An Assessment of the SBIR Program at the National Aeronautics and Space Administration (2009) / Chapter Skim
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Appendix E: Case Studies
Appendix E: Case Studies
Pages 218-303
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Deformation Developed simulation software to Computer simulation of forging Control solve thermo-mechanical problems for processes. Providing engineering Technology, the heat treatment industry.
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. Technology Solid Oxide Fuel Cell System (SOFC)
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15. SBIR promotes working with other companies and universities combining ideas with others to emphasize a team approach.
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6. Need more structured process for transitioning to Phase III.
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-- engineering software packages -- that have been developed and in each case, SBIR funding played an important role. Currently, about 50 percent of the company's revenue comes from SBIR/STTR and other government contracts (with the Air Force currently)
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The SBIR awards may or may not have had an effect on securing other financing. It may have been mildly beneficial with banks.
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It can get letters of support from third parties but not funding. The company would like to see more flexibility in government funding Phase III or IIB.
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In 1994, AeroSoft completed two Phase II SBIR awards sponsored by NASA which provided support for the development of GASPv3 and its unstructured CFD software, GUST. GASPv3 became commercially available in June 1995.
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The company has three related technologies -- engineering software packages -- that have been developed and in each case, SBIR funding played an important role. Currently, about 50 percent of the revenue comes from SBIR/STTR and other government contracts (with the Air Force currently)
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This is all a very small part of its activities. COMMERCIALIZATION The impact that AeroSoft's technologies have on its customers includes reduced cost, additional capability, higher quality, and increased ability to achieve agency mission.
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The company has received SBIR awards from NASA Langley, Ames, and Marshall. NASA and the Air Force use GASP on HPC MSRC facilities.(High Performance Computing Major Shared Resource Center)
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Project Title: Computational Fluid Dynamics Enhancements to Reduce End-User Work Load. Sales to: (a)
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It can get letters of support from third parties but not funding. The company would like to see more flexibility in government funding Phase III or IIB.
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First, the SBIR program is a costeffective model for small business to obtain government funded projects. Small companies are intimidated by the requirements for large contracts and the SBIR program eliminates the intimidation factor.
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the importance of sustained, strategic use of a large number of SBIR awards by one company over a long period of time; 2) the significance of SBIR during periods when other potential sources of early-stage funding, such as VC companies, show no interest because the technology is viewed as too risky and doesn't offer a large commercial market; 3)
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Importantly, industrial applications could ignore obstacles that existed in medical applications, such as the human-safe level of radiation tolerance (120kV; current ARACOR systems employ up to 15MV) and image blurring due to involuntary patient motion.
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ARACOR TECHNOLOGY ARACOR utilizes X-ray computed tomography technology for several CT applications. CT is a digital X-ray inspection technology used to produce images of an object's internal features, including information characterizing the object's materials and geometry.
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ARACOR Has Received 120 SBIR Awards Over Two Decades Prior to its purchase, ARACOR received a large number of SBIR awards: 78 Phase I and 42 Phase I coming from NSF, DoD and NASA. Their original award was with Wright-Patterson Air Force Base in Dayton, Ohio.
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SBIR funding on the other hand is awarded on the basis of the value and uniqueness of the technology and enables government organizations to satisfy arising problems even when there is not a demonstrable market for the new technology system. Their Technology Has Triggered Further Developments by Other Companies SBIR awards were very important in supporting the development of the firm's technology capabilities.
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He believes that some checks and balances should be established to prevent firms from just existing only to receive SBIR awards.
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Research at Creare now bridges diverse fields such as biomedical engineering and computational fluid and thermodynamics. At any given point in time Creare's staff is involved in approximately 50 projects.
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Where Dean, the founder, continued to be focused on the search for ideas with significant commercial potential, others at Creare preferred to maintain the scale and focus consistent with a contract research firm. The firm split, with Dean and some engineers leaving to start Creare Innovations.
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As a consequence, the company knew that SBIR was on its way. Creare was among the first firms to apply for, and to receive, an SBIR award.
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This led to a sequence of large industrial projects doing feasibility studies and design work to assist the client in evaluating different possible cooling systems, including two-phase approaches. The work covered the spectrum from putting together complete design methods -- based on work performed under SBIR awards -- to building experimental hardware.
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In the intervening years, the SBIR program and technologies developed under the program have become the primary sources of revenue for the firm. What accounts for the company's consistent success in winning SBIR awards?
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In these instances, as Elkouh states, "we may have done something in one field. Someone in a different field needs something that's related to our previous work and we carry that experience over." IMPROVING THE ADMINISTRATION OF THE SBIR PROGRAM According to Creare's current staff members, the single most significant determinant of the Phase III potential of a project is the engagement of the author of the technical topic.
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For instance, they state that the government is entitled to a royalty-free license to any technology developed under SBIR. But there has never been a clear definition of what that means." In one instance Creare developed a coating of interest to a private company for use in a specific product.
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The variation in program administration among agencies is a strength of the program -- although creating uniform reporting requirements for SBIR Phase III and commercialization data would significantly reduce the burdens on the company. Finally, from an institutional standpoint, no substitutes exist for the SBIR program.
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• Creare's longstanding expertise in computational fluid dynamics (CFD) gave birth to a uniquely comprehensive suite of CFD software that is now marketed by Fluent (a subsidiary of Aavid Thermal Technologies, Inc.)
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SBIR awards supported the company's R&D that, for example, created a capability for simulating the causes for material failure and the interrelationship among the various coatings, materials, and how they interact to affect failure rates. DCT views NASA as increasingly focusing the SBIR program over the last five years specific space-related needs with very little commercial significance for Northeast Ohio, and on interactions with minority companies.
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SBIR became key asset for doing the R&D necessary to adjust to the changing market. ESSENTIAL RESEARCH TECHNOLOGY DCT Collaborated with the National Center for Manufacturing Sciences in Developing Simulation Software to Solve Thermo Mechanical Problems for the Heat Treatment Industry Deformation Control Technology (DTC)
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The software's importance is that it permits manufacturers to simulate conditions rather than rely exclusively on trial and error. Dimensional changes occur during heat treatment due to several factors: thermal expansion and contraction, phase transformation, and internal stress. While these changes cannot be prevented during heat treatment, they can be accounted for during design.
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Most Customers Are Located in the Midwest Commercial customers are mostly located in Northeast Ohio and in Detroit's auto industry. They also have some Pittsburgh customers in specialized manufacturing.
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Part of the work supported by a NASA Glenn Phase II led NASA to identify DCT as a "success story." The simulation models were used to quantify the relative significance of complex materials property interactions. The technology is currently available for use.
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DCT publishes 4-6 papers per year with DoD's SBIR support. ISSUES WITH THE CURRENT SBIR PROGRAM DCT Plans to Be Selective in Applying for Future SBIR Projects DCT's plans to seek additional SBIR support but only selectively.
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The reason is that over the last five years NASA's has "increasingly used SBIR to focus on space-related needs, with very little commercial significance for Northeast Ohio, and on interactions with minority companies." DCT has not been awarded any Phase III awards. They see these as also "political and wired." In their view, they think that NASA often knows less about Phase III awards than proposal writers.
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, etc. Experience Indicates that NASA's SBIR Program Is Less Efficient than DoD DoD is much more efficient in their contracting, award process and management of the program than NASA.
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was founded in 1996 by three NASA subcontractors who had received a number of SBIR awards. Two years later, with growth in the company they hired C
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Essential Research then spent the next two years making money. However, instead of investing these funds in the company, the firm's founders withdrew the money.
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ERI Has Made a Breakthrough Using Quantum Dot Technology Essential Research made a breakthrough in light emitting diode (LED) technology that allows wider use of quantum dot technology to replace incandescent light.
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The following is a quote from Bill King describing the quantum dot technology: We are engaged in the development of a novel semiconductor -- light-emitting diode -- that emits light in the 1.7 to 2.4 micron (Near Infrared -- NIR) wave length range based on the use of quantum dots in a III-V compound semicon ductor structure.
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Most likely he will go to a bank for funding to build ER's own building. He plans to stay in Northeast Ohio, mainly because of ERI's link to NASA Glenn, which is just a few miles west of the company.
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ERI Has Sold a Number of Products Stemming from SBIR Awards ERI has sold a number of products stemming from SBIR, representing 100 81 percent of 2005/2004 sales revenue. These include PIN diodes in seven different sizes (AlGaAs and InGaAs)
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According to King, the SBIR awards were not important in obtaining a bank loan. State Science and Technology Only Partially Offsets the Region's Culture One other source of funding was a state Ohio Department of Development guaranteed loan of about $200,000-300,000, which King knew about.
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IMPORTANCE OF SBIR Essential Research Probably Wouldn't Exist Without SBIR Mr. King says that Essential Research would probably not exist without SBIR.
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For example, Essential Research just received a Phase II SBIR from NASA Glenn in NASA's photovoltaic area. One of Glenn's scientists in this field will have part of his/her salary covered for managing the project.
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In the case of Essential Research, the reverse exists: The company has more technology than NASA in its field. The point is that companies will view the role differently depending on whether the RTTC emphasizes private-sector commercialization or use of technology by NASA.
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As described on its Web site, the company focus areas include manufacturing process control, next-generation cancer drug development, analytical instrumentation, novel nanomaterials, advanced petroleum monitoring systems and wireless remote asset management. Luna's core technologies are in fiber optic, wireless, and ultrasonic sensing, biotechnology, advanced materials and integrated systems.
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There were only founder's funds, no other investors. SBIR awards helped in changing the project from an idea on paper to a feasible idea and prototype.
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There should be more money for Phase II awards. They should have a yearly technical conference (instead of having to contact topic authors during the solicitation process)
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Kent Murphy on June 14, 2005, at a conference on SBIR Phase III issues organized by the National Academy of Sciences. Luna is headquartered at 2851 Commerce Street Blacksburg, VA 24060-6657.
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Luna's core technologies are in fiber optic, wireless, and ultrasonic sensing, biotechnology, advanced materials and integrated systems. It has had over a decade of consecutive growth.
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The business model provides the appropriate support throughout the commercialization cycle as the typical engineer and scientist moves through the Luna network, including technology transfer from Luna Innovations, and then rebuilding a technical staff focused on the next identified commercial market. COMPANY TECHNOLOGIES As described on the company's Web site, Luna has developed core technologies in the following areas: fiber optic, wireless, and ultrasonic sensing, biotechnology, advanced materials, and integrated systems.
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In addition, we should expect industrial markets for wireless sensor and fiber optics sensor to move forward. Plus, spin-off companies continue to grow.
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Luna's model for driving technologies to commercialization -- Luna's technology launch pad: • Identifies market opportunities; • Develops technologies internally and when necessary integrates intellectual property from universities, government labs, and other industries; • Secures initial development funds from government and industrial organizations, including internal Luna funds to demonstrate technical feasibility; and • Builds expert entrepreneurial management teams, writes well-developed business plans, and raises private investments including angel, venture capital and large corporation strategic investors. The Luna Group History of Success Luna Innovations is proud of its record in commercializing the technologies evolving out of SBIR contracts and has introduced a number of products to the marketplace while establishing five spin-off companies.
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The Luna family of companies currently employs more than 185 professionals in basic research, development, administration, and production. Drawing upon a strong team of scientists, business professionals and engineers from diverse technical backgrounds, Luna has built a unique set of core capabilities in fiber optic and ultrasonic sensing, advanced materials, biochemistry, and integrated systems.
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There were only founder's funds, no other investors. SBIR awards help in changing the project from an idea on paper to a feasible idea and prototype.
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In regard to non-SBIR contracts, Luna participates in NASA and the Air Force and through prime contractors as subs. Some of the awards are more exploratory and similar to SBIR awards whereas others are tied to deliverables of the agency (but some SBIRs are like that too)
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Project Title: Distributed Fiber Optic Sensors for Space-Based Nuclear Reactors. Sales: 0.
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In general, the program allows business to test high-risk/high payoff ideas. It fosters building technology areas in small business.
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That is where the process is really completed. There must be better communication within the agency about Phase III possibilities.
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SBIR EFFECTS ON THE FIRM Mainstream views SBIR awards as the government as an underwriter of research and development to small business and as source of funds to help offset the cost of a project.
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. COMMERCIAL OUTPUTS Mainstream sells products and services derived from SBIR funding in the market place.
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• Portable generator for army to same for campers and smaller marine craft. • Thermal control for avionics, aircraft and spacecraft to HVAC/R products for the general public.
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We do not pursue R&D just for the sake of pure research -- I believe that is the role of university research, rather we pursue R&D to solve a specific problem and sell a product." "I lose money on the Phase I proposals in that it costs what I receive from winning a Phase I and then some to complete the Phase I I do it only because of the potential for commercialization of a product which comes out of the project, i.e., the Phase II and Phase IIB are when the real returns kick in." Helping to Identify New Technology Needs Mainstream believes that governmental needs, as outlined in the SBIR's topic list, aid the company identify new technology needs.
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With the Christmas holiday, it would have been much better in February but once a year was nice. Then they added a summer topic list and last year there were four DoD SBIR topic solicitations.
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However, I understand that in many cases these problems were impossible to anticipate." Multiple Awards According to Dr. Scaringe, SBIR mills (firms that are successful in getting SBIRs but not successful in commercialization of products resulting from the SBIR)
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Chalfant became familiar with the SBIR program around 1988 just after he went to work for a new technology startup firm called Optivision. Both Orlando and Chalfant worked together on a series of fiber optical network projects in the Silicon Valley region.
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Today, they have added several SBIR Phase Is and Phase IIs to their total from earlier firms bring the total including novated contracts to eight Phase Is and five Phase IIs, and have just received a $2.5 million contract from the Airforce (90 percent from SBIR) , as well as two recently awarded Phase II SBIR contracts worth $1.5 million.
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On the other hand, they also noted that Honeywell heard about one of their technologies through the SBIR Awards list and that it helped them to foster a joint project with them which has been very successful. CURRENT AND PLANNED PRODUCTS AND PATENTS DERIVED FROM SBIR-FUNDED RESEARCH • SPI's LaserFire® Free-Space Laser Communications Transceivers.
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7. "Spaceborne Fiber Optic Data Bus (SFODB)
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APPENDIX E 289 TABLE App-E-4 Space Photonics SBIR Awards -- As of May 1, 2005, Eight Phase I SBIRs and Five Phase II SBIRs Have Been Awarded Contract Award Amount Project Description Customer Date Status ($) Phase I SBIR -- Enhanced IEEE 1393 Air Force -- 1999 Completed in 2000 100,000 Spaceborne Fiber Optic Transmitters Kirtland AFB and Receivers Phase I SBIR -- IEEE 1394 Fiber Optic NASA/JPL 1999 Completed in 2000 70,000 Transceiver Phase II SBIR -- Enhanced IEEE 1393 Air Force -- 2000 Completed in 2003 750,000 Spaceborne Fiber Optic Transmitters Kirtland AFB and Receivers Phase II SBIR -- Ultra-high Bandwidth NASA/GSFC 2000 Completed in 2003 594,000 Spaceborne Fiber Optic Data Networks Phase I SBIR -- Miniature Free Space Air Force -- 2001 Completed in 2002 100,000 Optical Transceiver for Space Kirtland AFB Phase I STTR -- Dual Wavelength Army 2001 Completed in 2002 100,000 Optical Thyristor Phase I SBIR NSF 2003 Completed in 2004 100,000 Phase I SBIR -- Intelligent Free Space Air Force -- 2003 Completed in 2004 100,000 Optical Communications Node Kirtland AFB Phase II SBIR plus the AF Air Force -- 2003 Completion 1,250,000 Enhancement & Extension -- Miniature Kirtland AFB Target: May 1, Free Space Optical Transceiver for 2006 Space Phase I SBIR -- Free Space Laser Air Force -- 2004 Completed in 2004 100,000 Communications Turret for Aircraft Wright Patterson AFB Phase II SBIR -- Intelligent Free Space Air Force -- 2004 Start August 750,000 Optical Communications Node Kirtland Node 2 2004 -- End August 2006 Phase II SBIR -- Free Space Laser Air Force -- 2005 Start February 750,000 Communications Turret for Aircraft Wright 2005 -- End Patterson AFB February 2007 Phase I SBIR -- Performance Enhanced Air Force -- 2005 Start May 2005 -- 100,000 Managed FPGA Eglin AFB End February 2006 Total SBIR Awards 4,864,000 SOURCE: Space Photonics Inc.
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Lee to commercialize a patented SOFC (solid oxide fuel cell) technology developed by Standard Oil of Ohio (SOHIO)
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shareholder value.) TMI has seven patents granted and two current applications.11 Their desire to control the technology is fundamental to the execution of their business model, which is based on multiple exclusive licenses with strategic partners.
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(Ohio receives a very small share of SBIR awards relative to the size of its economy.) Nevertheless, TMI views Ohio as providing several clear advantages for fuel-cell technology firms: (1)
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(See Table App-E-5 for a list of TMI's SBIR awards.) When TMI was formed, they were not familiar with any large sources of seed funds other than SBIR.
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PATENTS ARE VERY IMPORTANT According to Lee, all of their patents and their know-how, drawn from years of TMI's generic knowledge base are considered part of a core technology portfolio. Although none of the patents are specifically linked to any specific SBIR research because their patents are viewed as reflecting TMI's general knowledge, one key issue in evaluating SBIR is: How have SBIR awards shaped the company's knowledge base?
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The idea is that NASA would utilize the knowledge developed by the firm using the SBIR award to think in new ways and cultivate innovation by NASA. OHIO LOCATION OFFERS ADVANTAGES TMI's view is that Ohio is a "superb" location for the development of fuel cell technology.
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296 APPENDIX E TECHNOLOGY MANAGEMENT, INC. -- ANNEX CEVEC (CUYAHOGA EAST VOCATIONAL EDUCATIONAL CONSORTIUM) DEMONSTRATION -- OCTOBER, 2005 The first public demonstration (October 2005)
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. TiNi may also illustrate the importance of multiple SBIR awards from several agencies as essential for developing a technology that at least initially, because of there being no obvious large commercial product market, is not attractive to VC.
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They have employed eight or nine people almost from the beginning and produce revenues of $650,000 to $1,500,000 annually. TiNi Has Received 31 SBIR Awards TiNi had three employees at the time the first SBIR award was received.
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Energy Battery technology lags behind requirements for compact sources of electrical energy while portable computers and various other instruments require considerable power. One solution involves using fuel cells, which can potentially provide substantially more power density.
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COMMERCIALIZATION Commercialization of Technology Has Occurred Through Licensing Its Patents to Commercially Successful Companies To summarize David Johnson's view, TiNi has used SBIR awards to develop valuable technology but they have had limited success with commercialization through manufacturing and sales. Licensing of patents has brought them their largest financial returns.
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Johnson believes that the technology was the most important factor in getting funding. The SBIR awards did not have a major influence on the decision to fund the work.
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SBIR Phase I Awards Should Be Smaller But with Reduced Goals Johnson's view is that there should not be a fixed amount for Phase I In fact, he thinks that it would sometimes be more effective if the grants were smaller and the goals were reduced accordingly.
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It developed a product that was sold to Boston Scientific, which provided TiNi Alloy with money. The point is that SBIR funded highly innovative thin film technology that required a second firm to complete the commercialization, indirectly further funding TiNi Alloy through the second company's sales.
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