a “Brandon Hall Excellence in Learning” award for innovative technology. For four consecutive years, Stottler Henke was named by Military Training Technology magazine as a “Top 100” company making a significant impact on military training. In 2005, Stottler Henke received a Blue Ribbon award for industry-leading innovation.

Seven Stottler Henke systems have been designated as SBIR success stories. Four systems have been listed in Spinoff, NASA’s showcase of successful spin-off technologies. In 2006, NASA released a Hallmarks of Success video52 that showcases innovative scheduling and training technologies that Stottler Henke developed for NASA.

Stottler Henke’s website also lists more than 100 published academic papers.

SBIR at NASA

Mr. Stottler sees NASA SBIR awards as falling into two categories:

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52 See http://www.stottlerhenke.com/company/nasa_hallmarks.htm.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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  • SBIR supported by operational groups with clear needs and objectives. These are often successful and usually generate the necessary follow-up funding.
  • SBIR sponsored by research-oriented components within NASA, which are often not connected to end users and often may fail to find useful take-up within the agency.

Mr. Stottler observed that SBIR awards are often used by agencies to fill gaps and holes. Although this use has value, it leaves major problems with sustainability. Because SBIR-funded projects are not part of the standard budgeting process at the agency, there is typically minimal or zero follow-on funding even for maintenance. Good projects are therefore sometimes left to die.

Stottler Henke has considerable experience with NASA applications and awards. Mr. Stottler believes that the selection process has a considerable random element, in part because of wide variability in the quality of reviews. However, he believes that NASA applications require a minimum level of quality—some applications identified by the company as lower quality have been funded at DoD but not at NASA.

NASA topics are not provided in searchable database form, according to Mr. Stottler. In recent years, the solicitation has been published in html only; in 2009 it appeared as a MS Word document. His analysis suggests that NASA topics change very little—2009 topics are very similar to 2008 topics. In contrast, DoD topics are almost always new with each solicitation, which has benefits but also drawbacks.

Stottler Henke has experienced significant Phase 1-Phase II gaps with NASA awards, which would have been damaging absent other work. Mr. Stottler observed that Stottler Henke is fortunate to have non-SBIR work to support project staff salaries during the gap period.

Comments on SBIR

Mr. Stottler noted that during the 1990s the main perceived metric for SBIR success at NASA was the acquisition of follow-on Phase III development funding. However, this metric was of limited relevance in areas such as those addressed by Stottler Henke, where the objective of a Phase II award was to deliver an operational product. Phase III funding was rarely required, as the cases of Aurora and AMP described below indicate.

Stottler Henke has also won more than 50 Phase II awards from DoD. Mr. Stottler noted that considerable rhetoric in DoD has focused on dual use of defense technologies in the civilian sector, which in his view is largely a myth: almost all Stottler Henke-developed DoD applications had minimal application in the civil sector. However, he did note that Stottler Henke retains the code library and reuses code as much as possible.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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Possible Improvements to SBIR

In Mr. Stottler’s view, annual solicitations are no longer sufficient. Technology and requirements move too rapidly, and given the topic-driven nature of the process at NASA, it is entirely possible that promising approaches will have to wait 2 or more years before they can be used for an application. He also observed that the process of adding a topic may be too onerous at NASA; although it may be appropriate to repeat broad topics, that practice becomes a problem when topics are tightly defined and exclude other potentially important technologies.

The quality of reviews would be considerably improved if applicants were encouraged to provide feedback about reviewers, which would be used to retain the best reviewers and replace less capable ones.

Mr. Stottler is not in favor of increasing the size of Phase I and Phase II awards. He believes that high-quality work can be accomplished at existing award levels that a tradeoff of fewer but larger awards would not be positive.

Mr. Stottler strongly approves the DoD pre-solicitation period during which COTRs are available for discussion and would like to see similar “communications windows” opened during the solicitation process at other agencies, particularly NASA.

NASA Successes

Stottler Henke has been highly successful in using NASA SBIR awards to develop tools that the agency has in turn adopted for operational use. These tools have been in use since the early 1990s.

Automated Manifest Planner (AMP)

The Automated Manifest Planner (AMP) “automatically makes scheduling decisions based on knowledge input by expert schedulers.”53 It “automatically schedules long-term space shuttle processing operations and sets launch dates at Kennedy Space Center”54 and was designed using artificial intelligence (AI) “techniques, allowing expert shuttle schedulers to input their knowledge to create a working automatic scheduling system.”55

As noted by NASA, “Planning and scheduling NASA space shuttle missions is no small task. The complex, knowledge-intensive process, [commencing] anywhere from 5 to 10 years prior to a launch, requires the expertise of experienced mission planners. [T]he many factors that the long-term

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53 National Aeronautics and Space Administration SBIR website, http://sbir.gsfc.nasa.gov.

54 Ibid.

55 Ibid.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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plans must reflect include the resources required, constraints, work shift requirements, intervals between launches, and maintenance issues.”56

NASA Kennedy Space Center (KSC) used AMP “to develop optimal manifest schedules, which support ongoing shuttle program efforts to reduce labor costs.”57 Reported commercial sales totaled “$400,000, exceeding NASA’s SBIR investment,”58 along with private investment at $50,000.

Further, according the NASA SBIR website, “In 1994, the Mission Planning Office was dissolved and the long-term planning component was transferred to United Space Alliance (USA), the primary shuttle contractor at KSC. The AMP system allowed personnel unfamiliar with long-term scheduling to maintain it without years of previously required training. AMP has now been used on a daily basis for [15] years to maintain manifests, perform advanced [“what if”] studies, and produce manifest reports for all NASA field centers.”59

NASA notes that AMP is also used to schedule the “short- and long-term external tank/solid rocket booster [(ET/SRB)] processing.”60 The ET/SRB scheduling process is “much faster and more accurate [than] the previous manual process. […] An extremely flexible and user-friendly tool, AMP plans orders of magnitude faster than existing tools. One user reported performing over 100 planning studies in a year, a task that would have been impossible without AMP.”61

As noted on the NASA SBIR website, automated “scheduling is common in vehicle assembly plants, batch processing plants, semiconductor manufacturing, printing and textiles, batch processing, surface and underground mining operations, and maintenance shops, where scheduling the use of different pieces of equipment that work together impacts production rates and costs.”62 Stottler Henke is marketing this software tool and other related products to industries involved with many resources, activities, and constraints, particularly when it is desirable to plan and project changes for many cycles or years ahead.

Aurora Scheduling System63

The Aurora project originated from KSC and received a Phase I award from NASA in 1999. This sophisticated scheduling system combines a variety of scheduling techniques, intelligent conflict resolution, and decision support designed to make scheduling faster and easier.

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56 NASA, Spin-off 2002, http://www.nasatech.com/Spinoff/spinoff2002/ct_5.html. Accessed September 10, 2009.

57 National Aeronautics and Space Administration SBIR website, http://sbir.gsfc.nasa.gov.

58 Ibid.

59 Ibid.

60 NASA, Spin-off 2002, http://www.nasatech.com/Spinoff/spinoff2002/ct_5.html. Accessed September 10, 2009.

61 Ibid.

62 National Aeronautics and Space Administration SBIR website, http://sbir.gsfc.nasa.gov.

63 This section draws on the documentation prepared for the NASA Success Story published at http://sbir.nasa.gov/SBIR/successes/ss/10-020text.html. Accessed September 10, 2009.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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The proof-of-concept prototype supported by the SBIR program was completed in the summer of 2001, and Aurora was deployed at KSC in 2003 after the end of the subsequent Phase II, where Aurora was applied to the specific scheduling needs of the Space Station Processing Facility (SSPF). SSPF scheduling features a variety of unusual features, most notably the importance of spatial relationships among elements being scheduled.

Aurora is used to schedule floor space and other resources at the Space Station Processing Facility (SPFF), where International Space Station components are prepared for space flight.64 Customized support for this scheduling problem was developed in tandem with the more general Aurora scheduling system, which can be easily adapted to a range of scheduling problems.

Aurora also supports a system that generates short- and long-term schedules for the ground-based activities that prepare space shuttles before each mission and refurbish them after each mission. This system replaced the AMP product used by NASA since 1994.

Aurora applies a combination of AI techniques to produce a system capable of rapidly completing a near-optimal schedule. Integrating sophisticated scheduling mechanisms with domain knowledge and expert conflict-resolution techniques, it also addresses problems unique to KSC, such as the need to schedule floor space and maintain certain spatial relationships among the tasks and components. Aurora then graphically displays resource use, floor space use, and the spatial relationships among different activities. Scheduling experts can interactively modify and update the schedule, and can request detailed information about specific scheduling decisions. This allows them to supply additional information or verify the system’s decisions and override them, if necessary, to resolve any conflicts.

Aurora was incorporated into other major systems when further applications of its core technology emerged after its development for use by KSC:

  • Aurora will be included by United Space Alliance, LLC in Temporis, an on-board scheduling system to be used by NASA crew members aboard the next generation Crew Exploration Vehicle. Aurora is also used by companies to plan complex, large-scale manufacturing operations.
  • Aurora/AMP replaced AMP. Because the shuttle spacecraft and ground-based facilities are very expensive, increasing the number of shuttle launches by just one is worth hundreds of millions of dollars, so finding near-optimal schedules is critical. Stottler Henke claims that

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64 For more details on Aurora’s use at NASA, see NASA, Spin-off magazine 2006, http://www.sti.nasa.gov/tto/Spinoff2006/ct_2.html. Accessed September 10, 2009.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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rapid generation of near-optimal schedules enables NASA to efficiently perform what-if studies to analyze numerous alternate scenarios.

  • The Boeing Company adopted Aurora to help optimize factory production of its new flagship Boeing 787 Dreamliner™ commercial airliner by balancing resource capacities with manufacturing requirements and constraints.

TECHNO-SCIENCES, INC.

Interview with Professor Gilmer Blankenship, CEO June 1995-June 2009, Chairman June 1995-May 2014

Techno-Sciences, Inc. is a high-technology company headquartered in Beltsville, Maryland. Lee Davidson, a professor of electrical engineering at the University of Maryland who specialized in information theory, founded the company in California in 1975. The company was created to provide systems engineering services to the U.S. government and prime contractors in communications, signal processing, and search and rescue. In 1988 Techno-Sciences merged with Systems Engineering, Inc., a company founded by Gil Blankenship and Harry Kwatny.

Until the late 1980s, Techno-Sciences was largely a contract research house that used government contracts, including SBIR awards, as a way to fund investigator-initiated research and as a basis for R&D in the U.S. Search and Rescue Satellite Aided Tracking (SARSAT) program. In the mid-1990s, the company underwent a major shift of emphasis. Professor Davidson retired, and Professor Blankenship65 became CEO and chairman.

In 1988, the company developed its first significant product—search- and-rescue command center satellite ground stations for international search- and-rescue programs. The new product line formed the basis for a new company. Since then, Techno-Sciences has become a company with a global market, selling ground stations and mission control centers in more than 20 countries, most of which have retained Techno-Sciences for ongoing management and maintenance, often for decades.

In the early 2000s Techno-Sciences rolled out a second major product line, the Trident Integrated Maritime Surveillance System (IMSS). This was sufficiently successful to create a new operating division for the company, called Trident Maritime. The Trident IMSS is now deployed on more than 3,500 km of coastline in Southeast Asia and North Africa—one of the largest such deployments in the world.

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65 Dr. Blankenship is also Professor and Associate Chairman of the Department of Electrical and Computer Engineering at the University of Maryland, College Park.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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As a result of these successful products, Techno-Sciences transitioned from a contract research house to a company primarily concerned with the development, deployment, and support of new products.

In May 2014 Techno-Sciences was acquired by the Orolia Group.

Company Structure

Prior to its acquisition, Techno-Sciences had three divisions:

  • SARSAT, which provides ground stations for search and rescue at sea and over land. Techno-Sciences’ SARSAT products are now mature systems, backed by an experienced staff with a well-developed process for scoping projects, deploying systems, and following up with effective maintenance and support. In short, the division has a smoothly operating ISO 9000-certified model of what it takes to deploy and support these systems on an international basis. Working with the NASA and the National Oceanic and Atmospheric Administration, the SARSAT division developed the next generation SARSAT ground systems based on MEOSAR satellite technology. Techno-Sciences has sold these important new systems in the United States, Australia, New Zealand, and Algeria. Many additional sales are expected as the COSPAS-SARSAT community changes to this next generation technology.
  • Trident, which sells coastal and ship-based surveillance and security systems, is active in Southeast Asia and North Africa. It has installed about 35 coastal stations, several command centers, and multiple shipboard systems. The coastal station network in Indonesia and Malaysia covers more than 3,000 km of coastline along the Strait of Malacca and around the Celebes Sea. Trident has also installed surveillance and security systems on oil platforms in the Middle East. The Trident coastal stations include dual band radars, automatic identification systems (AIS), long-range day and night vision cameras, and command-and-control and communications systems. Trident Maritime Operations Centers feature remote access and control functions and extensive cybersecurity systems. Because most of the stations are installed in extremely remote regions, the Trident division also manufactures and installs grid-free power systems using solar, wind, and generator units.
  • Advanced Technology, which undertakes both contract research and supports Techno-Sciences’ products and services. The division has worked in software, sensors, control systems, and active materials, including magneto-rheological fluids for semi-active dampers. Supported in large part by the SBIR program, the division has investigated a wide range of areas, some leading to new products for Techno-Sciences (elements of the coastal stations) and two spin-off
Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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companies. The division has strong ties to universities and has funded several million dollars of university-based research and development. Innovital Systems, Inc. acquired the Advanced Technology division in 2013.

Spin-offs

Techno-Sciences has spun off three companies: TRX systems, which focuses on the ability to track personnel in GPS-denied areas, a specific application of Techno-Sciences tracking technologies; Innovital Systems, which designs novel medical devices, including an implantable ventilator for persons with impaired diaphragm function; and E14 Technologies, Pvt. Ltd., a Mumbai based company that produces custom electronics for a wide range of applications.

TRX’s personal location and tracking products are based on years of research following the disaster of 9/11 in which hundreds of firefighters were among those lost in the collapse of the World Trade Center buildings. From the outset, TRX’s research focused on meeting stringent operational requirements for first responders. The system had to be low cost, highly portable (i.e., laptop-based “command center”), built largely from off-the-shelf components, and able to work in 3-D without building maps.

TRX systems met these requirements. Its products are deployed in several countries with firefighters and the military. TRX is now working on location and mapping services for consumer applications using handheld technology.

Innovital Systems has leveraged Techno-Sciences’ defense-based technologies to design novel medical devices, including an implantable ventilator for people with diminished diaphragm function. The Innovital DADS system employs pneumatic muscle technologies to move the diaphragm to support breathing. As a small business, Innovital has made use of the SBIR program to fund its basic research.

Techno-Sciences Products and markets

Satellite-based Search and Rescue (SARSAT)

A wide array of information is available to search-and-rescue (SAR) personnel. Integrating and managing the data from Mission Control Centers (MCCs), for SAR crews on land and in the air, and other sources is crucial to saving lives. The faster SAR resources are mobilized, and the more efficient the response, the greater the potential for saving lives. TSI’s SARSAT system automates the coordination of SAR information and resources.

The COSPAS-SARSAT system generates distress alert and location data for SAR operations. Emergency transmitters (distress beacons) are detected by polar orbiting, geosynchronous, and medium earth orbiting satellites, and

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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these signals are relayed to ground facilities, where they are processed for location and identification and ultimately distributed to Rescue Coordination Centers (RCCs), which perform the actual search-and-rescue missions.

SAR personnel require accurate, concise, information that can be accessed quickly and easily. SAR missions may involve high-risk rescuers and costly resources. Therefore accurate, reliable, and timely data are critical. The SARSAT system links information from the international search-and-rescue system (COSPAS-SARSAT) via MCCs that have database, communications, and 3-D graphical information systems (GIS). Data drawn from comprehensive digital maps of the world help rescuers understand the search requirements in the specific locality (e.g., roads, rivers, lakes, population centers, airports, geographic elevations, ocean currents).

Tech-Sciences’ RCCs maintain an extensive, automated database that manages all received alert information. New alert information generates alarms, and the map display highlights recently updated locations. Users can easily access data by time (most recent) or for a specific incident. Messages are tracked and archived automatically.

The MCC is a command and communications system based on a client server structure, which gathers data from satellite ground stations (Local User Terminals), aggregates and manages the data through its server and proprietary software, and delivers the data for display and analysis in a graphical interface and 3D GIS. By using a standard client-server architecture based on standard Microsoft/Intel technologies, costs are reduced and reliability enhanced. Proprietary software provides the competitive edge needed by Techno-Sciences.

International sales have always been important to Techno-Sciences, because search-and-rescue systems are sold on a national (or sometimes regional) level. The company’s record as a highly trusted supplier of SARSAT systems has allowed it to penetrate other markets including those for maritime safety and security (see below) and the personal location technology developed by TRX Systems.

Techno-Sciences has worked to limit the cost of initial installation with the objective of developing long-term maintenance and upgrade contracts and customer retention. This approach has been successful, with almost all SARSAT and Trident customers purchasing long-term contracts from Techno-Sciences. Some have been customers for more than 20 years.

Trident

The Trident division provides Techno-Sciences’ Integrated Maritime Surveillance System. This system is designed for governments and other authorities that need to manage the complex flow of traffic and information around crowded, vital coastal regions. The system “ … deploys a tightly integrated network of ship and shore based sensors, communications devices, and computing resources that collect, transmit, analyze and display a broad array of disparate data including automatic information system (AIS), radar,

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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surveillance cameras, global positioning system (GPS), equipment health monitors and radio transmissions of maritime traffic in a wide operating area. Redundant sensors and multiple communications paths make the system robust and functional even in the case of a major component failure.”66

The system can be sold as an integrated package or in component elements. In 2004, the Indonesian Navy bought the first Techno-Sciences coastal radar system. This was the result of $7.5 million in R&D investments, primarily from the U.S. government and to a considerable degree from the NSF and DoD SBIR programs. Specifically, the core technologies for the Trident system were derived from a single NSF SBIR (Phase 1 and II) award.

The NSF awards allowed Techno-Sciences to develop the technology that would go into a ship-based system. A subsequent SBIR award from U.S. Special Operations Command (SOCOM) supported the adaptation of the system for use by Navy Seal operations to track the precise location and status of Seal boats.

The sole-source advantage conferred by these SBIR awards had a significant effect on the subsequent decision by U.S. Space and Naval Warfare Systems Command (SPAWAR) to deploy the technology in the United States. Overall Techno-Sciences received more than $70 million in contracts to install coastal systems as SBIR Phase III awards, and it has received more than $100 million in contracts in this business area.

Other Advanced Technologies

In the Advanced Technology division, Techno-Sciences worked on a wide array of technology areas including software engineering, operations scheduling (for maintenance operations), sensors and actuators, wireless networks, and many others. One particularly interesting application area involved the use of magneto-rheological (MR) fluids for (semi-) active dampers for vehicles and occupant safety. Using MR dampers for soldier seating, Techno-Sciences and its partners at the University of Maryland demonstrated dramatic improvements in occupant safety when the vehicle was subjected to a dramatic shock such as an improvised explosive device (IED) explosion. Both SBIR and BAA funding supported this research.

In parallel, Techno-Sciences used SBIR funding to develop solutions using flexible hoses and air to provide air-driven mechanical operation of flaps on aircraft wings. The air-driven hoses (“pneumatic muscles”) can deliver 300 lbs or more of force, while avoiding the weight penalties of hydraulic systems. SBIR projects, performed jointly with the University of Maryland, were used to support research on pneumatic muscle applications. One project funded by the U.S. Army, as a part of the development of a robot for battlefield rescue of wounded soldiers, led to the development of a powerful robotic arm. The

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66 TSI: the Trident Maritime Integrated Marine Surveillance System, http://www.technosci.com/trident/imss.php, accessed October 30, 2009.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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pneumatic muscle-powered arm could easily pick up a 300 lb person (including equipment) using 90 psi of air pressure.

In other applications Bell Helicopter has tested pneumatic muscle-controlled wing flaps in the University of Maryland wind tunnel. If adopted, then this technology would revolutionize helicopter design. However, it has other potentially important applications as well. Wind turbine efficiency could be substantially improved through the adoption of automated flaps; the weight and cost of hydraulic systems have made this impractical thus far.

SBIR and TSI

Prof. Blankenship stated that SBIR awards have played a pivotal role in several different ways at different times in the company’s life cycle. Initially, SBIR awards supported investigator-initiated research and the growth of the company and its personnel during its early years.

As the company transitioned toward a product-driven model, the SBIR program funded the research that led to both of the company’s core product lines—SARSAT search and rescue and Trident ship-based monitoring. It also supported the creation of two of Techno-Sciences’ three spin-off companies: TRX Systems and Innovital Systems.

The Advanced Technologies Group is now part of Innovital Systems, which submits several SBIR applications each year. SBIR projects are now supporting Innovital’s push into new technologies and new markets for next generation medical devices.

SBIR and Advanced Staff Training

According to Professor Blankenship, SBIR awards assisted in developing Techno-Sciences’ human resources. He observed that SBIR projects provided an ideal training ground for project managers. Techno-Sciences research groups typically hired PhD researchers soon after graduation, at which point they were technically trained but had little understanding of how to manage projects, support clients, or work to fixed schedules.

SBIR projects at Techno-Sciences were treated as standalone projects and were often handed off to staff not yet ready for a major commercial projects. In the course of managing one or two SBIR awards, these staff acquired critical management skills, which were then applied to commercial projects and eventually to the management of entire product lines.

For example, TRX Systems is a spin-off from Techno-Sciences. Its CEO, Dr. Carol Teolis, was hired by Techno-Sciences as a new Ph.D. from the University of Maryland. She was assigned to several SBIR projects before entering senior management as Vice-President of Engineering. Her experience at Techno-Sciences—which included complete management responsibility for a research project for the U.S. Mint, and other key customers—allowed her to develop skills in customer development and support. Her skills translated into

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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several million dollars of research contracts that supported the development of TRX Systems. Two other employees followed a similar path and now lead their own companies (Innovital Systems and E14 Technologies).

SBIR and Skills Acquisition

Professor Blankenship also considers the SBIR program to be a means of acquiring technical skills and know-how that, while not necessarily directly commercialized, may have significant uses downstream on other projects.

For example, Techno-Sciences won an SBIR award to build high-performance gun turrets. As part of the project, Techno-Sciences built a prototype that required a high-performance gimbal. Commercially available gimbals were not suitable, so Techno-Sciences learned to build its own high-performance gimbal. Although DoD did not pick up the gun turret technology for acquisition, the gimbal design knowledge was later applied to coastal surveillance systems, supporting the Trident long-range cameras. Similarly, Techno-Sciences now builds high-performance cameras, which are sold as a part of its integrated systems, and grid-free power systems for installations in remote areas lacking reliable power.

Phase IIB

Techno-Sciences’ spinoff company TRX Systems won one of the first Phase IIB awards from NSF. This $500,000 award matched $1 million in investments by strategic partners and sales of the company’s products to key customers. This project helped to create what is now TRX Systems main line of business.

SBIR Improvements

Professor Blankenship indicated that the current award size is acceptable, although he is confident that Techno-Sciences would not suffer if the award size was increased and the number of awards reduced. He noted that the gap between Phase I and Phase II awards had been a problem for many smaller companies; however, the introduction of optional tasks to bridge the gap has remedied this problem.

Professor Blankenship was somewhat concerned about what he called Phase I SBIR mills, which win numerous Phase I awards but in general fail to convert them into Phase II awards or to commercialize the research. Techno-Sciences focused heavily on converting Phase I awards, and according to Prof. Blankenship, it typically matched a Phase I award with an additional 50 percent internal funds to ensure that the result was good and that Techno-Sciences had a strong case for a Phase II award. Techno-Sciences’ commercialization record for SBIR projects achieved and sustained the maximum rating.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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Professor Blankenship also observed that larger small businesses (those with more than 100 employees, for example) had a smaller need for SBIR awards, which should first be focused on very small firms (those with less than 10 employees), and then on smaller and mid-size small firms. The government is often the only investor willing to take a chance on a new company. Indeed, as Techno-Sciences grew, SBIR contracts supplied only about 5 percent of revenue.

Techno-Sciences Transitions

In May 2014 the Orolia Group, a rapidly growing French group, acquired the SARSAT and Trident divisions of Techno-Sciences. This acquisition followed a period of sustained rapid growth for the company. Over the period beginning in 2005, the company grew rapidly both in revenue and number of employees. In June 2009 Jean-Luc Abaziou joined the company as CEO, with the mission of managing growth and increasing the value of the company (Prof. Blankenship continued as Chairman of the Board and Principal Scientist). Mr. Abaziou led Torrent Networks prior to its acquisition by Sony-Erickson. He later worked at Highland Venture Capital. Under his leadership, Techno-Sciences was among the Deloitte Fast 500 Technology companies for 3 years in a row. In 2010 the company was named the High Tech Company of the Year in Maryland. Several companies expressed interest in acquiring Techno-Sciences. The company entered into negotiations with the Orolia Group in 2013, and the deal closed in May 2014. Since the acquisition, the SARSAT division was merged with the McMurdo subsidiary of Orolia. McMurdo is one of the world’s leading manufacturers of emergency beacons for the COSPAS-SARSAT program. The merged company is “vertically integrated,” offering beacons, ground stations, and rescue planning systems to a global market.

Prof. Blankenship retired from Techno-Sciences in June 2014. He has since started two new companies, one working in sleep health and the other in medical devices. Both have received SBIR funding.

ZONA TECHNOLOGY, INC.

Interview with Ping-Chih Chen, CEO/CTO, Darius Sarhaddi, CFO, and Jennifer Scherr, Director of Operations November 8, 2010, September 29, 2015

ZONA Technology, Inc. (ZONA) was founded in 1985, by Mr. Ping-Chih Chen and his now-retired partner, Dr. Danny D. Liu, a faculty member at Arizona State University (ASU). ZONA develops software for the design, analysis, and modeling of aeroelastic systems. Aeroelasticity is the physics of the interactions between the inertial, elastic, and aerodynamic forces that affect an elastic body exposed to a fluid flow. Because aircraft are not rigid, accurate

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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predictions of their performance requires the capability to model aeroelastic effects. Mr. Chen only began full-time work at ZONA in 1996 after a period as a consultant in Taiwan. With the company’s first Phase II award in 1999, ZONA started a period of rapid growth and expansion of share in the aeroelastic market.

The SBIR program has played a critical role in the development of the company. SBIR funding from the Air Force and NASA funded the development of the company’s first product, ZONA51. This product led to a spin off product called ZAERO, which quickly became a commercial success. The company followed ZAERO with a number of other modules focused on simulating the performance of aerodynamic surfaces and objects, and in particular on modeling unsteady aerodynamic performance.

After these modules had been developed, the Air Force became interested in creating a toolset that would integrate all of these technologies into a unified system. SBIR awards from the Air Force Research Laboratory funded ZONA to integrate its aeroelastic and aeroservoelastic technologies into the ASTROS (Automated STRuctural Optimization System) software which were also included in the commercially available version of ASTROS.

ZONA is currently using SBIR funding to develop technologies that enhance the computational efficiency and accuracy of its modeling of aeroelasticity.

Technologies and Products

The ZONA core product line currently consists of the following five software programs for modeling phenomena related to aeroelasticity. (See Table E-16.) Each product is influenced by multiple SBIR projects that produced a general capability and expertise at ZONA for modeling aeroelasticity phenomena.

TABLE E-16 ZONA Technology, Inc., Product Line

Product Description
ZAERO ZONA’s core software product enables modeling, design and analysis of advanced aeroelastic and thermoelastc effects.

ZONAIR

ZONAIR is a software package for computing aircraft flight loads including aeroelastic effects.

ZEUS

ZONA’s Euler Unsteady Solver (ZEUS) solves various aeroelastic problems using an Euler solver to limit the need for large scale computer resources.

ZMORPH

ZMORPH is used to morph geometrically NASTRAN structural finite element models during multidisciplinary optimization problems.

ASTROS

The Automated Structural Optimization System is a multidisciplinary design/optimization environment that combines finite element techniques with efficient optimization to reduce the time required for aircraft design.

SOURCE: http://www.zonatech.com. Accessed October 11, 2015.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
×

The ZAERO/ASTROS products are the financial backbone of the company, and currently (more than 15 years after their launch) generate around $2.5 million annually in licensing revenues. Licensing revenues continue to grow with ZONA continually adding new capabilities and software enhancements.

ASTROS was originally owned by a company called UAI with whom ZONA had partnered to take its ZONA51 product to market. UAI merged with a larger firm, MSC Software, and following the merger, MSC Software ceased development and support for ASTROS. At the request of the Air Force, ZONA continued support of ASTROS. The ASTROS system is an integrated design package supporting the preliminary design of new aircraft and spacecraft, as well as subsequent design modifications based on the NASTRAN data standard. ASTROS is the primary tool for accessing the ZAERO modeling system.

ZONA continues to have a positive commercial relationship with MSC Software, developer of the NASTRAN code. MSC resells ZONA51 with its NASTRAN code as the Aero II Option.

Knowledge Effects

ZONA Technology owns two patents. Because the company focuses on producing modeling and simulation software for aircraft, it has not patented much technology. Indeed, one of the patents it received for its method for creating a virtual wind tunnel has yet to been licensed. As Mr. Chen remarked, “We’re much better at licensing software than patents.” The company also supports the publication of scientific and technical peer-reviewed papers as a means of promoting and validating its software.

ZONA has published over 200 journal and conference papers published between 1988 and the present.

SBIR

ZONA has used the SBIR program since the late 1990s to fund development of its technologies. Mr. Chen said that he would not have been able to join ZONA full-time without the funding provided by the first two Phase II awards. Mr. Chen and Ms. Scherr emphasized that the company would not exist without the SBIR program, which provided support at a number of pivotal stages in its development. For ZONA, the SBIR program provides a useful revenue stream and funds the innovation that drives growth for the company, in the form of new technology that can be commercialized.

DoD awarded ZONA its first SBIR Phase I award in 1997. Since then, the company has won an additional 79 SBIR/STTR awards—more than 4 per year—worth in total $22.80 million. (See Table E-17.)

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
×

Like almost all SBIR/STTR recipients, most of ZONA’s awards come from SBIR. However, a surprising amount of funding (29.1 percent) comes from STTR sources. Most SBIR/STTR recipients average less, typically around 10-12 percent. Ms. Scherr observed and Mr. Chen confirmed that this was probably because of the basic research orientation of ZONA’s work.

ZONA has depended on two sources for its SBIR/STTR funding, receiving 45 percent of its funding from NASA and 55 percent from DoD (mostly the Air Force). Also, the company has had good success converting Phase I research into Phase II with slightly more than half of its Phase I projects receiving Phase II funding. (See Table E-18.)

SBIR awards have significantly affected the company’s product development. According to Mr. Chen, ZONA developed all six of the software packages comprising the company’s product line based on capabilities developed during SBIR funded projects. At present, only 40 percent of ZONA’s revenue stream is derived from SBIR. Of the remainder, 5-10 percent derives from other government and private research contracts, and 50-55 percent of revenues are generated by licensing fees from ZONA’s product line. In 2010, this amounted to $1.5 million annually; it is now closer to $2.5 million.

Because ZONA now has a steady stream of licensing revenue from its core software products, the company makes a practice of funding its own pre-

TABLE E-17 SBIR/STTR Awards to ZONA Technology, Inc., by Program and Phase

Program/Phase Number of Awards Funding
SBIR Phase I 39 3,812,459
SBIR Phase II 20 12,352,746
STTR Phase I 13 1,198,775
STTR Phase II 8 5,438,135
Total 80 22,802,115

SOURCE: https://www.sbir.gov/sbirsearch/firm/all. Accessed October 6, 2015.

TABLE E-18 SBIR/STTR Awards to ZONA Technology, Inc., by Phase and Source

Agency Number of Phase I Awards Phase I Funding (Dollars) Number of Phase II Awards Phase II Funding (Dollars) Total Funding By Agency Agency Funding as Percent of Total Phase I to Phase II Conversion Rate (Percent)
NASA 28 2,750,918 12 7,428,307 10,179,225 44 43
NSF 2 181,428 0 - 181,428 1 0
DoD 24 2,260,316 16 10,362,574 12,622,890 55 67
Total 52 5,011,234 28 17,790,881 22,802,115 100 54

SOURCE: https://www.sbir.gov/sbirsearch/firm/all. Accessed October 6, 2015.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
×

SBIR preliminary studies in a conscious effort to improve the likelihood that its SBIR applications will be successful. This approach appears to have achieved the desired results, and, according to Mr. Chen, is especially important when the proposed project is highly innovative. For example, ZONA conducted significant proof-of-concept work on the Dry Wind Tunnel before applying for a Phase I SBIR award. This strategy reflects the company’s view that competition for SBIR awards is intense and that ZONA needs every advantage to be successful.

SBIR funding allows ZONA to take preliminary ideas and test them to see whether they have traction technically and commercially. There can be a tension between what’s asked in the solicitation and what’s useful in the market. The ZONA management team believes strongly that it’s up to ZONA to make something useful for the market, not just the SBIR sponsor. Oftentimes, the solicitation is asking for basic research. Mr. Chen said, “It’s difficult but, it’s our responsibility to take the product to market. Of course, the fact is that not every project is commercializable.” The senior management team estimated that perhaps only 50 percent of completed SBIR Phase II projects produce something useful.

As an example of the uncertainties involved in the commercialization process, in 2010, ZONA was developing a process for collecting real-time flight time data to predict flutter boundary. Termed a “Dry Wind Tunnel,” the company believed that a considerable market existed for such a product. By modeling wind tunnel tests, a project team for a new aircraft might avoid costs on the order of $5 million-10 million.

ZONA developed models of F-18 AAW wings and had a clearly marked deployment and commercialization path for this technology. The company was also in discussion with the Air Force Seek Eagle development program at Eglin Air Force Base as potential beta customers. After demonstration in the military program, ZONA intended to expand into the commercial sector through its ties with companies such as Boeing.

Unfortunately, ZONA was never able to fully validate the Dry Wind Tunnel technology. Although the F-18 models generated some data, it was not sufficient to demonstrate to the commercial sector the validity of the technology. Further SBIR funding was not forthcoming, and ZONA lacked the resources to fully demonstrate the accuracy of the simulated approach. In the end, potential customers lacked proof that the simulation worked. Although ZONA now has patented this technology, it has not been able to license that patent.

As noted above, ZONA uses SBIR funding to enhance incrementally the performance of its software products. For example, the company currently has a Phase II SBIR from NASA which ZONA will use to update the ZONAIR technology. The current ZONAIR approach is accurate but not as efficient as industry would like. Since ZONAIR was designed and launched, solver algorithms and parallel computing algorithms have both improved. ZONA wants to take advantage of these improvements to increase the efficiency of the ZONAIR software package.

Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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ZONA has never received a formal Phase III award from DoD (or any other agency); the company’s strategy is to move directly to commercialization after SBIR, although in several cases more than one SBIR award was required to reach the commercialization stage.

STTR

Compared to other SBIR/STTR recipients, ZONA receives an unusually large proportion of STTR funding (29.1 percent). Senior management thought the reason is that aeroelasticity is a topic that still requires a great deal of basic research. Consequently, university partnerships are especially advantageous.

STTR projects allow ZONA engineers to get access to greater expertise in a particular area. It allows for better proposals and better alignment with topics. It enables access to University facilities which can be very important. Duke University has a wind tunnel that STTR funding has enabled ZONA to use.

The challenge of STTR is working with a large bureaucracy. Applications get made by ZONA at the last minute, and university sign-off procedures take time. This is especially a challenge for NASA applications where they website requires a university representative to click on a link to give permission prior to accepting an application. DOD doesn’t do this.

The other challenge for STTR is negotiating an IP agreement. Generally, IP is negotiated depending on how much each side contributes or is based on the tasks each side is performing. It’s not hard to come to an agreement usually, but it can be time consuming especially if ZONA has not worked with a particular university previously.

ZONA executives thought that in general SBIR seems more flexible because you can work with a broader range of consultants. STTR is only preferred if ZONA happens to need something from a university, either expertise or facilities.

Improving SBIR and STTR

ZONA officials suggested several improvements to SBIR operations during both the 2010 and 2015 interviews. There had been some improvements. Other issues continued unchanged.

  • NASA contracting. NASA SBIR contracting continues to be handled at the office level. If SBIR recipients have questions, they will be answered by whoever is available at the office. At Air Force, on the other hand, each project is assigned a program officer who is always responsible for questions related to that project.
  • Reporting requirements. In 2010, ZONA reported that both DoD and NASA sometimes impose unnecessarily stringent reporting requirements.
Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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Since then, NASA has improved, requiring only quarterly reports. Ms. Scherr observed, “This seems like a good balance of doing and telling.” DoD, however, has gotten worse. For example, Air Force requires technical and financial reports every month and an end of year report. As Ms. Scherr observed, “On an Air Force grant report writing is all my engineers seem to do.”

  • Feedback. Although it fulfills the reporting requirements, ZONA has struggled to derive value from the reporting process. In particular, the technical monitor on SBIR/STTR awards rarely responds to reports other than to note receipt. Given the amount of money involved and the mission orientation of DoD and NASA, this seems an opportunity missed. ZONA recognizes that the technical monitors are busy and that an SBIR project is additional work for them. However, more consistent feedback would probably result in higher technical success rates for these projects and would ensure that the technology developed meets the sponsors' needs.
  • Integrated Project Management. NASA has a website that allows a single point of contact for managing SBIR/STTR contracts and deliverables. ZONA can see its timelines, upload reports, and submit invoices. With DOD, everything is fragmented. SBIR recipients have to keep track of the project requirements separately and find the e-mail addresses of the people to whom reports and cost reports are to be sent.
  • Size of awards. In 2010, ZONA management opposed increasing the award size if fewer awards would result. SBIR awards have grown, and fewer awards are being awarded. By reducing the number of awards, this reduces the likelihood of innovation.
  • Communications. ZONA still recommends that NASA adopt the DoD “talk time” approach, in which COTRs are available for discussion and feedback for a set time period after release of the solicitation. This feedback could be used to address concerns or even redress errors—at least one NASA solicitation was misidentified with the wrong NASA center, leading ZONA to miscompute travel costs.
  • ITAR and solicitation. Unlike at DoD, NASA solicitations do not clearly indicate which topics are subject to ITAR regulations. Consequently, companies spend time and resources to gain permissions that they may not require. ZONA is not certain whether this had changed from 2010. They suspect it has not but are uncertain. Either way, they admitted that this problem may not be a pressing issue.
  • University Sign-Off. The NASA STTR process requires formal sign-off from the university partner, prior to acceptance of the project application by NASA. DoD does not require this. To facilitate the application process, ZONA management thought removal of this requirement would be preferred.
Suggested Citation:"Appendix E: Case Studies." National Academies of Sciences, Engineering, and Medicine. 2016. SBIR at NASA. Washington, DC: The National Academies Press. doi: 10.17226/21797.
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The Small Business Innovation Research (SBIR) program is one of the largest examples of U.S. public-private partnerships, and was established in 1982 to encourage small businesses to develop new processes and products and to provide quality research in support of the U.S. government’s many missions. The U.S. Congress tasked the National Research Council with undertaking a comprehensive study of how the SBIR program has stimulated technological innovation and used small businesses to meet federal research and development needs, and with recommending further improvements to the program. In the first round of this study, an ad hoc committee prepared a series of reports from 2004 to 2009 on the SBIR program at the five agencies responsible for 96 percent of the program’s operations -- including NASA. In a follow-up to the first round, NASA requested from the Academies an assessment focused on operational questions in order to identify further improvements to the program.

Public-private partnerships like SBIR are particularly important since today's knowledge economy is driven in large part by the nation's capacity to innovate. One of the defining features of the U.S. economy is a high level of entrepreneurial activity. Entrepreneurs in the United States see opportunities and are willing and able to assume risk to bring new welfare-enhancing, wealth-generating technologies to the market. Yet, although discoveries in various fields present new opportunities, converting these discoveries into innovations for the market involves substantial challenges. The American capacity for innovation can be strengthened by addressing the challenges faced by entrepreneurs.

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